Materials for Thursday's sessions for state officials are available at NASCOnet's members area. Login is required.
Charities Primer
Charities 101: Overview of basic aspects a regulator needs to know before conducting a charity fraud investigation: the historical context for AG’s authority, in the first instance, to investigate; sources of jurisdiction; the vocabulary of the substantive field; the players in the nonprofit and regulatory sectors; and overview of resources and tools.
What is fraud? What is fraud in the charitable sector? Why do we care? Why should we care? This overview session explored how fraud occurs in the charitable sector, how fraud in the charitable sector is different or the same as in other sectors, its impact on the charitable sector, the state Attorney General’s role, and the interrelationship between regulators and the sector.
Introduction: Cindy Lott
Speakers: Belinda Johns, Audrey Alvarado, Scott Harshbarger
This presentation reported on the types of fraud that have been identified in nonprofit organizations and the characteristics of both the victims and the perpetrators of the fraudulent activities. Based on the analysis, the speakers suggested that fraud losses can be prevented or mitigated.
A CPA and two experienced deputy attorneys general focused on what charity fraud looks like within the organization, how it can happen, how such malfeasance gets discovered by Attorneys General, and in general terms, how such offices respond to reported malfeasance, both strategically and through deployment of staff.
With an understanding of the nature of fraud within the charitable sector, how and by whom is the "variety of frauds" best addressed? What are the principal factors that frustrate effective enforcement? What frustrations exist in the charitable sector as it is impacted by fraud and the enforcement regime? What would enhance enforcement and collaborative relationships among regulators and the regulated community?
Speakers: Mark Pacella, Tracy McCurdy, Tim Delaney
The Current Economic Situation and Fraud in the Charitable Sector
Speaker Jack Siegel’s lunch remarks focused on a number of aspects of the Bernard Madoff scandal and the lessons they hold for the nonprofit sector and state charity officials: (i) measuring economic loss; (ii) adequacy of state conflicts-of-interest laws; (iii) required levels of trustee due diligence; (iv) appropriateness of exemptions for small charities and small transactions in charity regulation; (v) adequacy of the response by both state charity regulators and IRS; (vi) appropriateness of certain types of investments; (vii) audit failure and the bias in existing audit standards that potentially undermine the value of audits; (viii) Duty of an institution to sue its trustees; (ix) lessons for charity regulators from the SEC's response; (x) unexpected drawbacks; and (xi) contagion of social networks and their relationship to fraud.
Speaker: Jack Siegel
Education and Prevention Panel
Given the enormity of the problem - and the impact on small and mid-sized charities - what positive steps can Attorneys General and other state offices take with their limited resources? Should AGs focus just upon prosecution of the perpetrators of fraud or the trustees that were lax in their oversight? Should AGs develop a broader strategy to get out in front of the problem? What strategy and result to avoid future Madoff matters?
Speakers: Michael DeLucia, Andras Kosaras, Susan Staricka
Interactions and Cooperation Between Regulators and Regulated Entities
This wrap-up session for the day addressed various methods of and aspects to cooperation and resolution between the regulators and the regulated entities. Such aspects included questions regarding appropriate and strategic use of private counsel at the behest of the attorney general’s office; options for resolution that stop short of full-blown litigation; the potential of arbitration and mediation; from the perspectives of the attorneys general and the sector, the pros and cons of transparency for AG actions and settlements; the desirability of best practices and other guidelines generated by attorneys’ general offices.
Speakers: Karin K. Goldman, Marcus Owens, Betsy Adler
Materials for Saturday's sessions for state officials are available at NASCOnet's members area. Login is required.
Identifying Cases and Principles for Case Selection
Getting Started. Using the expertise of investigators and auditors effectively (and what to do if you have neither) and selecting cases: a discussion of the roles investigators and auditors play and how to identify cases, taking into consideration enforcement priorities and available resources.
Introduction: Cindy Lott
Speaker: Belinda Johns, Richard Schulman, Deena Markowitz, Marybeth Haggerty- Shaw, Anthony Johnstone
Case Triage
AG mission, resources and potential partners in other state and federal agencies.
Speakers: Shannon Smith and Bob Carlson
Documents That Become Evidence
Using an organization’s own filings and internal documents as evidence.
Moderator: Hugh Jones
Speakers: Jack Siegel and Julie Floch
Case Studies
Examples and analysis of a wide variety of fraudulent fundraising, embezzlement, and multi-agency cases, featuring the experiences of a number of officials from different states.
Moderator: Susan Staricka
Speakers: Belinda Johns, Kevin Wells, Elizabeth Grant, Eric Carriker, Sandra Cardone, Anthony Johnstone
