Above the law? Shriner Treasurers' Minutes, Part 10
Thu Nov 16, 2006
world-news, crime, fraud, theft, alabama, bingo, shriners
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Most would think that the Shriners Treasurers Association Meeting Minutes (STAMM) would record dull and boring presentations from bean counting number lovers.
There are some eye-popping, jaw-dropping little tidbits hidden away in the archives at: http://www.shrinetreasurers.org/minutes.htm
The minutes are in PDF form so you can search, instead of read, the 450 pages to find references to crime, mismanagement, suggestions to disobey the law, shocking financial disclosures, sexual harassment and dirty jokes.
First, let’s take a look at how we got here.
This story began last April after receiving an email from Vernon Hill, a Shriner whistleblower, who’d been working the two years previous with Paul Dolnier, a non-Shriner tax accountant with a Masters Degree in Taxation and three years experience as an IRS Revenue Officer.
Dolnier spent months examining hundreds of pages of 990 tax returns and began asking online questions as he posted the results on his “Charity Watch Center” (CWC) website. He also presented his findings to investigators from Pennsylvania. Discrepancies were allegedly found on the tax returns of the two non profit groups involved; the Shriners Hospitals for Children charity group and the Shriners fraternal group.
The Shriners Hospitals for Children is a 501(c)(3) tax exempt organization that oversees a $9 billion plus endowment to provide free medical care to burned and crippled children through a network of 22 hospitals. The Shriners temple fraternal group is a 501(c)(10) tax exempt organization that oversees the 191 temples who work as a “collection service” for the hospital group.
Before going on, let’s make one thing very clear.
This story is not about the nearly half-a-million fraternal Shriners who want to have fun while supporting the hospitals.
It’s not about the Shriner who rolls out at zero dawn thirty on a Saturday morning to set up for a pancake breakfast.
Or the Shriner who carefully applies his heavy make up and dons his colorful costume and doesn’t care what anyone thinks of a clown driving down the road as he goes to put a smile on the face of a badly burned toddler.
Or the Shriner who drives his goofy little car in local parades.
Or the Shriner who faithfully transports sick or crippled children and their guardians hundreds of miles for free medical treatment at a Shriners hospital.
This story is about those who would silence their "brothers" for asking financial questions. This story is about those who are sworn to uphold the laws of the land, yet, in the face of ongoing temple crime, silently obey Shrine law.
Twenty years ago, the Orlando Sentinel described a similar situation when the newspaper investigated allegations of a Shrine circus ticket scam. The tickets were re-sold so that an estimated $8,000 to $30,000 in charitable proceeds was unaccounted for. It was also reported that two law enforcement officers received complaints about the missing money, but failed to act.
They were also Shriners.
Twenty years later, there are more than just two law enforcement officers aware of Shrine crimes, as the details of which are broadcast worldwide through the online archives of the Shrine Treasurers Association Meeting Minutes. These include current and former state governors, FBI agents, U.S. Marshalls, Judges, Public defenders, District Attorneys, members of state House of Representatives, State Senators, Sheriffs, Police, Assistant Attorney Generals, Supreme Court Judges, Attorneys, CPA’s, bank founders and a retired Insurance Company Chairman.
The common element here is that these Shriners have professional backgrounds that require swearing to or affirming to uphold the laws of the land rather than being selectively silent about Shrine crimes.
The Orlando Sentinel articles also found that most of the circus’ charitable proceeds did not go towards the hospitals but were instead used for entertainment, trips and building maintenance. The investigation also described unusual real estate loans that were made from the charity to executives and employees of both groups; loans that were not reported to the IRS.
Back to Vernon Hill
He spent years volunteering his time for the Sudan Shrine Temple. As he asked more questions, a letter from the group’s corporate offices directed the head of the Sudan Shrine Temple to do what they wanted to him. Hill found himself removed from the Road Runners, the group that drives the sick and crippled children to the hospitals as well as from the temple’s PR committee.
