Twenty years ago, the Orlando Sentinel discovered that for two years, complaints of Shrine Circus ticket fraud fell on deaf ears until a Florida State Attorney decided to check things out. He found incestuous law enforcement, political, and economic relationships that lent themselves to a possible cover-up. After the ticket scam was finally “investigated” by secret Shrine committees, the offending Temple was “reprimanded” by having a letter of censure read to the members.
Though the drums of “fundraising reform” banged loudly, two decades later crime and fraud still plague the Shrine’s temples. At the last meeting of the Shriners Treasurers Association, officers admitted to knowing about crimes and fraud before the semi-annual gathering of those in charge of keeping the books.
The solution? Public relations was suggested as the weapon of choice instead of thorough investigations, independent audits or informing law enforcement officials.
According to the minutes (1) of a July 2, 2006 business meeting of the Shriners Treasurers’ Association, then Vice President of the Shrine fraternal corporation, Charles Cumpstone:
“addressed the meeting and repeated his concern abut Cash Control. That subject is becoming an increasingly common problem among several Shrine Temples. Over 30 Temples have discovered fraud in their Divan this year, some of them up to $300,000.”
Cumpstone’s “repeated concern” about the crimes failed to suggest that he or his successor, Michael Andrews, would launch an internal investigation, would ask the Temple leaders investigate or audit or that he would report the crimes to state and federal law enforcement agencies.
Cumpstone’s replacement, Michael Andrews, according to the same minutes:
“addressed the audience with emphasis on doing proper Fund Raising and being prepared to respond to the Media and public questions. Because of constant scrutiny by the Media and others, it is now more important than ever to do our fund-raising strictly according to the policies and procedures established by Shrine headquarters. Also, he strongly suggested that each Shrine Temple and organization appoint one person to be the official spokesperson when discussing Shrine business with the Media and public.”
In contrast to Andrews suggesting that the Shrine Temples rely on PR to deal with the fraud questions, he, like Cumpstone, failed to include the possibilities of internal investigations, audits or reporting the crimes to law enforcement authorities. Additionally, he emphasized that the fund raising be conducted according to the policies and procedures established by Shrine HQ but failed to include compliance with state and federal non profit rules and regulations.
As of October 27, 2006 at 11:06 pm, the minutes were available at:
Twenty years ago, Andrews was in a similar position as Shrine Public Relations Director.
The Orlando Sentinel began investigating the Shriners after learning about a Circus ticket scam that was reported to officials who did nothing. From an August 2, 1985 Orlando Sentinel article “Circus Ticket Hocus Pocus was Ignored, Sources Say”:
“Orange County’s convention center director excused the possible disappearance of thousands of dollars in ticket proceeds from a 1983 Shrine circus without investigating the event…Several sources have said a Shrine audit indicated that between $8,000 and $30,000 in ticket proceeds could have been stolen during the run of the circus at the Orange County Convention and Civic Center on April 22 and 23, 1983…When members of the Bahia Shrine Temple told convention center director Tom Sewell that they suspected a ticket scam within their ranks and offered to repay the county, he chose to do nothing, sources said…Sewell was appointed early this week to be acting administrator of Orange County…Had Sewell investigated, the Orlando law firm of Gray, Harris and Robinson could have been in a peculiar and possibly embarrassing situation. At the time, the firm represented the civic center and their Orange County Commission, and a senior partner, Gordon “Stumpy” Harris was the potentate, or head, of the Bahia Shrine Temple…The Shrine contract Harris helped draft was one of a kind for the civic center. In a letter Sewell wrote in January, 1984 to the Shriners, he explained:
‘The standard policy of the Orange County Convention and Civic Center is to require all shows to use and pay for ticket takers employed by the center. ‘A one-time only exception was made for the 1983 Bahai Temple Circus. The exception was made because Harris was the potentate of the temple and also legal counsel for the center.’
Shriners who worked as ticket takers at the civic center said they were instructed not to rip tickets in half and the used tickets were brought up to the civic center’s ticket booth, which was also staffed by Shriners, and there the ticket sellers were instructed to resell the used tickets first, the sources said. Instead of a computer printout on the ticket sales, or an affidavit, the civic center received from the Shriners pieces of paper with the number of tickets taken scrawled in pencil and pen.”
This prompted State Attorney Robert Eagan to investigate. He said that two law enforcement officers, Seminole County Sheriff John Polk, 53, and Polk County State Attorney Jerry Hill, 38, ‘should have reported it at the time and that they are under the same obligations as any other citizen to report a crime. Polk and Hill were both Shriners…Although a violation of state law might have been involved, the Shriners bylaws dictated that the possible fraud be handled internally and secretly.”
Following this, authorities in Minnesota, Ohio, Oklahoma, New York and Massachusetts took a look at the group’s fundraising practices and the General Accounting Office was asked to “probe tax-exempt” reports.
