Investment Fraud Found in Many Non-Profits
Within the last five years, more than 1,000 non-profit organizations have been tainted by fraud, embezzlement and related misconduct, resulting in losses of at least $250,000 each.
This is the result of a recent Washington Post study based on analysis of tax filings.
The non-profits all indicated “significant diversion of funds” on their tax filings, revealing losses such as theft or embezzlement-related diversion of funds.
According to the report, over the last decade, the 10 non-profits that suffered the most sustained $500 million combined losses. Many of these organizations were harmed by Bernie Madoff’s Ponzi scheme.
The report claims that many of the non-profit fraud schemes were run by individuals within the organization. In one flagrant case, people working within the Conference on Jewish Material Claims against Germany stole tens of millions of dollars that were supposed to go to Holocaust victims.
Prior to 2008, non-profit organizations were not required to disclose these losses. But new regulations require them to check the “significant diversion of funds” box on tax forms and provide a detailed explanation of what the losses entail.
Non-profit fraud is likely more widespread than the study indicates. The report only focuses on incidents of fraud within organizations that chose to disclose it.
Starr Austen & Miller, LLP has a team of investment fraud lawyers who handle diverse securities fraud cases.