Today, Shriners and non-Shriners are still asking “Where does all the money go?” though they have been expelled or, in the case of Hill and Dolnier, sued for defamation.
In a September 1, 2006 complaint filed with the 13th Judicial Circuit Court of Hillsborough County, Florida, both Shriners tax exempt groups accuse Hill of using emails and the CWC website to “publish false and defamatory information” about the Shriners.
The lawsuit alleges:
“These publications falsely communicate to the public that there are facts which would support the messages that the Plaintiffs are violating the law by not properly using or applying contributed funds; that there is corruption within Shriners which has led to investigations by law enforcement agencies; and that money donated for charitable purposes is being used for non-charitable purposes.”
In contrast, the Shriners Treasurers Association Minutes (STAMM) broadcast temple crimes for all to read, either online or in their Shrine temples.
Credit card fraud of $5,000 by a past Potentate, STAMM, Summer, 2004, pp22
30 temples with crime and fraud, some of them up to $300,000, STAMM, Summer, 2006, pp2
Bingo theft to the tune of $1.2 million, STAMM, Winter, 2005, pp 22
A quick aside about Bingo.
The New York Times ran a story on Tuesday, November 7, 2006 that described how a Cahaba Shrine temple sub-group, the Decatur Shrine Club of Alabama, held bingo games but allegedly failed to obey Shrine law that mandates that 100% of the charitable proceeds go directly to the hospitals. The club’s leader claimed he followed a city ordinance and, instead, sent 51% of the charitable proceeds to corporate.
The Times reported that the Decatur Shrine Club was closed on Sunday, November 5 by Robert Utley, Potentate of the Cahaba Shrine, the regional group that also oversees nearly 20 local Shrine clubs in northern Alabama.
“I guess Shrine law supersedes the city ordinance,” said club member Lucian McCulloch, who was quoted in both the Times article as well as in a story run by the Decatur Daily on Wednesday, November 8, 2006.
Though McCulloch was quoted in both stories, neither newspaper reported that his comments had to have been cleared and approved through the Shrine chain of command. A May, 2006 directive "By Order of the Potentate and in Concurrence with Imperial Shrine," signed by Robert Utley, Potentate, states:
1) No one has the authority to speak outside the Temple to anyone on legal matters of the Temple without permission of the Potentate.
2) No member of any Temple will give interviews to any media without the permission of the Potentate who must know what will be discussed.
3) Members are forbidden from requesting Shrine Unit or Shrine Club records from any source.
4) No one has the authority to contact the Imperial Potentate without first contacting the Potentate with a copy of the signed complaint. If the Potentate refuses to forward the communication, then the member may transmit it directly to the Imperial Potentate. A representative may communicate directly with the Imperial Potentate. (the Imperial Potentate is the head of the Shriners fraternal governing body otherwise known as a divan.)
5) It is also ordered that no Shriner enlist the help of a non-Shriner to get around Shrine law.
6) Anyone conducting an investigation of a Shrine Club or Shrine Unit without the Potentates' permission is hereby ordered to cease and desist.
McCulloch officially spun the story by blaming a former Potentate who “called the Times and Alabama officials, alleging the Decatur Club was stealing. ‘We had one man that shut us down,’ McCulloch said. ‘A former potentate had a vendetta against us. He called this gal at The (New York) Times. He went to (Morgan County District Attorney) Bob Burrell and (Alabama) Attorney General Troy King, saying we were stealing, but no money was ever missing.’”
In what seems to be a case of mixed signals whether the decision to sell was based on the former potentate’s allegations of theft or the discovery that the temple had misappropriated $110,000, Utley made sure the building was locked up until the ultimate decision could be made.
Here, now, are the excerpts from the treasurers’ minutes.
“I can give you a litany of examples where credit cards have been misused at temple level and you know, it’s a hell of a problem when a Potentate owes the temple $5,000 for illegal credit card use or credit card use that was not approved, and he’s going out and is now a Past Potentate. It’s tough to get that money.”