In response, the Shriners announced fund raising guidelines for temples and according to an October 28, 1986 AP story:
“Tampa Fla. – The Shriners have agreed to a new set of fund raising guidelines after a newspaper reported that less than one-third of the money raised by the fraternal organization each year goes to its charities. A list of 10 recommendations was unanimously adopted Monday by the Shriners board at a quarterly meeting, according to a news release. The standards ‘are intended to assure the public that information on Shriners fund-raising activities is sufficient to easily identify those activities which benefit the Temples and those which benefit Shriners Hospitals,’ said Mike Andrews, Shriners public relations director.”
It appears that after twenty years, some of the Temples have yet to learn about the “new set” of fund-raising guidelines. On 10/10/06, a team of auditors from Shrine headquarters spent the morning at the Cahaba Shrine in Alabama to investigate allegations of Bingo theft that were supposedly reported to the group’s leadership three years ago. To date, Willard Fawcett, Shrine comptroller, has yet to respond to questions about the matter.
On May 10, 2006, Robert Utley, Potentate of Alabama’s Cahaba Shrine, released a gag order that states:
“It is directed that no member of the Cahaba Temple will conduct an interview with a TV station, radio or newspaper or any other organization, without written approval of the Potentate, and he must know the subject matter that will be discussed. Thank you for your cooperation, Robert Utley, Potentate.”
The Orlando Sentinel investigation found more than fundraising irregularities. The paper was able to obtain only 343 of 685 forms that should have been filed with the IRS during 1982, 1983 and 1984. The newspaper had to rely on the IRS documents because the Shriners “declined to make the information available.”
The investigation found:
1) In 1984, Shrine hospitals got only 1% of the Shrine circuses charitable funds
2) Shrine Board directors got free trips, jewels and uniforms
3) Imperial Potentate’s relatives went on trips
4) The Imperial Potentate spent $146,000 on travel with $93,263 coming from the board and $53,000 from the hospital charity
5) A board member received $20,000 in expenses for working 4 hours a week or nearly $100 hr.
6) Imperial Potentate received $63,600 for working 20 hours a week or $60 hr.
7) $1 million in charity went to staff home loans
From the Orlando Sentinel article “$1 Million in Charity went to Shrine Staff for Home Loans” published August 3, 1986:
“The Shrine of North America gave 13 employees about $1 million in low-interest loans from funds donated by the public to the Shrine’s hospitals for crippled and burned children…Shriners said they consider the loans to be perks that are no different from the financial assistance provided by many (for) profit corporations encouraging key personnel to relocate. Because the loans were provided substantially below prevailing interest rates they represent a potential savings of tens of thousands of dollars to the Shrine employees who got them…A national expert on charities, Elizabeth Doherty, director of the Philanthropic Advisory Service Council of the Better Business Bureaus, said short term location loans by charities occur but the employees usually must pay the loan back within two or three years.
Doherty said she has never heard of a charity giving a 30-year-term low interest to an employee. “In fact, I have never seen a mortgage given to an employee by a charity at all,” she said.
Frank Driscoll, a spokesman for the National Charities Information Bureau in New York, also called long term loans unusual. “I have never seen that amount of money loaned by any one organization” he said.
Doherty said if her organization reviewed such a loan, it would ask “Is this the way a donor wants their money used? We’d ask how involved the board was in making the loans.
Detailed information about the $1.25 million loaned to Shrine employees is not included in the Shrine’s annual reports…Shrine employees receiving loans included the administrator of the Shriners fraternity, the administrator of the hospital charity, two attorneys, two medical record keepers, four data processors, an insurance specialist, a comptroller and a former hospital administrator…The only public record of the loans are mortgage deeds in the Hillsborough and Pinellas county courthouses.”
An online search of Hillsborough County documents show that Charles Cumpstone had three mortgages from the Shriners Hospitals for Children, dated 7/25/79, 10/5/79 and 2/16/84. Two of the mortgages were satisfied just six years later, one of which named Lewis K. Molnar, COO of Shriners Hospitals, as co-grantor with the Shriners Hospitals.
Other Hillsborough County documents show that in 1998, 1999, 2001, 2002 and 2003, employee mortgages with Shriners Hospitals for Children were satisfied but were not disclosed on their tax forms to the IRS.
Since it appears that, after twenty years, both the Shriners fraternal corporation and the Shriners Hospitals for Children lack of effective internal controls and oversight has resulted in self-admitted fraud and crime, this and the possiblity of years of incomplete tax returns, has been shared with the proper authorities.
(1) From the website http://www.shrinetreasurers.org/ :
“The Shrine Treasurers Association of North America is an Association of the Treasurers of the 191 Shrine Temples throughout North America. Sixty Six Shrine Treasurers signed up for the business meeting which featured reports by the Shrine’s new Executive Vice President, Mike Andrews, and his outgoing counterpart, Charlie Cumpstone.”
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