While preparing a recent post about fund diversion at the United Way, I ran across some stories about serious internal fraud cases at the Salvation Army in Toronto and Honolulu (and possibly New York) that for some reason did not receive much press notice.
Toronto's was an alleged phony-invoice scheme that diverted $2.3 million (Canadian) from the organization's Canada headquarters in Toronto. It was reported in January by the Toronto Globe & Mail and by CTV. The full Globe & Mail article may still be available here. I don't recall seeing it anywhere else.
Apparently Ming Wa, an accountant for the SA earning $41,000 a year, had first attempted a settlement that would have allowed him to keep most of what he had taken. In December, an attorney had informed the Salvation Army about the misappropriation on behalf of a client who offered to return 40% of the money in return for a confidentiality agreement. Acting on the information that it was an inside job, the chief financial officer eventually focused on the computer files of an accountant who had resigned suddenly in early December. He found spreadsheets documenting 34 deposits with amounts that corresponded to payments made to two companies, which were then investigated and found to be fictitious. A call to the bank confirmed that Mr. Ming was signer on accounts in the companies' names. The Salvation Army spokeperson said that controls were in place, but the Globe and Mail pointedly noted that in this case the perpetrator had foolishly outed himself, at which point the spokesperson said that he could not comment further due to the ongoing criminal investigation.
This week, there is a story out of Hawaii about a prison escapee who landed a position as planned giving director at Salvation Army Hawaii. Timothy Peter Janusz was caught after an anonymous tip that he was defrauding seniors. He had deposited at least $150,000 in checks to account he controlled and received deeds to properties valued at over $200,000. Both Janusz and his wife Susan had criminal records, yet the Salvation Army only did background checks of staff working with children, and the schools where Mrs. Janusz worked had not found anything amiss.
The possible third story appears in an odd publicaton called the "North Country Gazette." It reports an indictment of an accountant in the Manhattan office of Salvation Army named Wilfred Keaton. Allegedly he deposited 51 checks totalling $166,914 into an account he controlled. The story is very specific, almost as if it were written directly from an indictment. However, the story is corroborated nowhere else. North Country Gazette appears to be published by June Maxam, who bills herself as an "investigative journalist" and was very active in blogging circles during in the Terri Schaivo case.
So here are two, possible three, cases that reflect serious lapses in very basic accounting controls at the Salvation Army units—not in small, out of the way offices, but in the large metropolitan centers. The question remains why there has not been more attention given to these stores at a time when much smaller alleged frauds against the Red Cross get headline treatment. It does charitable organizations no favor when the press looks the other way: it just ensures that abuses will continue.
