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Kids charity worker turns whistleblower

News Channel 8
Published:   |   Updated: March 19, 2013 at 01:52 PM
HOLIDAY -

Meanda Dubay said she started gathering information about the charity where she worked because she thought something wasn't right — about its fundraising methods, its contracting practices, and reports it sent to the Internal Revenue Service.

The charity, Kids Wish Network, learned of Dubay's snooping and notified authorities. The allegation: Dubay was stealing proprietary information via computer to set up her own charity for granting the wishes of sick and dying children.

The FBI confirms a cybercrimes investigation is under way and that it involves a former employee. The agency would not comment further.

However the investigation turns out, the charity already has corrected errors in its 2010 and 2009 IRS filings after Dubay noted payments were missing.

Kids Wish Network, a $20 million a year operation that says it helped 73,200 children last year, neglected to mention it paid nearly $1.7 million over two years to for-profit companies headed by Mark Breiner, its own founder and former president.

"I did try to appeal to the board to do an investigation to see if indeed there is a conflict of interest," Dubay said in an interview.

The omission was not intentional, but a clerical mistake overlooked by management and the charity's outside accountants, said Anna Lanzatella, executive director of Kids Wish Network, in an email response to questions from News Channel 8.

"There are no penalties for this kind of error," Lanzatella said.

But failure to disclose payments to Breiner's companies could raise questions by the IRS, said Professor John Jewell, who heads the accountancy program at University of South Florida St. Petersburg.

"The clerical aspect seems dubious," Jewell said.

The payments to businesses Briener headed came to light in a four-page letter Dubay emailed the charity's board Jan. 3. She attached 26 pages of documents to support her wide-ranging concerns about Kids Wish Network operations.

Dubay was fired that day, after six months on the job and two weeks after the charity first went to authorities with its suspicions about her.

"I lost a job I really, really loved to try and make sure people are doing the right thing," said Dubay, a 34-year-old wife and mother of three who made $11 an hour as a "wish granter." "I would do it again to make sure people know exactly what is going on."

 

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Dubay said she first became concerned when the mother of a child with cancer rejected an offer from Kids Wish Network because of what she had learned about the charity's finances.

Of the $20 million Kids Wish Network reported in revenue last year, $15.7 million came through campaigns by outside fundraising companies. However, only 12 cents of each dollar they collected went for granting wishes, buying gift cards and distributing toys.

The fundraisers, including telemarketing companies, kept the rest.

Kids Wish Network does offer an online donation option, called the "Guardian Angel Fund," where 100 percent of contributions go to the charity's programs.

There are few if any limits under federal law on how much a tax-exempt charity such as Kids Wish can spend to raise money.

"That kind of raised a huge red flag for me," Dubay said. "So I started keeping my eyes open."

Shortly after Dubay detailed her concerns to the board, the charity's accountants sent the IRS an amended 2010 report, this one including the payments of $692,000 to two fundraising companies operated by Mark Breiner.

Then Tuesday, Kids Wish Network released an amended IRS report for 2009 showing it paid an additional $993,000 to one of those companies, United Charities International. Breiner served as both Kids Wish president and co-managing partner of United Charities in 2009.

Kids Wish Network says in the 2009 amended report that the payment to United Charities International was left out "due to an oversight due to the transitioning of and change in executive directors."

Breiner, 54, founded Kids Wish Network in Oldsmar 15 years ago with his wife Shelley and her mother, Barbara Askin. Breiner left his $130,000 a year job as the charity's president in 2009 to become a professional fundraising consultant, specializing in sweepstakes giveaways of expensive race cars.

The contract between Kids Wish Network and consultant Breiner includes an addendum signed by his mother-in-law, Askin, still an executive with the charity and its second-highest paid employee. She receives $84,000 a year in salary and benefits; executive director Lanzatella gets $95,000.

Lanzatella signed the five-year contract, agreeing to pay $100,000 a year to Breiner's company, Amerasource Inc., for consulting. It's not clear what arrangement the charity had with the other company with which Breiner is associated, United Charities International. United Charities received $592,771 in "licensing fees" from Kids Wish Network, the amended IRS filing says.

Breiner's dual role as founder of Kids Wish Network and now a professional fundraiser for the charity raises questions for Jewell with USF St. Petersburg.

"I believe those types of relationships should cause you to scratch your head and say, 'Well, is that a legitimate relationship or does that person have so much influence over the Kids Wish Network that they're able to receive an above-market fee for the fundraiser?' " said Jewell, a CPA and a lawyer with expertise on nonprofits.

Daniel Borochoff runs the industry watchdog group Charity Watch and has given Kids Wish Network a grade of "F" for years because of its financial practices.

"You're telling me there's not a better fundraiser to use that they must use their former founder that used to work there," Borochoff said. "It doesn't smell well."

Ken Berger runs Charity Navigator, another watchdog organization that gives Kids Wish Network low ratings, one star out of four. Berger said the practice of having relatives conducting nonprofit business with each other is something every charity should avoid.

"For the average donor, it's worrisome," Berger said.

Breiner would not agree to an interview with News Channel 8 but sent responses to written questions.

He said he left Kids Wish Network and joined the for-profit United Charities International "in response to the difficulties faced by charitable organizations in today's economic climate."

United Charities International works hand-in-hand with Amerasource, he said. The two companies share offices in Clearwater.

 

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Long before employee Meanda Dubay brought her concerns to Kids Wish Network, the charity was drawing criticism from watchdog groups in the nonprofit industry.

"If what she was saying is true, I think she reported it to the wrong parties," Jewell said. "It's kind of like the three little pigs reporting to the wolf board, so to speak. They're better off seeking independent advice."

Berger at Charity Navigator said Kids Wish Network stands out among the nonprofits it monitors: "Their fundraising is way off the industry standard."

Breiner's response to the criticism: Watchdog groups get it all wrong.

"Your presumption that a charity can be determined to be 'good or bad' based on fundraising ratios is misguided," he said. "The achievement of a charity's purpose for existence is not even factored into the fundraising ratio you measure them by."

The public should ignore criticism of the Kids Wish Network's finances, he said, and focus instead on all the children whose lives the group has helped. "I believe this is a great example of how business in America should work," Breiner said.

He also said there's nothing improper about the sweepstakes he runs to benefit Kids Wish Network.

"Your inference of a quid-pro-quo, cozy insider relationship and conflict of interest couldn't be further from reality," Breiner writes. "We are doing them a favor, not the reverse."

Meanda Dubay presented a different view of the operation in her letter to the Kids Wish Network board. Her goal in bringing up the concerns, she said, was to help the charity, not sink it.

"The last thing that I want is for this organization to close or anything like that," Dubay said. "That doesn't benefit anybody, but changes will."


mdouglas@wfla.com (727)709-2753

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