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10 Non-Profit Leaders Who Stole from Their Organization
Some people will tell you that robbing a bank is a victimless crime—as long as you don’t injure someone while doing it. The money is insured, so the only loser is the bank, and banks have plenty of money. Of course, the bank passes on the cost of insuring the money to its clients, so it’s not quite “free money.” Still, successful non-violent bank robbers are part of American culture and admired by many.
I don’t think anyone would ever say the same about people who steal from non-profit organizations. Such people are abusing their position, taking money donors have given in good faith, and depriving the people or organizations that should benefit from the donated funds.
Non-profits rely on goodwill and enjoy various privileges; unfortunately, they are sometimes secretive and unprofessional regarding due diligence. Most charities are legitimate, but before parting with your money, you should research the organization you want to donate to so you don’t line the wrong people’s pockets.
Here are ten non-profit leaders who stole from their organizations.
10 American Parkinson’s Disease Association
In July 1996, a judge sentenced 55-year-old Frank L. Williams to 15 months in jail, followed by three years on probation. The sentence was on the lenient side because Williams suffered from heart disease. Williams was also told that he had to repay the money he had stolen from the American Parkinson’s Disease Association.
Before his conviction, the charity had good reason to be pleased with Williams’s performance as its head. His dynamic leadership led to expansion and a significant increase in donations. But some of the money was going into his own pocket.
Williams’s scheme was not especially sophisticated. He diverted checks from the Staten Island headquarters to the branch headquarters in Minnesota. There, an accomplice would pay the checks into a local bank account and then write new checks to Williams. The scheme went on for about seven years, and he pocketed around $1 million. Williams’s excuse for the theft was that other heads of comparable charities earned twice as much; he was already earning nearly $110,000 annually.
Williams said that it was hard to stop once he had started and that he had spent the money on things like cars, TVs, and clothes.
9 United Way of America
William Aramony wanted to show his new girlfriend a good time. He bought a condo for her in New York, took her on lavish foreign vacations, and gave her a job with the charity he headed. Aramony might have felt he needed to treat his new lover because he was 59, and she was just 17 when they started their relationship. But that’s not even the most inappropriate thing he did.
Aramony was a noted womanizer who used his position as CEO of United Way of America to persuade women to have sex with him. He had been with the charity for 22 years when he resigned in 1992. Apparently, he was an effective and respected leader with considerable influence in the non-profit sector.
In 1995, Aramony and two others faced court, accused of stealing $1.2 million. His lawyer said that Aramony had a brain condition that affected his ability to control his impulses.
8 Goodwill Industries
In the ’90s in Santa Clara County, California, at ten Goodwill stores, employees sorted donated goods and loaded them onto trucks. But employees should have gone through the donations and put all suitable items up for sale in their stores. Instead, they were putting in long hours of work, seven days a week, that was benefitting a profitable scam. The scammers paid the workers with occasional “unofficial” payments from the stolen goods’ profits.
Seven local Goodwill leaders had organized a system that stole millions of dollars in donated cash and goods. All seven of the managers were related to each other—four of them were sisters. An eighth unrelated suspect committed suicide after authorities searched her home. The team stole an estimated $15 million.
There is no reason to suspect that people at the top of the organization were involved, but people wondered how they didn’t notice something was wrong.
7 On Your Feet
It all looked above board, but, for at least ten years, not everything was as it seemed at this charity. Geraldine and Clayton Hill set up a California non-profit to help those in need. The Hills convinced many local companies to donate clothes and other goods to On Your Feet, and some stuff indeed ended up with those who could best use the items.
Unforatenly, a lot didn’t because many of the donations were siphoned off by the Hills, who sold items to discount stores and pocketed the proceeds. Their charity was tax-exempt, and they used it like a personal checking account and avoided paying taxes on their “business.”
The couple made well over $1 million by trading on the goodwill of businesses. Geraldine received a sentence of 15 months; her husband received nine months when they appeared before a court in 2020.
Nothing illustrates their hypocrisy more than the fact that they donated some of the proceeds to their church.
6 Order of the Eastern Star
The Order of the Eastern Star is a Masonic institution that can trace its origins back to 1850 Mississippi. But it was in Scotland, not the United States, where one of its leaders went off the rails.
