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SANDY FROST
Online investigative journalist, author "Shriners' Shame"
Articles Posted: 85; Links Seeded: 242
Member Since: 6/2006Last Seen: 11/26/2009
Member Since: 6/2006Last Seen: 11/26/2009
22 Comments
PrintInternal Shriner Report Confirms Corruption?
News Type: Event — Fri Jul 18, 2008 2:13 AM EDT
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Editor's Note: Updated with timeline on July 21, 2008.
Sandy Frost, Starbucks, WA
A confidential "Interim Report of the Special Investigative Committee of the Joint Boards of Shriners Hospitals for Children" describes how immediate past potentate Bernard Lemieux appointed a committee to investigate the conduct of Shriner leaders, Ralph Semb, Chairman of the Shriners Hospitals for Children Board of Trustees and Gene Bracewell, Imperial Treasurer Shriners International Imperial Divan. The report was leaked online at Wikileaks.com and can be found here.
The April 10, 2008 document describes how Lemieux appointed committee members on September 20, 2007 to "inquire whether Semb and Bracewell engaged in unethical conduct by intervening in the executive evaluation process (the so called 360 degree review) of Edgar McGonigal, Director of Development of SHC during the year 2007."
It is believed that this is the first time that an Imperial Potentate has appointed such a committee to investigate allegations that top Shriner leaders behaved unethically.
The report reveals how Semb and Bracewell pushed hard for continued contracts with one specific fund-raising company, Vantage Direct Marketing Services. Vantage raised over $46 million between 1999 and 2003 on behalf of SHC with only $2.5 million going to the hospitals.
In other words, if someone donated $100 during these campaigns, $95 was kept by Vantage with only $5 going to the hospitals.
Bracewell admitted to committee and board members that he got at least one free trip from Vantage in 2007.
The report suggests that Semb retaliated against McGonigal, who opposed Vantage contracts, by unilaterally firing him on October 31, 2006 without first consulting the joint boards or HR.
The report suggests that both Semb and Bracewell were attempting to accomplish their purpose by using subterfuge rather than by directly making their views known by "compromising the 360 degree review process in an unprecedented way." The committee reported that Semb and Bracewell contacted confidential employment reviewers in an effort to further retaliate against McGonigal by having him removed for poor job performance. This was done after executive vice president James Full allegedly violated employment confidentiality to "in part, avoid a confrontation with Mr. Semb."
The report also describes how the committee was suspended by an unrecorded action of the joint boards in executive session on November 2, 2007. After the investigation was reinstated on January 26, 2008, it was expanded to include events surrounding the resignation of controller, Willard Fawcett.
The report describes how Fawcett alleged "improper reimbursement of expenses that did not further the exempt purposes of SHC and contracts that were not in the best interests of SHC and may have involved self-interest on the part of members of the Joint Boards."
"Of greater concern," the report explains "is Mr. Fawcett's allegation (which we emphasize is unsubstantiated at this time) that the 2006 Form 990 may include improper reporting of certain items, and that the form was executed by Mr. Semb notwithstanding the identification by Mr. Fawcett of irregularities in the return."
The committee members also described how headquarters personnel worked under the threat of being fired in a culture of fear if they did not bend to the wills of leaders like Semb and Bracewell.
The committee recommended that:
* Semb and Bracewell be reprimanded for violating both SHC and AAONMS Code of Ethics.
* Deloitte and Touche be hired for forensic accounting.
* Records be reviewed to correct or recover improper reimbursements.
* The Conflict of Interest Policy and Bylaws be amended to designate a full time member of the legal department for conflict of interest compliance.
* The SHC bylaws be amended to "debar from business with SHC any entity that provides or offers any gifts, gratuities or favors to any member of the joint boards, any officer or senior executive."
* SHC provide a whistle blower hotline or other program so employees, senior executives, trustees or directors can report suspected incidents, corporate wrong doing, conflict of interest, violations of corporate policy or violations of law.
The report concluded the committee's investigation into the Semb/Bracewell/Vantage conflict of interest matter but stated that Fawcett's allegations required more investigation.
NOTE: The following timeline is based on dates and information provided in the above mentioned Interim Report of the Special Investigative Committee and was added on July 21, 2008. Some dates are based on month and year only per the report.
