A.G. Schneiderman Announces $4.3 Million Settlement With Former Leaders Of New York City-Based Charity Over Misuse Of Funds

Investigation Concludes Homeland Foundation, Inc.’s Former President and Trustees Misused Funds, Gave Away Millions Of Dollars To Organizations Closely Connected To Trustees

Ex-President Elizabeth Wyckoff Admits Taking Over $700,000 For Personal Benefit

Schneiderman: Charitable Dollars Are Not Personal Piggy Banks For Trustees

NEW YORK -- Attorney General Eric T. Schneiderman today announced that the former trustees of the Homeland Foundation, Inc. (“Homeland”) have agreed to the findings of the Attorney General’s investigation into the trustees’ repeated failures to properly administer millions of dollars of charitable assets entrusted to their care. The Attorney General determined that, among other breaches of their fiduciary duties, the former trustees issued at least $4.25 million dollars in grants, beyond what they were authorized to spend. In issuing the improper $4.25 million in grants, the trustees failed to follow their obligation to make grants in any one year not to exceed 5% of the total value of Homeland’s cash and investments, as required by the organization’s charter.

Many of the grants authorized by the trustees, including E. Lisk Wyckoff, Homeland’s president during most of the period of the investigation, went to organizations closely connected to Wyckoff and his wife Elizabeth, or to other trustees—for example, $1.5 million to private schools attended by the Wyckoffs’ children, and $4.5 million to schools that Wyckoff himself had attended. No allegations were made that recipients of Homeland’s donations committed any wrongdoing.

“The use of charitable assets for personal gain is both deplorable and illegal,” said Attorney General Schneiderman. “When individuals charged with advancing a charitable mission instead treat a charity’s assets as a personal piggybank, my office will hold them accountable.”

As described in the assurance of discontinuance signed by the former trustees, their spending was not only improper; it was reckless. During the period of the investigation, as the trustees spent far beyond their 5% limitation on questionable donations, the underlying value of Homeland’s accounts was sharply deteriorating: from $39.8 in 2006 to $17.4 million in 2011. 

The trustees have agreed to repay Homeland a total of $4,378,828 to cover the misappropriated funds. Repayment includes $701,328 that Elizabeth Wyckoff improperly took from Homeland exclusively for her personal benefit, once she became Homeland’s president in December 2012, upon the death of her husband. (Lisk Wyckoff had been president since 1989.) 

Shortly after her husband’s death, Mrs. Wyckoff abused her position as president by releasing $701,328 in life insurance proceeds from several policies that Homeland had purchased for itself and her husband. Under these policies, Homeland was entitled to receive the greater share ($701,328) of the value of the policies, with a smaller amount being paid to Mrs. Wyckoff. However, Mrs. Wyckoff, in part by obtaining written approval of Homeland’s vice-president at the time (Rev. John Kamas), directed the insurance company to pay herself alone the entire value of all the policies, leaving nothing for Homeland. Neither Mrs. Wyckoff nor Rev. Kamas sought approval from the board of trustees for this significant and unjustified action. 

Mrs. Wyckoff, who was paid an annual salary of $330,000 as Homeland’s president, maintains residences in both New York City and Connecticut.

Homeland was founded for general charitable purposes in 1938. It expanded in 1989, when its founder, Chauncey Stillman died, leaving much of his substantial estate to the foundation, including investments and the Wethersfield Mansion, Gardens, Carriage House and Farm, occupying approximately 1,200 acres in and near Amenia, located in Dutchess County, New York.  Homeland’s business offices are located in New York City.  Homeland’s funds are required to be used for, among other things, the maintenance of the Dutchess County land, buildings and artwork (called the Wethersfield Estate), and their operation as a museum and gardens for the general public. Information about the Wethersfield Estate can be found here: http://www.wethersfieldgarden.org/

 

Among the reforms instituted at Homeland as a result of the investigation and settlement:

  • New, expanded and more diverse board of trustees, including two members from the geographic area near Homeland’s museum and land in Dutchess County, and two members from the family of Homeland’s founder;
  • Mended by-laws to prohibit the trustees from (a) making grants to organizations with which they have business ties or interests, and (b) compensating trustees for their work on behalf of Homeland;
  • An enhanced conflict-of-interest policy to address and prevent abuses committed by the former trustees in their grant-making practices; and
  • A renewed emphasis by Homeland and the new trustees to operate the foundation in a fiscally prudent manner, and to keep the foundation’s focus on the Wethersfield Estate and the Wethersfield Institute.

Mrs. Wyckoff and Rev. Kamas are now subject to indefinite bans on becoming officers, directors, trustees and fiduciaries of New York not-for-profit organizations.The bans are subject to review by the Attorney General’s Office after five and three years, respectively, if Wyckoff and Kamas can demonstrate that they have successfully completed comprehensive education and training in the management and oversight of charitable organizations.  Other former trustees are subject to bans with defined periods of up to three years.

 

The agreement reached by the Attorney General, Homeland, and its former trustees underscores the need for boards of directors and trustees of not-for-profits to exercise their duty to actively oversee their organizations, in accordance with law, especially following recent changes that strengthened New York’s Not-For-Profit Corporation Law (NPCL). Enhancements to the NPCL of particular note relate to prohibitions on self-dealing by directors and trustees, auditing and financial transparency and accountability, and conflict-of-interest policies and whistleblower policies. For example, directors and trustees who become aware of abuses within their organizations are obligated to address those problems promptly; and, if their initial efforts are not successful, to take such further action as may be necessary to protect the funds and assets entrusted to their care. The chronic failure by Homeland’s former trustees to fulfill their duties in a responsible manner, free of conflicts-of-interest, made possible most of the problems uncovered by the Attorney General’s investigation.

 

This case was handled by Assistant Attorney General Steven Shiffman of the Attorney General’s Charities Bureau, with assistance from Associate Accountant Joseph Stoffel. The chief of the bureau’s Enforcement Section is Sean Courtney. The Charities Bureau is led by James Sheehan. The Division of Social Justice, of which the Charities Bureau is a part, is led by Executive Deputy Attorney General Alvin Bragg.