Sweetwater Reporter (Sweetwater, Tex.), Vol. 113, No. 246, Ed. 1 Wednesday, August 31, 2011 Page: 8 of 12
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Page 8 ■ Wednesday, August 31, 2011
Sweetwater Reporter
AP IMPACT: Some 9/11
charities failed miserably
BRETT J. BLACKLEDGE
The Associated Press
DAVID B. CARUSO
The Associated Press
NEW YORK (AP) — Americans eager to give after
the 9/11 terrorist attacks poured $1.5 billion into hun-
dreds of charities established to serve the victims, their
families and their memories. But a decade later, an
Associated Press investigation shows that many of those
nonprofits have failed miserably.
lere are those that spent huge sums on themselves,
those that cannot account for the money they received,
those that have few results to show for their spend-
ing and those that have yet to file required income tax
returns. Yet many of the charities continue to raise
money in the name of Sept. 11.
One charity raised more than $700,000 for a giant
memorial quilt, but there is no quilt. Another raised
more than $4 million to help victims, but didn't account
publicly for how it spent all of the money. A third helps
support a 9/11 flag sold by the founder's for-profit com-
pany.
There are other charities that can account for practi-
cally every penny raised — except that all the money
went to pay for fundraising, and not the intended mis-
sion.
To be sure, most of the 325 charities identified by the
AP followed the rules, accounted fully for their expendi-
tures and closed after fulfilling identified goals
There have been charities to assist ill and dying first
responders, to help families of the dead, to help survi-
vors and to honor the memory of victims. And there are
charities that revolve around the flag, patriotism, motor-
cycle rallies and memorials of all sizes and shapes
But in virtually every category of 9/11 lonprofit, an
AP analysis of tax documents and other official records
uncovered schemes beset with shady dealings, question-
able expenses and dubious inten ions. Many of those
still raising money are small, founded by people with no
experience running a nonprofit.
— The Arizona-based charity that raised $713,000 for
a 9/11 memorial quilt promised it would be big enough
to cover 25 football fields, but there are only several
hundred decorated sheets packed in boxes at a storage
unit.
One-third of the money raised went to the charity's
founder and 'elatives, according to :ax records and
interviews. The chairman of the board, an 84-year-old
Roman Catholic priest, says he didn't know he was
chairman and thought that only small amounts of
money had been raised He says he was unaware that
the founder had given himself a $200 per week car
allowance, rent reimbursement and a $45,000 payment
for an unreported loan.
— There's a charity for a 9/11 Garden of Forgiveness
a t the World Trade Center site — only there's no Garden
of Forgiveness. The Rev. Lyndon Harris, who founded
the Sacred City nonprofit in 2005, spent the months fol-
lowing 9/11 at ground zero helping victims, relatives and
first responders. He said he formed the charity to fulfill
"our sacred oath" to build the garden. Tax records show
the charity has raised $200,000, and that the Episcopal
priest paii himself $126,530 in salary and used another
$3,562 for dining expenses between 2005 and 2007.
Harris said he sees his charity's work as a success even
if there is 110 garden at the site. "I saw our mission as
teaching about forgiveness," he said.
— Another Manhattan 9/11 charity, Urban Life
Ministries, raised more than $4 million to help victims
and first responders. But the group only accounted for
about $670,000 on its tax forms. Along with almost
four dozen other 9/11 charities, Urban Life lost its IRS
tax-exempt status this year because it failed to show how
money was collected and spent.
— The Flag of Honor Fund, a Connecticu charity,
raised nearly $140,000 to promote a memorial flag hon-
oring 9/11 victims. The flag, which contains the name of
every person killed on Sept. 11, 2001, is on sale today at
Wal-Mart and other retail stores. But only a tiny fraction
of the money from those sales goes 0 9/1 charities,
with most going to retail stores, the flag maker and a
for-profit business — run by the man who created the
flag charity.
Tl AP examined charities that received tax-exempt
status from the Internal Revenue Service by promis-
ing to serve victims of the 9/1 tragedy, buil memori-
als or do other charitable works in honor of the dead.