July 18, 1997 Joint Boards and SHC adopt conflict of interest policy.
June, 1999 Vantage Direct Marketing Services enters into fundraising contract with SHC.
October 2003 Henry Lewis and senior executives of Vantage DMS face criminal charges in Postal Service proceedings and settle after paying a fine of $4.5 million w/out admission of guilt by Vantage or its executives.
December 2003 Contract w/Vantage terminated due to "unsatisfactory business relationship" because return from the direct mail campaign was very low with Vantage raising $46,155,104 and SHC receiving only 5.4% or $2,514,694. Vantage paid fees in addition to 93.9% profit.
September, 2004 Edgar McGonigal hired as corporate Director of Development.
May, 2006 Gene Bracewell arranges meeting w/Ralph Semb and McGonigal in Boston to hear a direct marketing proposal at Vantage Travel HQ. Proposal features names of Vantage DMS and Convergence.
June 21, 2006 Convergence submits proposal to SHC for direct mail marketing services.
August, 2006 Imperial Divan retreat where Bracewell urges approval of the Convergence proposal. One of the participants raises concerns about Convergence's relationship to Vantage Travel or DMS and raises improper relationships with Vantage. Bracewell reacts angrily and accuses McGonigal of leaking details. No minutes taken at this meeting, in violation of AAONMS and SHC by-laws.
October 31, 2006 Semb attempts to terminate McGonigal for poor performance in advance of joint board meeting.
November, 2006 Joint Boards meeting.
November 27, 2006 Semb and Bracewell meet with McGonigal for a performance review.
December, 2006 According to committee interviews, Bracewell is still in contact with representatives of both Vantage and Convergence. "Bracewell was concerned because several members of the joint boards were taking what he characterized as 'free trips' with Vantage Travel and that they should not be taking free trips from people they would not do business with."
April 2007 Bracewell, John Cinotto and four other members of the Joint Board take a cruise arranged by Vantage Travel. Bracewell and Cinotto attend a presentation arranged by Vantage Travel. Presentation was by MCS Direct, a direct mail solicitation firm who is pursuing a vendor relationship with SHC. Cinotto is chairman of the Development Committee.
April, 2007 Joint Boards meeting where Bracewell makes a motion to award McGonigal the raise that was denied to him in November 2006. McGonigal gets salary increase retroactive to January 1, 2007.
April 18, 2007 Conflict of Interest Policy amended to include "A conflict of interest is deemed to exist whenever any director, trustee, officer or employee accepts gifts, gratuities or other favors from any individual or entity that does or is seeking to do business with SHC..."
April 22, 2007 Semb and Bracewell execute disclosure statements in which they indicate that they were aware of no conflicts of interest within the meaning of the amended policy.
May 14, 2007 Representatives from MCS and PEP Direct make marketing presentation to Semb, Bracewell, Cinotto and McGonigal. McGonigal reports that he has discovered an apparent joint venture between MCS Direct and Vantage DMS, per the Vantage website. "Bracewell was upset by mention if this issue and terminated the conversation."
May 15, 2007 McGonigal sends Bracewell an email that points out that MCS proposal would cost more and did not compare to current arrangement w/current vendor, Barton Cotton.
June 2007 Executive VP James Full begins the 360 degree review process for senior execs at SHC, including McGonigal.
September 7, 2007 Semb contacts Full and requests that Robert Cotner, Director of Development at Chicago SHC and William Austin, Director of Development at Tampa SHC be included as reviewers of McGonigal's performance. Full regarded this as unusual, in that the identities of individuals providing reviews are intended to be confidential and Semb could not have known who would be designated for this purpose. Semb did not explain the reason for this request…Full acknowledged the request and did submit an evaluation form to Austin, in part to avoid confrontation with Semb.
September 20, 2007 Imperial Potentate Bernard Lemieux appoints committee to investigate Semb and Bracewell for "unethical behavior."