Mary Shirkie was the acting treasurer of the Supreme Grand Council of Scotland, and she betrayed the trust of its members. She was the only person who received a salary at the Order’s headquarters in Glasgow. The salary was not large; the Order devotes its income to paying annuities to members and donating to the charities it supports. But Eastern Star in Scotland was not donating much nor paying annuities.
Shirkie’s neighbors thought she must have won some prize money and kept quiet about it. It was true that she had more money than people expected, but it wasn’t her money. Over five years, she had embezzled around $26,000 (in today’s money). This might not sound like a lot, but the Order does not generate cash. Its income comes from dues and goes out on expenses and disbursements.
The auditor was a member of the local chapter and suspected nothing. In fact, nobody believed that Shirkie would do such a thing. In 2000, when authorities caught up with her, she offered to pay back the money. Meanwhile, the Order had no money to pay its tax liabilities, let alone its regular operational expenses.
5 Wounded Warrior Project
Firstly, it’s important to emphasize that the Wounded Warrior Project appears to be back on track and dedicating its efforts to helping veterans, but this wasn’t always the case.
An investigation in 2016 showed that the charity leaders were spending a fortune on hobbies and events. One employee described their spending habits as “total excess.”
Other charities that work with veterans were (and are) spending more than 90% of their income on the causes they support—mental, physical, and financial help for veterans. The rest of their income goes to unavoidable expenses. However, The Wounded Warrior Project only spent around 60% on its cause. The rest was going to junkets that had nothing to do with fundraising.
4 Leonardo DiCaprio Foundation
There is no suggestion that DiCaprio personally benefits from his environmental charity—he hardly needs the money after all. But, in 2016, the United States Justice Department filed a complaint that his charity formed part of a $3 billion embezzlement scandal based in Malaysia. Jho Low was named as an important figure in the scam, and Jho Low was a personal friend of DiCaprio.
The main problem was that DiCaprio’s foundation was completely opaque. The foundation claimed to have taken in some $45 million in 2016, but it was unclear where the money came from and where it went. Nor was it clear exactly how the charity was linked to dubious practices in Malaysia. Records showed that the charity had just six staff, all of them working unpaid.
There might have been nothing untoward about the operation. However, all charities need to be open about their activities.
3 New Era Philanthropy
In 1989, John Bennett Jr. set up the Foundation for New Era Philanthropy (or New Era, for short).
The New Era idea was simple: A non-profit would deposit funds with New Era for a specified period. On the due date, the charity would get its original money back and the same amount again that an anonymous donor chipped in. Doubling the money. Great!
But Bennett was paying the first donors from funds deposited by later investors; there were no anonymous donors. Yeah, in other words, a Ponzi scheme. This practice went on for over five years.
In 1996, Bennett faced indictment on 82 counts. He was in jail for 12 years.
2 Coalition to Salute America’s Heroes and Help Hospitalized Veterans
Roger Chapin has enjoyed a long career in the charity field. He has started over 30 organizations that have worked in various areas, from cancer to veteran aid. But there are suggestions that the primary beneficiary of his efforts has been Chapin himself.
The House Committee on Oversight and Government looked into his activities in 2007 and again in 2008 because of the “financial inefficiency” in two of his projects. The Coalition to Salute America’s Heroes and Help Hospitalized Veterans were great at raising funds—nearly $170 million between 2004 and 2006. Only around 25% of the money found its way to veterans, though. The rest went into salaries for Chapin and his cronies and expenses.
He retired from Help Hospitalized Veterans in 2009, and even though authorities had highlighted inefficiencies, he still paid himself nearly $2 million from the charity’s funds as a retirement payout.
What Chapin did was not illegal, but it was unethical, to say the least.
1 Feed the Children
This is an excellent place to recognize the work that charitywatch.org does in monitoring the behavior of non-profits. This group labeled Feed the Children under the presidency of Larry Jones, “The Most Outrageous Charity in America.”
Jones ran the charity for almost 30 years until the board made him step down in 2009. He filed for wrongful termination, but the board proved a series of offenses that included the misuse of funds, unauthorized salary increases for Jones and his wife, and much more.
Jones managed Feed the Children for three decades as a private fiefdom. Now that he has gone, the charity is back to doing what it should be doing.