- Cumpstone, executive VP, Shrine fraternal, STAMM, Summer, 2004, pp 22
“I have to tell you that we’re still experiencing theft at temple level. I know you’re tired of hearing me talk about it but we’ve got a lawsuit going on now, looks like about $1.2 million that’s out of bingo. Bingo can be a lot of fun but it’s fraught with all sorts of headaches. So just keep in mind theft, cash particularly at the small temples and even some of the larger ones, where you don’t have cash control, we’re still having theft both by temple employees and by temple officers.”
- Cumpstone, executive VP, Shrine fraternal, STAMM, Winter 2005, pp 22
“Noble Charlie Cumpstone addressed the meeting and repeated his concern about 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.”
- STAMM, Summer, 2006, pp 2
“The last five and a half years, we’ve known in our office eighteen occurrences…There are two in the last fourteen months that we’re aware of…Now of these eighteen situations, I’m only aware of three that have been prosecuted. The reason they don’t is they don’t want their names in the press. They don’t want to give a black eye to the Shrine. They just want to sweep it under the table, release the person and nothing else is done about it.”
- Phillips, Director of Temple Accounting, STAMM, Summer, 2003, pp 21 - 22
Editor's note: If we look at the fact that 3 out of 18 crimes are prosecuted, this equates to a 16% prosecution rate or an 84% crime acceptance rate. Hypothetically, if each incident amounted to $10,000, the total missing would be $180,000, with only $30,000 prosecuted. This means that a loss of $150,000 would be acceptable.
“At the current time, I can tell you what we see in the lists we get from your temples, it would be a disaster. Records are not well kept, not well kept at all.”
- Cumpstone, executive VP, Shrine fraternal, STAMM, Winter, 2005, pp 24
“First of all, the revenues and expenses on our Imperial Council, our fraternity, you’ll look back in 1999, the revenues were $3,628,000; the operating expenses were $3,972,000; and when you see that you’ll notice there’s a difference. We went in the hole some $344,000 back in 1999. Jump over here to 2003 and you can see the situation is really exacerbated there because the revenue was $3,124,000 and expenses were $4,468,000. We went in the hole $1,344,000. That’s down $1,688,000 in two years. You can quickly see why the per capita was so necessary last year to get us out of a situation where in a couple of years we would be pumped financially; and that’s the truth of the matter.”
- Bracewell, Imperial Treasurer, STAMM Winter, 2004, pp 19
Editor’s note: According to this, the Imperial Council admitted that in 2003, they overspent by 143%. In other words, for every dollar taken in, $1.43 was spent. There is no suggestion that the Imperial Council reign spending in; rather, it is suggested that the deficit be paid by raising the members’ per capita payments. Also, there are 14 members on the Imperial Council or an average of $319,142 per member.
Suggestions to minimize or disobey legal requirements:
“Going to the second page (of the IRS tax return form 990), there’s too much work being done, I’m not being over critical, I’m just saying let’s just do the minimum disclosure to the IRS. There’s too much work being done on part 2.” - Phillips, Director of Temple Accounting, STAMM, Winter, 2003, pp 72
“By the way, if someone comes to you with $100,000 or $1,000 or $10.00 and you don’t have the proper forms, take it, write a thank you letter, write another and say when are you going to do it again, Keep taking the money.”
- Semb, Past Imperial Potentate and Chairman of the Hospital Board of Trustees, STAMM, Summer 2004, pp 29
“I was touched one time in Hawaii when they were introducing some of the patients to us. This was before HIPPA (Health Insurance Protection and Accountability Act), to hell with HIPPA, go talk to the children, guys, we’re not going to pay attention to that stuff. I’ll pay your summons if you get a summons, okay? There isn’t anybody out there writing summons. Let’s talk to the children.”
- Semb, Past Imperial Potentate and Chairman of the Hospital Board of Trustees, STAMM, Summer 2005, pp 11
“This morning I spoke with your Recorders about a problem we’ve been having at too many temples recently of sexual harassment. Many of you as Treasurers are not in the office a lot, some of you are, and the problem has really gotten problematic recently because one of our temples is looking at two lawsuits put together that are going to cost them about $160,000 to settle.”