November, 2007 Cinotto reports a meeting w/Semb in his office at SHC and learned that both Semb and Bracewell had communicated w/Lewis of Vantage DMS and that Vantage was prepared to offer whatever was necessary to buy out SHC's obligations to Barton Cotton. Cinotto rejects idea as he believes Semb and Bracewell have a particular interest in Vantage. Semb and Bracewell deny having discussions w/Lewis other than to hear Lewis is going to make a "major gift" to SHC, but gift never materializes.
November 2, 2007 Bracewell secretly tape records his interview with Special Committee.
November 8, 2007 Investigation suspended by an unrecorded action of the Joint Boards in Executive Session.
November, 2007 Bracewell admits to members of Joint Boards that he taped his November 2 interview w/the Special Committee.
November 27, 2007 Full issues McGonigal's performance appraisal, stating good results in fundraising results but needs to improve interpersonal skills.
January 17, 2008 Controller Willard Fawcett resigns/retires after 25 years.
January 26, 2008 Special committee reinstated by joint boards.
March 25, 2008 Semb interviewed by Special Committee and is asked about the circumstances concerning the 2006 990. Semb says he did not recollect signing the form because he signs so many. Semb denies receiving a letter from Fawcett detailing any concerns about the form and denies having a conversation w/Fawcett in which he suggested falsifying any information on the Form 990. Semb expresses view that "all of the direct marketing programs behave in unethical manners to attract business."
March 27, 2008 Fawcett's attorney states that his client has information concerning the following matters: failure to report benefits as income (presumably reimbursement of personal, non-business expenses that should have been reported on either Form W-2 or form 1099-MISC and Form 990) and business transactions not in the best interests of SHC (presumably involving conflict of interest or private benefit or inurement).
April 2, 2008 Bracewell interviewed by Special Committee and indicates he is unaware of any issues concerning his expenses and that he believes he has adequately documented all expenses reimbursed by SHC. He admits he 'took free passage."
April 10, 2008 Interim Report issued by Special Committee.
All copies of material reprinted or duplicated from "by Sandy Frost" must include the following credit line: From http://sandyfrost.newsvine.com/ Copyright © 2008 by Sandy Frost. Used by permission.
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3.7
{"commentId":2220915,"authorDomain":"uncleandy"}
Very interesting article Sandy. Great job.
{"commentId":2220915,"threadId":"315131","contentId":"1675553","authorDomain":"uncleandy"}
- 1 vote
#1 - Fri Jul 18, 2008 8:01 AM EDT{"commentId":2232513,"authorDomain":"SandyFrost"}
{"commentId":2233714,"authorDomain":"uncleandy"}
Aeria Gloris Sandy Frost, those whom you speak of, they will be taken into custody and tried soon enough. No one should worry so much about the suffering of these bloaks; for this is the mason way. I will tell you this, it is not so much about the money, dollars and cents (gold in any language), as it where as any suffering that was needlessly set upon the children who were place in the care of the shiner's hospital. If needless suffering is discovered, there will be no escape from the torment the masons will bring upon those who choose to usurp the calling of our existence. That is the factual purpose, the way of the masons and has been since the order was founded. I have no idea if you believe in the myths or the present reality of Masonic lodges whom make of the shiners, however, if you do happen to drive by a building bearing the square and the compass consider this; there may actually be people in this world who do concern themselves with social justice. A person of very high tolerance to ignorance and self indulgences however, has no mercy for those who profit on the innocent. This is no secret mind you; it is just a simple fact. All people who enter the lodge of the masons are dutifully warned of the dangers of crossing the order. If any of these persons have done so, they know the consequence.
{"commentId":2233714,"threadId":"315131","contentId":"1675553","authorDomain":"uncleandy"}
- 1 vote
{"commentId":2243964,"authorDomain":"SandyFrost"}
{"commentId":2221264,"authorDomain":"keggerlord-1"}
So we're talking about a $43.5M charity swindle, and the major networks aren't covering this... why? I would think this kind of story would grab some serious headlines, particularly since Shriners are considered as a charity very worth the donation, given the results of their effort.
Then again, we are talking about a bunch of grown men in fez's, but still....
