WEEKLY NEWS DIGEST (October 9-16, 2011)

SCANDAL

Daley doesn’t explain how money ended up at wife’s charity.” By Hal Dardick. Chicago Tribune. October 10, 2011. Former Mayor Richard Daley popped up to give a tour of Millennium Park Monday, but did not address why more than a dozen companies subsidized by city taxpayers were required to give more than $900,000 to the charity founded and led by his wife. Instead, in his first public comments on the issue, Daley made the issue personal, characterizing Inspector General Joseph Ferguson’s review of After School Matters as “disgraceful” and “a personal insult” to Maggie Daley. Last week, Ferguson’s review of public-benefits clauses in city tax-increment finance district agreements determined 16 companies were required to give to After School Matters. No other private, non-profit group got as many, the report stated. Just how the charity was chosen and who chose it was not clear, according to the report. But only one of the officials from nine companies who were interviewed said the company itself chose the charity. The rest were “unilaterally chosen” by the city, the report stated. “Neither Mr. Daley’s wife nor After School Matters were at issue,” Ferguson responded in a prepared statement after being told of Daley’s remarks Monday. “Moreover, no allegations of any sort were made. “Instead, the report lays bare the simple fact of a near total absence of transparency, accountability, or ownership in the city’s process for leveraging TIF subsidies to the benefit private not-for-profits.”

Free Trips Raise Issues for Officials in Education.” New York Times. By Michael Winerip. October 10, 2011. Since 2008, the Pearson Foundation, the nonprofit arm of one of the nation’s largest educational publishers, has financed free international trips — some have called them junkets — for education commissioners whose states do business with the company. When the state commissioners are asked about these trips — to Rio de Janeiro; London; Singapore; and Helsinki, Finland — they emphasize the time they spend with educators from around the world to get ideas for improving American public schools. Rarely do they mention that they also meet with top executives of the Pearson company. The foundation’s officials say the free trips are solely educational and have no business purpose. On the foundation’s tax forms for the last two years, the line for listing “payments of travel or entertainment expenses for any federal, state or local public officials” has been left blank.That may be a problem. Experts in tax law say that Pearson appears to be using its foundation to push its business interests, which would be a violation of the federal tax code. “The Pearson conferences fit the same fact pattern as the influence-buying junkets that the convicted lobbyist Jack Abramoff arranged for members of Congress,” said Marcus S. Owens, a lawyer who was director of the Exempt Organizations Division of the Internal Revenue Service for 10 years and is a former board member of the Better Business Bureau’s Wise Giving Alliance. “Those junkets were paid for by private charities.”

Ex-housing charity worker charged with embezzling.” By Jill Tucker. San Francisco Chronicle. October 13, 2011. A former employee of the Tenderloin Housing Clinic has been charged with embezzling $29,000 in tenant rent money from the San Francisco nonprofit, police said Wednesday. James Eugene Holland, 41, of San Francisco was fired from the nonprofit two years ago after allegations of theft, said Randy Shaw, the organization’s executive director. Holland was arrested last Thursday and charged with grand theft, embezzlement from an employer and forgery, police said. He is being held in lieu of $300,000 bail. The clinic operates the city’s largest housing program for homeless adults. Holland collected rent payments from the low-income tenants, many disabled or elderly, and allegedly deposited the money into his personal account, police said. In one case, Holland placed a tenant in clinic-managed housing without telling the nonprofit and had the rent money sent to his post office box, police said. The allegations did not involve any properties connected to the Tenderloin Housing Clinic’s city contracts for housing, Shaw said. “It’s sad, because (Holland) is someone who had risen up and become successful,” Shaw said. “People were all very surprised.” The housing organization has not recovered any of the lost money, Shaw said.

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