Philanthropists and charities should protect themselves against fraud schemes to ensure that donated money is truly benefiting good causes. Fraudsters don't discriminate, which places the most trusted nonprofits at risk. The most benign-sounding organization could be funding a white-collar criminal's summer home - or even terrorism. Here's information that all fraud examiners need.
Similar to the legitimate Make-A-Wish Foundation, Kidwish USA claimed to grant last wishes for terminally ill children by collecting money from philanthropic donors. However, Kidwish was a fraud. The phony organization used photos of children from the brochures of genuine charities for their own advertisements to wring millions of dollars out of unsuspecting donors and didn't grant a single child's wish. Michael Manzer and Richard Carbonaro, who with their cohorts organized the sham charity in New York and other states, both were convicted of mail fraud and money laundering charges and sentenced to prison for two years and fined $5,000 each. Kidwish USA is one of the few questionable charities to result in criminal charges, prosecutors said.1
There's no prototypical fraudster - no common physical features or economic status. Anyone can fit the profile and those who work for charities, donate to them, and run these humanitarian organizations are no exception. Most victims are shocked to find out that the individual who committed the fraud is someone like them - someone they trusted and never suspected. Case in point: Jacquelyn Allen-MacGregor, former vice president of finance for the United Way, an employee of 20 years who was caught stealing $2 million from the organization by writing checks to herself and forging officers' names. Investigators found that she was using the money to purchase expensive quarter horses. In June 2003, the court sentenced Allen-MacGregor to four years in prison and ordered her to pay $2.08 million in restitution.2