The charities were identified using data maintained by
Guidestar, a private database of nonprofits that the IRS
recommends
The $1.5 billion donated to these charities was in addi-
tion the billions spent by Congress and states and
established nonprofits like the Red Cross.
Most of the c 11 charities fulfilled their missions, but
the AP analysis found dozens that struggled, fell short of
their promises or did more to help their founders than
those affected by the terrorist attacks.
Here are some of their stories:
THE QUILT THAT ISN'T
Kevin Held was earning a living as a self-employed
handyman in Peoria, Ariz., when he formed Stage 1
Productions in 2003 to promote the American Quilt
Memorial honoring the li ves lost on Sept. 11. He said
thousands of indiv (lual pieces would be crafted together
on white, king-sized sheets that, when sewn together,,
would stretch 1V2 miles across an eight-lane highway.
That never happened.
The $713,000 that Held raised from students, school
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fundraising campaigns, T-shirt sales and other dona-
tions is gone. More than $270,000 of that went to Held
and family members, records show.
In a July interview, Held said he hoped to finish the
quilt in a "few months. But he changed his mind a few
weeks after the AP began asking questions, abruptly
shutting the project because of "tough economic times."
Held has done an impressive job raising money,
persuading students to hold "penny drives" and police
officers tc ouy T-shirts promoting the quilt for $20 or
more. But he's spent a lot in doing so.
Since 2004, Held paid himst f $175,000 in salary,
health insurance, other benefits and a weekly car allow-
ance he received for most of that time. He's owed
another $63,820 in deferred salary, according to the
charity's most recent tax filing. Held argues that he's
actually owed closer to $420,000, because he was sup-
posed to receive $60,000 annually since 2003, and has
received far less.
He told the AP in July that more than $50,000 paid in
2005 to satisfy a loan nev er reported by the charity wen1
to his mother to repay "an accumulation of a bunch of
small loans." But when pressed last week — after the AP
Kointed out that his mother died that year — Held said
e paid himself more than $45,000 to repay the loan.
He said he couldn't explain the other $5,000 without
researching it.
He said e paid another $12,000 to his brothers, Dave
and John, as consulting fees.
-ield also charged the charity more than $37,000 for
office rent, utilities and other related expenses, accord-
ing to the group's tax forms. But the addresses reported
by the charity for most years were Held's home and
private mail boxes at PostNet and UPS stores in Arizona
and south Texas.
Held said he received much of the office payments to
cover the cost of working out of his home.
Held spent more than $170,000 on travel since 2004
to promote the quilt. He rarely traveled without his
two Alaskan Malamute dogs, one at 120 pounds and
the other 200 pounds. He also listed $36,691 in credit
card and bank charges since 2005 and $10,460 for an
expense listed as "petty" in 2009,
"I loved going out and traveling/' he said. "I loved
going to the po v departments."
He i acknowledges he struggled managing the char-
ity's finances, but he said he die i't live off the nonprofit.
"If I made a mistake, made a mistake. If I did, then
crucify me. I never said I was a professional at this."
Still, he's come a long way since serving a few days in
a Tampa jail in 1993 for misdemeanor theft and battery.
With his wife, he's moving into a $660,000, five-bed-
room house overlooking ; ake in Chandler, Ariz.
The charity's finances surprised the Rev. Jude Duffy,
identified in the charity's tax filings as board chairman.
He said he had no idea that Hi d had collected more
than $713,000 for the charity until the AP showed him
the documents
Duffy, who lives in St. Lawrence Friary in Beacon,
N.Y., said he became suspicious several years ago after
Held created a new fundraising project without finish-
ing the quilt. The latest project — Operation Adopt-a-
So ier — promises st udents postcards and posters that
they can send to soldiers in Iraq and Afghanistan if each
class will send Held up to $40.
"Is this some kind o ;cam?" Duffy said he asked Held
in an email. "Are you playing on the emotion of the
people with this?"
