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WPCNR ALBANY ROUNDS. From the Office of the New York State Attorney General. March 5, 2015:
Attorney General Eric T. Schneiderman today released his annual “Pennies for Charity” fundraising report showing that for-profit telemarketers operating in New York in 2013 retained the majority of the funds they raised on behalf of charities – more than $156 million that was intended to support charitable causes.
Telemarketers registered in New York reported raising more than $302 million for charity in 2013, a 20% increase over the previous year and the most ever reported in the history of the New York Attorney General’s annual Pennies for Charity report.
The Lower Hudson Valley is the exception to the rule where charities actually kept 85% of what their professional fundraisers raised.
Of those funds, $146.5 million went to organizations’ charitable missions, about 48% of the total money raised. In 75% of the fundraising campaigns run by telemarketers, the charities retained less than 50% of the funds raised.
“New Yorkers who are generous enough to donate their hard-earned money to charity deserve to know how that money is really spent, including how much is used to pay for-profit telemarketers,” Attorney General Schneiderman said. “Our Pennies for Charity report is an important tool for transparency because it informs the donating public what portion of their charitable contributions made through telemarketers went to the outside fundraisers’, and how much was left to support charitable programs.”
At 48%, the share of funds raised by for-profit telemarketers that went to charity in 2013 increased significantly in comparison to 2012, when only 37% of the funds raised went to the charitable missions donors intended to support.
The Pennies for Charity report has been published annually for the last 12 years, drawing attention to this issue.
The “Pennies for Charity” report aggregates information from fundraising reports filed with the Attorney General’s Charities Bureau for telemarketing campaigns conducted in the previous year.
Other significant findings from analyzing the 573 fundraising campaigns covered in the Attorney General’s report include:
Statewide, the rate of return was lowest for donations solicited in the Central New York area, specifically Broome, Cayuga, Chenango, Cortland, Herkimer, Jefferson, Lewis, Madison, Oneida, Onondaga, Oswego, Otsego, St. Lawrence, Tioga and Tompkins counties.
Based upon the address contained in documents filed with the Charities Bureau, each charitable organization listed in this report has been assigned to a particular geographic area. The following is a list of these geographic areas, the counties included in each area, total gross dollars raised on behalf of charities located in each area and the net amount received by these charitable organizations:
|
Geographical Area |
Counties |
Gross Receipts |
Net to Charity |
Retained by Charity |
|
1 – New York City |
Bronx, King, New York, Queens, Richmond |
$39,451,348.76 |
$21,505,637.39 |
54.5% |
|
2 – Long Island |
Nassau, Suffolk |
$8,901,262.08 |
$2,437,476.21 |
27.4% |
|
3 – Lower Hudson Valley |
Delaware, Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster, Westchester |
$75,754,186.73 |
$64,762,271.85 |
85.5% |
|
4 – Capital District and Eastern Adirondacks |
Albany, Clinton, Columbia, Essex, Franklin, Fulton, Greene, Hamilton, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie, Warren, Washington |
$4,952,785.37 |
$1,483,934.89 |
30.0% |
|
5 – Central NY and Western Adirondacks |
Broome, Cayuga, Chenango, Cortland, Herkimer, Jefferson, Lewis, Madison, Oneida, Onondaga, Oswego, Otsego, St. Lawrence, Tioga, Tompkins |
$853,312.56 |
$91,807.55 |
10.8% |
|
6 – Rochester and Surrounding Area |
Chemung, Livingston, Monroe, Ontario, Schuyler, Seneca, Steuben, Wayne, Yates |
$1,492,643.82 |
$834,017.48 |
55.9% |
|
7 – Western NY |
Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans, Wyoming |
$1,800,429.87 |
$719,953.74 |
40.0% |
|
8 – All Others |
Locations outside New York State |
$169,382,350.80 |
$54,625,720.68 |
32.2% |
Despite improvements in the share of funds going to charitable purposes, telemarketing remains an expensive and intrusive method of raising funds for charity, and suffers from significant limitations compared to other forms of fundraising:
To assist charities in addressing this issue, Tips for Charities are included in the report. In an effort to help people who give to charity to ensure that their donations support the causes they intend, Attorney General Schneiderman issued the following tips when making donations via phone solicitation:
A copy of today’s report can be accessed here.
WPCNR FBI WIRE. From the Federal Bureau of Investigation. March 4, 2015
Gilbert Fiorentino, 54, and Carl Fiorentino, 57, both of Coral Gables, Florida, were sentenced yesterday in Federal Court in the Southern District of Florida, in connection with their participation in an illegal scheme to obtain more than $11 million dollars in kickbacks and other benefits, and to conceal this illicit income from the IRS, while employed as senior executives at Systemax, Inc. (“Systemax”) and its subsidiary, TigerDirect, Inc. (“TigerDirect”).
