The raffle promotion promised fabulous prizes, it just didn't say when they would be awarded.
Newspapers in Missouri are reporting on the indictment of Carl Sengheiser (also called Lou), founder of Gateway to a Cure (EIN 43-1743362 Form 990) (articles in the St. Louis Post Dispatch by Bill Smith and Kansas City Star by Joyce Tsai). Mr. Sengheiser started the organization to support spinal cord injury research after his son was paralyzed in a fall.
Mr. Sengheiser has been in hot water for some time as the Missouri Attorney General had stepped in last year to stop his organization's raffles. It has started with $1,000 ticket raffles held in St. Louis and Kansas City that offered luxury homes and a Bentley. The hitch was that the prizes wouldn't be given away until a certain number of tickets were sold, 2,000 in Kansas City and 1,000 in St. Louis. The Kansas City drawing eventually took place after just 1,400 tickets were sold (the winner accepted cash in lieu of the house and car), and the St. Louis raffle only sold 162 tickets and never occurred. Later raffles had smaller ticket prices and more modest prizes, but also fell far short of targets and never took place.
The current indictment claims that the organization collected $1.9 million but has given only $38,000 to the cause of spinal cord injury research. It says the money went for personal credit card bills, mortgage payments, and purchases of automobiles for Mr. Stengheiser and others.
The story combines elements that we have seen before: last year we talked about Chris Burke of Tuesday's Children (April 6, 2006), who created a secret slush fund in the charity he founded after his brother died on 9/11, which he eventually used to pay personal bills. Phony raffles were the undoing of Rev. Robert Ascolese in New Jersey (September 22, 2006).
Our persistent belief in the value of entrepreneurial fundraising (especially in response to personal tragedies) creates the environment where abuses like this can take place. These fundraising schemes lack the basic controls (both internal and external) that keep honest people honest.