Held responded the he was insulted by the sugges-
tion and assured Duffy that he would finish the quilt
project.
"As we look at it today," Duffy said, "certainly it seems
to be that we were duped entirely by whatever he had
in mind. I don't know what that is. But I would call it a
scam or a clever scheme."
Even Held's story of how the quilt project started is
suspect.
For years, he claimed he had come up with the idea
for a student-led national tribute after hearing that
Dominique Deal, a family friend's high school daughter,
crafted her own memorial on a bed sheet.
But she says that story isn't true
"I think he wanted people to think I came up with
it. But I just helped," said the woman, now Dominique
Greer, 25, and married in Peoria, Ariz. "I guess he
thought it would be weird to say he started it."
-fi i now admits he made up the story because he
didn't want to receive credit.
He insists he has accounted for every dime spent by
the charity, even if he can't justify all the expenses.
"It doesn't mean I'm a ba person," Held said. "It just
means I made a mistake."
MINISTER'S MILLIONS
Urban Life Ministries, based in a church not far from
the World Trade Center site, is one of many 9/11 chari-
ties that have caught the attention of the IRS because
it failed to file annual tax returns. The AP review found
other issues as well.
The charity's creator, the Rev. Carl Keyes, said that in
the initial month after the 9/11 attacks the group raised
more than $4 million with the help of a Christian televi-
sion station telethon. All of that money, he said, went to
cover the costs of counseling, feeding and caring for 9/11
victims, first responders and workers at grouni zero.
'There were plenty of things to do to ease the suffering
of the people," Keyes said.
But there's no way to know how Keyes used donations
raised to do that.
The only tax return available from Guidestar — for the
2001 tax year — lists just $670,000 raised foi his relief
work. The New York Attorney General's office said it
didn't receive the required filings from the charity after
2001. The IRS withdrew the charity's tax-exempt status
in June for failing to file annual returns.
Keyes, an Assemblies of God minister, acknowledged
that the nonprofit did not file taxes for all years.
Keyes has not responded to AP's requests to explain
how "the money raised was spent; some of the informa-
tion he did provide conflicted with the 2001 return.
For example, Keyes said in the initial interview that
he never received a salary from his charity. But the 2001
tax filing reported that he spent $89,500 on compensa-
tion to charity directors, including $31,600 paid to him-
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self and his wife in the nonprofit's first months.
Keyes and his wife also received salaries from Glad
Tidings Ta bernacle, their New York City church. A large
amount of the charity's money went to Keyes' church
The nonprofit group gave the church a $23,855 loan and
had leases to pay it $192,000 a year in rent, according to
financial statements filed in New York.
Keyes said he set up a branch of his charity on the Gulf
Coast after Hurricane Katrina devastated the area in
2005, putting his brother-in-law, Mark Jones, in charge.
But it's not ear how much money was raised and spent
because Keyes has not filed the necessary tax statements
with the IRS.
Jones estimated that at least $800,000 was spent by
the charity for lie Mississippi projects. Jones helped
oversee rebuilding and renovations to more than 100
homes, which he said cost between $7,000 and $12,000
each.
Keyes said he knows his charity has not filed all the
required disclosures. "We're not very good at that," he
said.
But he said he hoped the nonprofit's efforts in response
to 9/11 and Katrina wouldn't be tainted by his lack of
accounting.
"You're going to beat me up in an article because we're
bad managers?" Keyes said.
FOR-PROFIT FLAG
At first glance, the Flag of Honor/Flag of Heroes
Project looks like any other charity doing philanthropy
in the name of 9/11. But people who have bought one of
its flags might be surprised to learn that nearly all the
Sroceeds have gone to the charity founder's for-profit
ag company, not 9/11 victims.
IRS es generally prohibit the resources of a non-
profit group from being used to promote a for-profit
product.
John Michelotti of Greenwich, Conn., the charity's
founder said one of his goals was to give a framed
copy of his flag, which bears the names of all the dead
em lazoned on the Stars and Stripes to every fa mil that
lost someone in the attacks. He also designed a "Flag of
Heroes" with only the names of fallen firefighters and
law enforcement personnel.
