WEEKLY NEWS DIGEST (December 12-18, 2011)

SCANDAL

Aiding Disabled, Nonprofits Rake in State Money.” By Russ Buettner. New York Times. December 13, 2011. Every day across New York State, thousands of part-time workers visit the homes of developmentally disabled people to teach them simple tasks, like grooming or how to take a bus. For their work, which requires no special credentials, the employees typically earn $10 to $15 an hour. But when the nonprofit organizations that employ those workers bill the state, they collect three and four times that amount — with some having received as much as $67 an hour. Spending on this little-known home care program, called Community Habilitation, has soared in recent years, creating multimillion-dollar surpluses at some nonprofit agencies and eye-popping salaries and benefits for those who run them. And it helps explain how New York’s costs of caring for developmentally disabled people have ballooned in recent years, creating the nation’s most generous system of Medicaid-financed programs, with little scrutiny of its efficiency or results.

National Arts Club Files Claim Against Ex-Chief.” By Pia Catton. Wall Street Journal. December 15, 2011. The National Arts Club is firing back at O. Aldon James, its former president who sued the club after it moved to oust him this summer along with his brother John and a friend, Steven Leitner. In an amended response to Mr. James’s lawsuit, the club has alleged that he is responsible for at least $1.5 million in lost revenue and $600,000 of improperly spent funds in the last six years. Mr. James was the president of the club for 25 years, but the statue of limitations allows the club to claim only the last six years of expenses. Mr. James’s lawyer, Adam Gilbert, said: “It is an utterly baseless claim.” The club said the $1.5 million is related to rent that would have been charged on apartments and additional spaces within the club. Mr. James had access to the club’s ATM card and checkbook, and the club claims he misused the money to the tune of $100,000 each year. According to the club’s lawyer, Roland Riopelle, the details of the expenditures were not included in the first response because Mr. James disrupted the monthly board meeting. “At the time we filed our original answer, the broad was being prevented from meeting as a whole,” he said. “The board was finally able to meet again in November. The issue of whether the board should include counterclaims was raised and a vote was taken.”

Access to Details on Wealthy Donors Fueled Theft Ring.”By Joseph Berger. New York Times. December 16, 2011. She worked as an ordinary clerk in the back offices of UJA-Federation of New York in Manhattan, but her position gave her ready access to the credit card and checking account details of enormously wealthy donors, including the billionaire Ira Rennert and a half-dozen generous philanthropies, like the Starr Foundation. The woman, Tracey Nelson, 24, and the man she lived with in Brooklyn, Roberto Millar, 26, an Audi car salesman who similarly had access to confidential information from customers, stole the identity details for their own enrichment, according to an indictment announced by the Manhattan district attorney’s office, and sometimes used their smartphones to photograph and e-mail checks written by donors or customers. Since at least May last year, they and a loosely connected group of more than 50 accomplices stashed or cashed the money using bank accounts they set up or invaded their victims’ bank accounts and transferred money to accounts they controlled, the indictment said. Much of the money was spent on expensive clothes, electronics and luxury cars, like the Porsche and two Mercedes-Benzes the investigators seized. The conspirators included three Chase bank tellers who either stole information from customers’ accounts or turned “a blind eye” to transactions they knew were nefarious, the Manhattan district attorney’s office said. Altogether, more than $2 million was stolen from over 200 individuals and organizations. Ms. Nelson, Mr. Millar and at least 10 others of the 55 defendants were arraigned on Friday in Manhattan on an assortment of charges, including grand larceny and identity theft. UJA-Federation said Ms. Nelson, who had worked at the agency for three years, was suspended without pay in August.

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