Nebraska Nonprofit Accused of ‘Fiscal Train Wreck’ Amidst Scathing Financial Misconduct Allegations - fundsforNGOs

Nebraska State Auditor Mike Foley has issued a blistering report detailing alleged financial misconduct and mismanagement at the Karen Society, a nonprofit dedicated to assisting refugees and immigrants from Burma. The audit claims nearly all government grant funding received by the organization has been spent improperly, leading to serious concerns about accountability and the use of public funds.

Key Takeaways

Nearly 99% of government grant funding is alleged to have been misspent.
"Deliberate and ongoing pattern of monetary mismanagement and abuse" cited by the State Auditor.
Issues include duplicate billing, poor record-keeping, and failure to file tax documents.
Documentation has been turned over to the county attorney’s office.

Allegations of Widespread Misspending

Nebraska Auditor Mike Foley’s report paints a grim picture of the Karen Society’s financial practices. According to the audit, an astonishing 99% of all government grant funding the nonprofit receives is being spent improperly. Foley described the situation as a "fiscal train wreck and disgrace in terms of financial accountability," stating that the organization appears to be "misspending just about every dollar they touch."

Specific Financial Irregularities

The audit uncovered a range of concerning financial activities. These include:

Billing the same expense multiple times to different grants.
Maintaining "sloppy" record-keeping.
Failing to file necessary tax documents for the past two years.
Allegations of circumventing federal record-keeping requirements by classifying individuals, including the executive director, as independent contractors.
The executive director reportedly logged over 1,300 hours for the nonprofit while also employed full-time elsewhere, amounting to over $23,000 in wages.
Unexplained expenditures totaling nearly $100,000, including $18,000 to a PayPal account, $10,000 for a mortgage payment, and $14,649 through Western Union.

Peculiar Property Ownership and Questionable Expenditures

Further raising red flags, the nonprofit’s Lincoln office appears to be titled in the name of the executive director, with the Karen Society covering the mortgage payments. Auditor Foley deemed this arrangement "highly peculiar."

The report also highlighted expenditures that Foley characterized as nonsensical, such as using public funds to translate brochures on preparing for hurricanes and tropical storms for refugees in Nebraska, a region not typically prone to such weather events. Foley called this decision "pure idiocy."

Legal Ramifications and Lack of Response

In light of the findings, Auditor Foley has turned over the relevant documentation to the county attorney’s office, indicating the potential for criminal charges. The Karen Society did not respond to requests for comment from news outlets.

The audit, which covered a nonprofit that has been operating for 15 years and serves refugees and immigrants from Burma, emphasizes a "deliberate and ongoing pattern of monetary mismanagement and abuse" that Foley believes demands immediate attention from law enforcement. He concluded that the situation is an "affront to taxpayers" and must be stopped.