- Cumpstone, executive VP, Shrine fraternal, STAMM, Summer, 2004, pp 21
“Let’s talk a minute about sexual harassment. Laurie Spieler, a lawyer from our staff at headquarters will be over to talk with you about basically sexual harassment. We still have it going on guys, and Laurie is going to put it in nicer terms than I am, but keep your hands off the help. Unfortunately, we see a great deal of it in our temple offices where we’ve got new, younger employees rather than the old girl who used to work there and she’s 65 years old and was happy as hell anybody would touch her.”
- Cumpstone, executive VP, Shrine fraternal, STAMM, Winter 2005, pp 22.
After Laurie Spieler, attorney for Shriners Hospitals for Children, gave a presentation about sexual harassment at the Winter, 2005 Treasurers meeting, she concluded with “Don’t flirt, don’t touch, don’t talk about sex, and don’t joke or comment about body parts…” (pp 67) after which the following was said at the afternoon session:
“Unidentified Noble: What’s the status with Hooters? I understand they used to publish a newspaper and put the Shrine Hospitals in the newspaper and then there was some argument and people said they didn’t want it in there.
Noble Bob Phillips: With Hooters corporation? I’m not aware of any problem…We have no problem with Hooters. Elevator eyes, right? (Laughter)”
- Phillips, Director of Temple Accounting, STAMM, Winter, 2005, pp 85.
And finally, the dirty jokes:
“Boy it’s nice to be with the guys with the money. I’ll tell you. Have any of you gotten crabs, I mean eaten any crabs since you’ve been here (laughter). How many have had crabs since they’ve been here? Boy, that’s good. Blue ointment works great, they tell me.”
- Frevel, Imperial Potentate, STAMM, Summer, 2005, pp 9
“Just a little story about what happened, just one incident, probably the only one we can talk about on the cruise. One night the ladies were tired from the long day in the sun and shopping downtown and they retired early. Our secretary-treasurer, I won’t mention any names, says Bruce why don’t we go up to the casino? I said, well, I’m not a gambling man, really. He said come on, we’ll have fun, they have great slots up there that are lose, blackjack, roulette, we’ll have a lot of fun, we’ll make some money.
I said no, I’m not a gambling man. He said, he’s twisting my arm. I said look, I’m going to go out and smoke my cigar. Here’s $100, get lucky for me. You know, the next morning I’m out on the deck having breakfast and who do I see? I won’t mention his name. I said how you doing? Sleep well? Have a good time at the casino? You remember I gave you $100? Yeah. You said you were going to get lucky for me, was I lucky? He said Bruce you were damn lucky, you got laid.”
- Thompson, President, Shrine Treasurers Association, STAMM, Winter 2004, pp 113
“I went up to the Daughters of the Nile when they were trying to find out if there was a wholesale distributor for oxygen (laughter). You know what’s the similarity between a lady and a screen door? You hear that yesterday? Bang them a few times and they loosen up. (Laughter) Anyway, they were looking for oxygen.”
- Semb, Past Imperial Potentate and Chairman of the Hospital Board of Trustees, STAMM, Summer, 2004, pp 27
In conclusion, the Shriners' oath states:
"...in willful violation whereof I may incur the fearful penalty of having my eyeballs pierced to the center with a three-edged blade, my feet flayed and I will be forced to walk the hot sands upon the sterile shores of the Red Sea, until the flaming sun shall strike me with livid plague, and may Allah the God of Arab, Muslim and Mohammedan, the God of our fathers support me to the entire fulfillment of the same, Amen, Amen, Amen."
It appears that those who uphold this oath and learn about the unprosecuted crimes through the Shrine Treasurers Meeting minutes will be able to do so with both eyes wide open.
The minutes are online at http://www.shrinetreasurers.org/minutes.htm.
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