Tuesday, December 10, 2013
Founded in 2002, the U.S. Navy Veterans Association raised around $100 million in its first eight years, making it a leader in the charitable community. Headed by Jack L. Nimitz, the organization boasted of 41 state chapters and around 66,000 members. The only problem? Nimitz, the state chapters, and the members never existed. Instead there was John Donald Cody, going by the name Bobby Thompson, working from a duplex in Tampa.
Generated by a series of for-profit telemarketers, the money was raised by asking small-money donors to support needy naval veterans. Little money made it to these needy naval veterans, but a whole lot of it stayed with the fundraisers and “Mr. Thompson.”
After two reporters uncovered this scheme, Cody fled but was eventually tracked down by federal marshals who also found a storage unit containing almost a million dollars and almost two dozen fake identity cards. Cody was convicted of 23 felony counts for identity theft, filing false statements, and using organizational money for personal use.
The troubling matter is that most of what Cody did what legal and others have figured it out. The principal beneficiaries were always the for-profit fundraisers, who specifically stated a large portion of donations would go to cover telemarketing and other costs. During Cody’s trial, a fundraiser from Community Support Inc. testified his company kept 90% of the donations.
So this holiday season, donors should look to sources like Givewell to find organizations with a track record of effectiveness before giving their money away.
See Ken Stern, The Charity Swindle, The New York Times, Nov. 25, 2013.
Special thanks to Adam J. Hirsch (Professor of Law, University of San Diego School of Law) for bringing this article to my attention.