Carl Fiorentino was sentenced to 80 months’ imprisonment. Gilbert Fiorentino was sentenced to 60 months’ imprisonment. A hearing to determine the remaining amount of restitution owed to Systemax by the defendants, who are brothers, has been scheduled for April 3, 2015.
Systemax had its principal place of business in Port Washington, New York, and sold personal computers and other consumer electronics through its websites, retail stores, and direct mail catalogs including TigerDirect, CompUSA, and Circuit City. In fiscal year 2010, Systemax had annual sales revenue of approximately $3.6 billion according to its public filings. Gilbert Fiorentino was a director of Systemax and was the Chief Executive Officer of its Technology Product Group, including its subsidiary TigerDirect. Carl Fiorentino was the former president of TigerDirect. Both defendants worked at TigerDirect’s Miami offices before they were terminated on April 18, 2011.
On December 2, 2014, Carl Fiorentino pleaded guilty to one count of conspiracy to commit mail and wire fraud, and one count of tax evasion, and Gilbert Fiorentino pleaded guilty to one count of conspiracy to commit securities fraud and to impair and impede the lawful functions of the Internal Revenue Service.
The sentences were announced by Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Loretta E. Lynch, United States Attorney for the Eastern District of New York; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and Kelly R. Jackson, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office.
U.S. Attorney Wifredo A. Ferrer stated, “Gilbert and Carl Fiorentino hid their ill-gotten financial gains from the IRS and the shareholders of Systemax. They violated their positions of trust by accepting illegal kickbacks, driving up the price of the consumer electronics and passing the price increase to the consumer. Yesterday’s sentences demonstrate our commitment to root out corporate fraud and enforce the laws that protect investors in financial markets.”
“For years, the brothers Fiorentino financed their luxury lifestyles with illicit kickbacks, all the while concealing their fraudulent gains from the shareholders of Systemax and the IRS. Such illegal self-enrichment, at the expense of a publicly-traded corporation and the IRS, cannot be tolerated,” stated United States Attorney Lynch. “Yesterday’s sentences should serve as a stern reminder that those who commit corporate fraud will be held accountable.”
Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, stated, “The Fiorentinos financed their extravagant lifestyle with $11 million in kickbacks. These kickbacks paid for, among other things, a waterfront Florida mansion. But the excess ends today. This sentence should put anyone who plans to shakedown shareholders on notice.”
IRS-CI Special Agent-in-Charge Kelly R. Jackson stated, “These high-ranking corporate officials undermined the process of fair and open competition and broke the law when they obtained unlawful kickbacks. They then took steps to hide these kickbacks from Systemax and the IRS. Yesterday’s sentencing sends a clear message to other corporate officials that this type of criminal behavior will be punished. IRS Criminal Investigation will continue to work with its law enforcement partners to investigate corporate officers who misuse their positions of trust and violate the tax laws.”
As senior executives of Systemax and TigerDirect, Gilbert Fiorentino and Carl Fiorentino had responsibility for, among other things, purchasing and sourcing hundreds of millions of dollars’ worth of computer and electronics items for Systemax and its various operations. Gilbert Fiorentino and Carl Fiorentino conspired with each other and third parties to obtain unlawful kickbacks in exchange for steering business to companies that paid the kickbacks.
For example, Carl Fiorentino received millions of dollars in payments from one TigerDirect supplier, including more than $3 million to pay for his waterfront residence in Gables Estates and millions of dollars’ worth of luxury furniture, art, and high-end electronics. Gilbert Fiorentino received hundreds of thousands of dollars in payments. These included deliveries of gold coins, cash handed over in the parking lot of the Miami offices of TigerDirect, and furniture and other goods and services delivered to his Gables Estates waterfront home.
In connection with this scheme, Carl and Gilbert Fiorentino filed false United States Individual Income Tax Returns and also regularly signed conflict of interest questionnaires in which they falsely and fraudulently concealed from Systemax their receipt of cash and other remuneration from vendors who did business with the company. In doing so, they mislead Systemax’s auditors and prevented them from performing accurate reviews and audits of the company’s books, records, and accounts. Additionally, when Carl Fiorentino learned that he was under investigation by the government, he obstructed justice by instructing witnesses to lie to federal authorities to conceal his criminal conduct.
This case was originally investigated by the U.S. Attorney’s Office for the Eastern District of New York with the assistance of the FBI New York Field Office and the IRS-CI Miami Field Office. Carl Fiorentino was previously charged in the Eastern District of New York on June 18, 2013, with conspiracy to commit mail and wire fraud, multiple counts of mail and wire fraud, and money laundering. The case involving Carl Fiorentino was transferred to the Southern District of Florida by court order on January 6, 2014.
The sentence was imposed by United States District Judge Jose E. Martinez.
The matter is being prosecuted by Assistant U.S. Attorneys Jerrob Duffy of the Southern District of Florida and Whitman G.S. Knapp of the Eastern District of New York.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement and investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.