{"commentId":2221264,"threadId":"315131","contentId":"1675553","authorDomain":"keggerlord-1"}
- 1 vote
#2 - Fri Jul 18, 2008 9:21 AM EDT{"commentId":2232521,"authorDomain":"SandyFrost"}
{"commentId":2279768,"authorDomain":"lmehaffey"}
Sounds to me like the Shriners have taken responsible action to address and correct a serious problem...no different than any other large enterprise. Where there's money, there's human greed - the Shriner organization can hardly (at least, not fairly) be held up as criminals for the actions of one, two, or teven wo dozen of their members...not as long as they step up and deal with the members rather than cover up their malfeasance. Oh, and for the record: I am not a Shriner, although I am a Freemason.
{"commentId":2279768,"threadId":"315131","contentId":"1675553","authorDomain":"lmehaffey"}
- 1 vote
{"commentId":2286083,"authorDomain":"SandyFrost"}
{"commentId":2230972,"authorDomain":"honestabe2005"}
$46,000,000 Million collected and only $2.5 Million going to the Shriners Hospitals.
What the hell is going on? Why haven't the Shriners demanded the FBIl to investigate FRAUD, CORRUPTION, and have the thieves locked up, unless of course they are afraid more will
be exposed and maybe the truth will finally come out. Ms. Frost has written stories on
"Shriners Whistleblowers" being threatened, sued, thrown out for asking questions on
Financial Accountability. It seems that they paid the price to want the public to know the real
truth regarding how their money is used, abused and never going to the Hospitals. Be assured
that I will no longer give them any money nor support them. Keep exposing them Ms. Frost.
I will be printing this and sending it to the IRS and FBI.
{"commentId":2230972,"threadId":"315131","contentId":"1675553","authorDomain":"honestabe2005"}
- 1 vote
#3 - Sat Jul 19, 2008 1:40 PM EDT{"commentId":2232637,"authorDomain":"SandyFrost"}
Thank you, The Lone Ranger. I sense your frustration. There are many others who feel the same way that you do. I can't fathom a non profit group run by Machiavellian men who seem to hide behind burned and crippled children with their own hands out. There is something about corruption that is just so wrong. There is something horrifyingly ugly about exploiting burned and crippled children, to include conducting clinical studies that violated FDA and Office of Human Research Protection regulations. From where I sit, the Shriners are nothing more than an oligarchy where men buy their pretend positions of leadership to perpetuate the illusion that the members are doing so much good when the fraternity contributes around 2%. For all the red flags these past two years, there have been findings, each more shocking. And that is sad. No one knows the times I've sat here and shaken my head and thought "I didn't think it could get any worse." And it does.
The saddest part is listening to those dedicated Shriners who wanted to clean things up and reported the crimes. Instead, they have all been retaliated against in viciously vengeful ways. I guess that is why the Shrine Law doesn't include the law of the land because some of these guys are clearly acting as if they are above the law.
Sooner or later, the Shriners will need to fully comply with the highest standards of non profit transparency, disclosure and accountability. If not, they may pay the ultimate price for those leaders acted in their own best interest and not in the best interest of the children.
Thank you,
Sandy
{"commentId":2232637,"threadId":"315131","contentId":"1675553","authorDomain":"SandyFrost"}
- 1 vote
#4 - Sat Jul 19, 2008 6:34 PM EDT{"commentId":2236043,"authorDomain":"shrinerswife"}
Go get them Sandy! I am a shriners wife and I'm sick of all this. I hate to think I've been out there raising money for years and the children are not getting the profit and instead padding pockets of pompous "leaders". I hope the other children's charities out there are not doing the same thing. I would love to see where all the money I've helped raise has gone. I know I can't get in trouble for speaking my mind but I know my husband could and that is sad.
{"commentId":2236043,"threadId":"315131","contentId":"1675553","authorDomain":"shrinerswife"}
- 1 vote
#5 - Sun Jul 20, 2008 10:15 AM EDT{"commentId":2241870,"authorDomain":"SandyFrost"}
{"commentId":2240846,"authorDomain":"b-young1932"}
Go get them Sandy. I was a victim of their breaking of shrine laws. The worm has turned and I will be most happy when the rotten leaders are tried in a civil court of law. I cannot imagine why all of the Nobles are not in arms and demanding justice. How sickening it is to know that $46 million was donated and only $2.5 million reached the hospital. What a rip off. The US Treasure fell millions short as most of the donations were tax deductible.
