Settlement With Albany Not-for-profits
New York State Attorney General Spitzer today announced an agreement with two Albany-area not-for-profit corporations and their executive director to reform the corporations' structures, separate their finances, enhance board oversight, and ensure compliance with restrictions on charitable entities.
Today's agreement concludes the Attorney General&'s investigation of the New York State Sheriffs' Association, Inc. (the "Sheriffs' Association"), a trade association for county sheriffs, and the New York State Sheriffs' Association Institute, Inc. (the "Sheriffs' Institute"), a charity created to provide law enforcement education, and their Executive Director and Counsel, Peter Kehoe.
Unlike the Sheriffs' Association, the Sheriffs' Institute was incorporated as a tax-exempt charity. The Attorney General's investigation revealed that, under Kehoe's management, the Sheriffs' Association and the Sheriffs' Institute failed to observe the distinct obligations of their different legal statuses and instead operated without any meaningful separation. The groups commingled finances and shared assets and expenses, such as employees and office space, without properly allocating costs between the entities. In addition, the Attorney General's Office found that the Sheriffs' Association and the Sheriffs' Institute jointly sought donations from the public through misleading solicitations that appeared to be written on behalf of county sheriffs in their official capacities.
The Attorney General's Office also discovered that the Sheriffs' Association and the Sheriffs' Institute had entered into marketing agreements with three vendors that provide services to New York counties. Although the Sheriffs' Association and the Sheriffs' Institute earned more than $400,000 annually under these agreements and urged counties to contract with these vendors, they repeatedly did not disclose that, in exchange for marketing the vendors'services, the Sheriffs' Association and the Sheriffs' Institute received a share of the revenues each vendor earned from each county.
The agreement with the Attorney General requires separation of the Sheriffs' Institute and the Sheriffs' Association. Among other things, they must separate their boards and finances. The Sheriffs' Association must pay the Sheriffs' Institute $450,000 to compensate the charity for use of previously shared assets, and they must cease sharing office space, management employees, accountants, and bookkeepers. Kehoe shall no longer be employed by the Sheriffs' Institute, but may be employed the Sheriffs' Association. The entities also must use accurate solicitation letters and make necessary disclosures to county officials about any marketing agreements into which they enter. In addition, the boards of directors of both entities shall have increased responsibility for ensuring accurate books and records.
The agreement further requires that the Sheriffs' Institute and Sheriffs' Association retain an independent monitor who will have access to all their records, employees, officers, and outside accountants to ensure compliance with the agreement and who will report annually to the Attorney General's Office.
The investigation was conducted by Assistant Attorneys General Monica J. Stamm and Timothy B. Lennon under the supervision of Carrie H. Cohen, Chief of the Public Integrity Unit, Gerald A. Rosenberg, Chief of the Charities Bureau, and Marty J. Mack, Deputy Attorney General.
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