"The more the flags are out there, the more these
people live, the more they are remembered," he said.
Documents filed with the state of Connecticut explain
that part of the fund's mission is to create "a national
people's memorial" by urging corporations "to hang the
Flag of Honor artwork prominently in all of their busi-
ness locations." In some IRS filings, the charity said its
purpose was to sell the memoria lag.
During the last nine years, Michelotti said, he has sold
or given away almost 300,000 banners and posters of
the Flag of Honor. The project's website lists 10 non-
profit groups as beneficiaries of the flag sales, including
the Boy Scouts, a food bank in Oregon and a Manhattan
church that narrowly escaped being destroyed in the
attacks.
But in an AP interview, Michelotti acknowledged that
his for-profit business, BIE LLC, has donated no more
than $15,000 to 9/11 charities.
VIost of the charities listed as beneficiaries were actu-
ally BIE customers that urchased flags to resell during
their own fundraising efforts.
For example Michelotti imported flags from China
for about $5 each, he said. The Exchange Group chapter
in Salem, Ore., bought about 4,000 flags from his for-
profit company to use in a patriotic display for about $7
each, then sold them for $25. About $75,000 was raised
for several causes, including the Oregon National Guard
Emergency Relief Fund, but none of the money came
out 0 Michelotti's cut.
Michelotti's charity collected $139,332 in donations
and other revenue from 2003 to 2009, but it only gave
away framed copies of the flag to the families of between
200 and 350 victims of the terror attacks.
Tax returns filed by the group don't list any donations
to 9/11 victims or the groups that serve them
In interviews with the AP, Michelotti said he has never
tried to mislead anyone about the nature of his busi-
ness. "I never tell people, 'Your money is going into a
nonprofit,™ he said.
He contended the 10 beneficiaries were listed on the
company's website merely to show that some nonprofit
groups have used the flag in their events, not to indicate
that they are getting a cut of the profits.
"I'm not getting 1 e feedback that people are confused
by it," he said.
Some people have gotten the wrong idea, though.
When "Today" show lost Hoda Kotb promoted he
flag on national television in 2009, she described the
project as "a contribution fund to elp those that were
affected."
Several 9/11 organizations have embraced his prod-
uct The flag is s at the National Sept. 11 Memorial
and Museum, and online by Voices of Sept. 11, a leading
victims' advocacy group
Annin Flag Makers, the nation's largest and oldest
flag company, also recently signed on to the project. The
company said it shipped 170,000 of the flags this sum-
mer to stores nationwide, including Walmart.
Under Michelotti's deal with Annin, some money from
flag sales will go to charities regularly for the first time
hut it won't be much. Ten percent of the wholesale rev-
enue will be split among the Wounded Warriors Project,
the National Sept. 11 Memorial and Museum, Voices of
9/11 — and Michelotti's Flag of Honor charity, according
to Annin's marketing material.
Michelotti and Annin declined to disclose how much
of a licensing fee he will receive or how much retailers
are paying for the flag. But if it is close to the $7 whole-
sale price Michelotti charged previously, roughly 70
cents of a $20 retail purchase would go to charity.
The remaining profit would go to the flag maker, the
retailer, and Michelotti's for-profit company.
Asked if he thought the Flag of Honor Fund had
crossed the firewall between a charity and a for-profit
company, Michelotti said, "One bleeds into the other
for me," and then added: "It probably helps, because we
have good will, but it doesn't elp financially."
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MAKING SENSE OF INVESTING
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Sweetwater Reporter (Sweetwater, Tex.), Vol. 113, No. 246, Ed. 1 Wednesday, August 31, 2011, newspaper, August 31, 2011; Sweetwater, Texas. (https://texashistory.unt.edu/ark:/67531/metapth229552/m1/8/: accessed July 15, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting Sweetwater/Nolan County City-County Library.