Having noted alleged misbehaviour by Mortenson in the lead-up to a book chapter on trust it is interesting to see Ken Stern's article on 'The Charity Swindle' at A25 in the 26 November 2013 NY Times -
By all outward indications, the U.S. Navy Veterans Association was a leader in the charitable community. Founded in 2002 to provide support to Navy veterans in need, the charity recorded astonishing financial success. In its first eight years, it raised around $100 million in charitable contributions, almost all of it through a direct marketing campaign. The organization, headed by Jack L. Nimitz, boasted of 41 state chapters and some 66,000 members.
This would be a great story of charitable success, except for the fact that virtually everything about the association turned out to be false: no state chapters, no members, no leader with the name redolent of naval history. Instead, there was one guy: a man calling himself Bobby Thompson who worked from a duplex across the street from the Cuesta-Rey cigar factory in the Ybor City neighborhood of Tampa.
But the money raised was real enough, generated by a series of for-profit telemarketers. The victims, by and large, were unsuspecting small-money donors who received urgent solicitations asking for support for needy naval veterans. Most of the money raised stayed with the fund-raisers, though plenty apparently dripped through to Mr. Thompson and a succession of Republican lawmakers who received generous contributions from the association’s political arm. But little ever made it to the intended beneficiaries. In 2010, the scheme was unwound by two reporters for what is now The Tampa Bay Times, but not before Mr. Thompson had fled the state of Florida.
From June 2010, Mr. Thompson was on the run, the search for him hamstrung by the fact that no one had any real idea of who he was. Finally, on April 30, 2012, federal marshals tracked him down in Portland, Ore., finding him with a card to a storage unit containing $981,650 in cash and almost two dozen fake identity cards.
Earlier this month in Ohio, where the charity’s registration documents had been filed, the man arrested as Bobby Thompson was convicted on 23 felony counts, including fraud, theft and money laundering. Authorities have identified him as John Donald Cody, a former Army intelligence officer and Harvard Law graduate.
The most outrageous aspect of the case is that much of what Mr. Cody did was probably legal, or at least not specifically illegal. The principal beneficiaries were always the association’s for-profit fund-raisers. During the trial, one of them, Thomas Berkenbush of Community Support Inc., testified, apparently without fear of legal repercussions, that his company had kept 90 percent of the donations as a fund-raising charge.
That, in and of itself, isn’t criminal. The alleged fraud was not that very, very little money ever went to Navy veterans. In fact, the fund-raising explicitly stated that a large portion of donations would go to cover telemarketing and other costs. Mr. Cody ran afoul of the law because he filed registration documents that contained false statements, because he stole the identity of the real Bobby Thompson, and because he pulled money from organizational accounts for his personal use. The irony is that he could have accomplished virtually his entire enrichment scheme without ever violating the law — and others have figured that out.Thompson is elsewhere reported to have claimed to be a retired Naval commander, to have raised over US$100 million for his 'charity', gained funding from a "black box" CIA budget, and in court filings to have stated that he was working under "non-official cover" for the agency. He became a major Republican donor, reflected in twice having his photo taken with President George W. Bush.