{"commentId":2240846,"threadId":"315131","contentId":"1675553","authorDomain":"b-young1932"}
#6 - Mon Jul 21, 2008 1:10 AM EDT{"commentId":2240877,"authorDomain":"b-young1932"}
What a rip off by the Shrine! $46 million raised. $2.5 million actually got to the hospitals. Taxpayers should be enraged as well as ALL nobles that work so hard for the children. This means that about $46 million could have been used as tax deductions and $2.5 million went to the hospital. Where is the IRS and the Senate Finance Committee? The US Treasury was cheated out of many millions.
{"commentId":2240877,"threadId":"315131","contentId":"1675553","authorDomain":"b-young1932"}
- 1 vote
#7 - Mon Jul 21, 2008 1:17 AM EDT{"commentId":2241923,"authorDomain":"SandyFrost"}
Bill 220736,
True, but what this really points to is a lack of oversight. There seems to be a huge cultural clash between those "good old boys" and the corporate executives who are trying to run the corporation according to the laws of the land and not Shrine law.
Oversight by law enforcement is no way to run a charity.
Thanks,
Sandy
{"commentId":2241923,"threadId":"315131","contentId":"1675553","authorDomain":"SandyFrost"}
- 1 vote
#8 - Mon Jul 21, 2008 9:01 AM EDT{"commentId":2287065,"authorDomain":"mlmcguire"}
Sandy it sounds like you carry a bit of grudge or ill feelings towards the Shriners.
Tell me how many little children have you visited in a Shriner's Hospital.And can you you highlight a single child or family from among millions that have been helped deeply by the Shriners and Masons?
I don't think throwing the baby out with the bath water is constructive .
The Shriners will take care of the Mis doers and will continue to help millions of more little ones and famlies.
Michael in Vorginia
{"commentId":2287065,"threadId":"315131","contentId":"1675553","authorDomain":"mlmcguire"}
- 1 vote
#9 - Sat Jul 26, 2008 2:26 PM EDT{"commentId":2288622,"authorDomain":"SandyFrost"}
{"commentId":2287152,"authorDomain":"mlmcguire"}
I happened to stumble on this site by accident while researching another subject.
But,it seems it's just another whipping post site and jump on the bandwagon.
Before we were here and after we are gone the Shriners and Masons will continue a noble and charitable work.
There is no charge to any child or family for medical services at a Shriners Hospital.The Eye foundation,The Burn Center or any other medical facility. I think this in iteself is worthy of praise. To try and discredit them because of one or two does wrong is like saying since one or two journalists
told a lie or fabricated a story or portrayed a story in a bias way we should close the doors to all newspapers and close our ears tom all news people.
{"commentId":2287152,"threadId":"315131","contentId":"1675553","authorDomain":"mlmcguire"}
#10 - Sat Jul 26, 2008 2:37 PM EDT{"commentId":2288643,"authorDomain":"SandyFrost"}
{"commentId":2305127,"authorDomain":"gapch13"}
Ralph Semb lives in MA. and Gene Bracewell in GA. I've looked for articles in newspapers concerning this story and have found NOTHING!!! These deeds are an INSULT to everyone associated w/ the organization. Hopefully through this web site and others, the news will be brought to national attention.
Keep up the great work!!
{"commentId":2305127,"threadId":"315131","contentId":"1675553","authorDomain":"gapch13"}
- 1 vote
#11 - Mon Jul 28, 2008 9:38 PM EDT{"commentId":2313975,"authorDomain":"SandyFrost"}
{"commentId":6255765,"authorDomain":"noles2u-1"}
The Shrine has 880k members who in turn have incredible influence at all levels - frankly, I will be surprised if this messy situation ever sees the glaring spotlight it so richly deserves. I have received many negative looks when I refuse to contribute to a Shriner soliciting funds "for the crippled and burned children". Your work is impressive. Please continue the good fight.
{"commentId":6255765,"threadId":"315131","contentId":"1675553","authorDomain":"noles2u-1"}
- 1 vote
#12 - Tue Mar 31, 2009 10:46 PM EDT{"commentId":6257624,"authorDomain":"SandyFrost"}
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