They are criminals in anyone's book. It's only a matter of time before they're prosecuted.

Good to see them cracking down on things like this. Probably more common than most think. There's a special place in hell for people like this.

Leukemia "foundation" spent less than 1% of funds on patients


http://www.nytimes.com/2015/07/21/nyregi...fraud.html?_r=0


Over the years, donors gave millions of dollars to the National Children’s Leukemia Foundation, perhaps motivated by brochures or telemarketing pitches describing the charity’s bone marrow registry or its cancer research building.

Neither of those things existed, the New York State attorney general’s office said in a petition filed in State Supreme Court in Brooklyn on Monday.

The petition seeks to shut down the Brooklyn-based foundation and recover money that the attorney general’s office said had been raised fraudulently.

The petition said the foundation had paid exorbitant fees for telemarketing and direct-mail fund-raising campaigns — more than 80 percent of the $9.7 million that the charity collected from mid-2009 to mid-2013. It paid out only $57,451 in “direct cash assistance to leukemia patients” in that time, the documents said.

“Nothing is more shameful than pocketing millions of dollars donated by good-hearted people who just wanted to help children afflicted with a terminal illness,” the attorney general, Eric T. Schneiderman, said.

Even the foundation’s Make a Dream Come True program for children with cancer was mostly a mirage, according to investigators. The foundation’s website, which appears to have been taken down last year, said the program arranged family trips and introductions to celebrities. A telemarketing script used in fund-raising efforts said the program sent children to places like Disney World.

But the court petition said the foundation had spent nothing on the program since March 2009, and only $7,866 in 12 months before that.

Investigators said the foundation amounted to a one-man operation doing business from the basement of a home in the Bergen Beach section of Brooklyn.

That one man, the petition said, was Zvi Shor, who started the foundation in 1991 after losing a son to leukemia. The court papers said Mr. Shor, who ran a construction and plumbing business, had paid himself $595,000 in salary and $600,000 in deferred compensation from 2009 to 2013, along with the promise of a lifetime pension of more than $100,000 a year.

The petition illustrated some of the difficulties of regulating nonprofit organizations, a responsibility that falls to the attorney general’s charities bureau. New York State does not have a law making charities fraud a crime, and criminal prosecutions usually involve larceny, embezzlement or tax fraud.

The foundation’s telephone number has been disconnected, and calls to Mr. Shor’s personal line went unanswered on Monday. Mr. Shor’s lawyer, Douglas Gross, said that he had not seen the petition but that Mr. Shor denied any wrongdoing.

“We do not believe that any of the attorney general’s allegations have any substance,” Mr. Gross said. “Mr. Shor began this charity and ran it with the best of intentions.”

Mr. Shor’s title was president of the foundation until 2010, when, the court papers said, he “nominally resigned that position” after it became known that he had been convicted of bank fraud in 1999.

The court papers said Yehuda Gutwein, the foundation’s accountant, became president but Mr. Shor continued to control the decision-making. Mr. Shor remained so much in charge, the court papers said, that Mr. Gutwein did not know who the foundation’s directors were. When lawyers from the charities bureau handed him a list of the directors, he said he had “no idea who these people are.”

Mr. Gutwein, reached for comment on Monday, said his lawyer would be in touch.

The petition said Mr. Shor admitted to investigators that the foundation never had a registry for bone marrow donors. The court papers said the foundation’s activities about bone marrow work “were limited to him encouraging callers to become donors, and referring people to their local blood bank.”

Mr. Shor also claimed the foundation was “banking stem cells” in liquid nitrogen at extremely cold temperatures, the petition said. But he told investigators that the foundation had never collected or stored what is known as cord blood.

The petition said that when Mr. Gutwein became president, Shlomo Donn, who had spent his entire career working for Mr. Gutwein, became the foundation’s accountant. The court papers said that Mr. Donn repeatedly signed financial forms that must be filed with the attorney general’s charities bureau every year, but did no audits.

A call seeking comment on Monday was answered by Mr. Donn’s wife, who said he was not at home and could not be reached.

The petition said the foundation had transferred $655,000 to an Israeli organization that Mr. Shor set up, supposedly for research. Some of the money went to one medical researcher there, the petition said, but the foundation did not provide records showing how much.

In 2012, Mr. Shor and his wife at the time, Susan Gardin, who also worked for the foundation, delivered a PowerPoint presentation in London that showed a building in Israel labeled “Biomedical Cancer Research Center.” But Mr. Shor later told investigators the lettering had been superimposed on the photograph. Ms. Gardin was quoted in the petition as saying that the Israeli organization had bought part of one floor in the building, not the entire building.

The petition also said the foundation had paid for more than $30,000 in personal expenses for Mr. Shor, including $16,615 for gasoline and tolls and $9,000 for supplies used to renovate his house.