Whistleblowers in Court – Shriners: Part 12
Mon Dec 25, 2006 1:57 PM ES
news, whistleblowers, shriners
Editor's Note: I became interested in whistleblowers after interviewing and writing a public affairs feature about John W. Dean, the White House lawyer who helped blow the whistle on the Watergate scandal that drove Richard Nixon from office. Thirty years later, I am still telling the stories of those who risk all as they stand up to wrong doing by alleging crime and corruption. For attempting to doing so, Shriners have been ignored, thrown out, and sued. It’s now time for them to be heard instead of silenced.
To some, whistleblowers are heroes of conscience.
The movie “Silkwood”s tagline reads: “On November 13, 1974, Karen Silkwood, an employee of a nuclear facility, left to meet with a reporter from the New York Times. She never got there.” Karen Silkwood, portrayed by Meryl Streep, was “a metallurgy worker at a plutonium processing plant who was purposefully contaminated, psychologically tortured and possibly murdered to prevent her from exposing blatant worker safety violations at the plant.”
“Serpico” tells the story of a former New York City police officer who reported several of his fellow officers for bribery and related charges. He is the first officer to testify against police corruption.
Jeffrey Wigand, former executive of Brown & Williamson, is known as the man who blew the whistle on Big Tobacco after he revealed that executives knew that cigarettes were addictive and that they added carcinogenic ingredients. He almost single-handedly revealed the health dangers of smoking to the public as he exposed his company's practice of intentionally manipulating the effect of nicotine in cigarettes on the CBS news program "60 Minutes."
Sherron Watkins, the former Vice President of Enron Corporation who alerted then-CEO Ken Lay in August 2001 to accounting irregularities within the company, warning him that Enron "might implode in a wave of accounting scandals" was joined by Cynthia Cooper of Worldcom and Coleen Rowley of the FBI, who later outlined the agency's slow action prior to the September 11, 2001 attacks as they were selected as Time's "People of the Year" in 2002.
To others, whistleblowers are viewed as traitors; as troublemakers who must be punished, made examples of and silenced.
This seems to be the pattern experienced by Shriners who ask questions like:
“Where does all the money go?”
“How much is spent on each Imperial Potentate’s travel allowance?”
“Why are there no cash deposits after Bingo games?”
“Why are divan leaders threatening their nobles with having their dues cards revoked if they send letters and emails about the potentates who abuse their positions of leadership when they threaten their nobles with actions only for the purpose of trying to scare them into submission?”
Or submit complaints to legal authorities about:
“The alleged falsification of a Shrine Temple’s financial documents in order to obtain matching funds, the illegal use of those charitable funds obtained and diversion of those charitable funds from their intended purpose.” This is from a letter to the Governor of Texas after his state’s assistant Attorney General, who represented the Charitable Trusts Section, “declined further involvement in this matter.”
In most cases, the questions and allegations are generally ignored. If they persist, the Shriner whistleblower, as in the case of Vernon Hill, gets kicked off committees after his Potentate was advised by the Imperial Council’s executive VP “Enclosed please find a letter received today from one of your nobles. I am forwarding this to you for whatever action you deem appropriate.”
In other cases, the whistleblower is subjected to Article 8 or disciplinary hearings and, according to one charged with un-Shrine like behavior a decade ago, “was denied witnesses” and other due process because “Shrine Law does not include the law of the land.”
In the case of whistleblowers Hill and Paul Dolnier, an accountant with a Master’s in taxation and a former IRS agent who ran the online “Charity Watch Center,” both were sued for defamation by the Shriners on September 1, 2006.
Hill began working with Dolnier two years ago to review the tax returns of some of the 191 Shrine temples, the Imperial Council and Shriners Hospitals for Children. Dolnier began asking questions on his website such as:
“Why does the group collect MILLIONS of dollars in charitable funds yearly and turns over any where from 10% to 40% to the Shriners Hospital for Children and they seem to keep the rest of the funds for non-exempt and non charitable uses such as excess travel, entertainment, conventions and parties?”
Hill has questioned the Shrine leadership the past five years and after being “stone walled” and in his own words “retaliated against,” has been an outspoken critic of how Shrine leadership doesn’t seem to take crime and corruption seriously or do anything to clean it up.
The Shrine Treasurers minutes online transcripts at http://www.shrinetreasurers.org/ include the Shrine leadership openly discussing sexual harassment lawsuits, Potentate credit card fraud and other crime such as $1 million lost from bingo. According to the minutes, only 19 per cent of the cases are prosecuted because they “don’t want to see their names in the newspapers and don’t want the bad PR.”
“How can they sue us for asking questions and for suggesting that they might be under investigation by state charity investigators after Paul presented his findings to officials from Pennsylvania?” Hill asked. “They do more to incriminate and defame themselves in their own treasurers meetings.”
Allegations of Shriner crime are nothing new. Twenty years ago, whistleblowers reported a Shrine Circus ticket scam to Florida authorities. The Orlando Sentinel wrote a series of award winning investigative articles that exposed a pattern of perks, real estate loans between the charity and executives and employees as well as other irregularities. It has also been learned that the Shriners hired a lobbyist in 2005 to lobby against the Sarbanes Oxley Act. The mortgages and lobbying must be repoorted to the IRS but no such information can be found on the Shriners’ tax returns.
Today, though, it is illegal for a profit or non profit corporation to retaliate against whistleblowers. According to Independent Sector and BoardSource, two non profit policy groups:
“The Sarbanes Oxley Act provides protections for whistleblowers and imposes criminal penalties for actions taken in retaliation against those who report suspected illegal activities in an organization. It is illegal for any entity – for-profit and non profit alike – to punish the whistleblowers in any manner.”
The act was designed to prevent corporate white collar crime and corruption but also, according to the article “Sarbanes Oxley and Social Clubs and Other Tax-Exempt Organizations” by James J. Reilly that was published March, 2005 in the CPA Journal Online, a publication of the New York State Society of CPAs:
“Because SOA is central to the management of publicly traded companies, it is reasonable for such officers and directors to consider its application to social clubs.”
Reilly suggests that social clubs and other tax exempt organizations modify their corporate governance to include audit committees, internal controls designed to disclose material information to the groups officers, directors and key employees, conflict of interest policies, prohibition of loans, audit partner rotation, separate audit and consulting providers, whistleblower protection and record retention.
Back to the defamation lawsuit.
Dolnier said that he could not afford to hire an attorney so he answered the summons by himself. Or “Pro se.” Florida law requires that defendants be represented by an attorney and Dolnier states that he didn’t know he was not supposed to file his answer himself.
On December 13, 2006, Judge Charlene Honeywell of the Thirteenth Judicial Circuit of Hillsborough County, Florida, granted the Shriners’ motion to strike Dolnier’s pro se answer and also granted the motion for entry of default for monetary damages against the Charity Watch Center. It is believed that this is the first legal victory for the Shriners against a “civilian” or non-Shriner whistleblower.
According to a statement released by the Charity Watch Center:
" Although we lost our battle in court due to our lack of finding a pro-bono lawyer to represent us, the legal costs were estimated at $ 350,000.00 or more. We feel we have won because the information is now out there. More people, both inside and outside of the organization, are asking questions and demanding full financial accountability, and we will NOT stop fighting until we convince the US Congress to change the IRS Tax Code to require all IRS 501 (c) (10) organizations to FULLY document all public charity money collected and fully document exactly where and how much money to sent to IRS 501 (c) (3) public charities as is REQUIRED by the tax law, otherwise they risk the LOSS of their tax exempt status We feel due to this organization’s previous problems in the 1980's and their continued problems in these current cases of significant financial irregularities, that IRS should reclassify them to a IRS 501 (c) (7) which is a Social Club, that status more clearly reflects the operations of this organization based on what we have found in our exhaustive two year investigation.”
Attempts to reach Shriners' attorney, Donovan Conwell, Jr, have been unsuccessful and phone calls to him remain unanswered.
On October 16, 2006, Hill's attorney, David M. Snyder, filed a Motion to Dismiss based on Limited Appearance challenging Jurisdiction. No hearing has been set to argue this motion.
“Attorneys have suggested to me that there is a real possibility for a ‘whistleblower retaliation’ lawsuit against the Shriners,” Hill said. “I’ve asked the questions, like the others, because we care about the kids, the donors and members. Why should anyone be kept in the dark and this information be so secret? What I want to know is if things are above board, why won’t anyone just answer the questions?”
(1) According to the latest restated Articles of Incorporation filed with Iowa's Secretary of State by the Shriners Temple fraternal group:
"The objects and purposes of this corporation and business to be transacted by it are to maintain, control, conduct and superintend any and all charities, benevolences and hospitals now established, maintained and controlled by the Imperial council and to create and maintain a charitable and educational fund for the purchase, erection, operation and maintenance of Shriners Hospitals for Children."
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