According to two recent newspaper reports, the Pennsylvania Attorney General's Office, through its Charitable Trusts & Organizations Section, is exercising its review and intercessory powers over the administration of charitable funds in response to actions taken, or proposed to be taken, by trustees or directors.
Regarding a case of alleged trustee abuse, an article appeared on January 26, 2007, in the Times Tribune here, and in The Citizen's Voice, entitled "Attorney general pursues removal of trust overseers", by Dave Janoski. It reported, in part, as follows:
Reading the newspaper report, the removal request in this case is founded upon past actions taken by the individual trustees alleged to benefit their self-interests, not the charitable beneficiary. Furthermore, expenditures for fees and commissions also are questioned by the Attorney General's Office:The trustees of a charitable trust created by the late labor leader Anthony F. Kane Jr. should be removed, state attorneys say, for lending most of the trust’s money to a business partner and friend of one of the trustees.
The state attorney general’s office, in a petition filed Wednesday, asked Luzerne County Orphans’ Court Judge Michael Conahan to strip control of the trust from Gloria Bartnicki Riegel and her husband, Joel Riegel.
Kane, a widower with no children, directed that about $730,000 be placed in a trust, with investment and interest income going to the United Way of Wyoming Valley.Regarding a case of already-committed use of charitable reserve funds, an article appeared on February 1, 2007, in the Delaware County Times entitled "Judge permits SPCA’s plan to withdraw $4.2M from fund", by Kathleen E. Carey.
In 2005, the United Way and the state attorney general’s office challenged the Riegels’ handling of the trust in Orphans’ Court, questioning fees paid to lawyers, commissions paid to the trustees and investments in mortgages, which, they said, violated state laws governing investments by non-profits.
Since then, the three parties have been entangled in legal arguments over whether the Riegels should be required to reveal the details of those mortgages, including the identities of the borrowers.
Last week, responding to an order from Conahan, the Riegels supplied information on the loans to the attorney general’s office.
State attorneys, in their petition, claim that about three-quarters of the trust’s money, more than $588,000, was loaned to Kathryn Cubillo, described as the “best friend” and business partner of Gloria Bartnicki Riegel. * * *
The Riegels have “committed a serious breach of the trust,” the petition argues and their removal is “in the best interest of the beneficiary of the trust,” that is, the United Way.
An auditor for the SPCA had notified the board that court approval was needed to withdraw money from its reserve fund. The SPCA notified the Attorney General’s Office about the needed, substantial withdrawal from its reserve funds. But the PA AG's Office objected.Delaware County Common Pleas Court President Judge Edward Zetusky Friday ruled that the Delaware County SPCA could use $4.2 million of its reserve fund to pay off some of its bills, but mostly to finance a renovation and expansion of the Upper Providence facility.
Board members had been trying since last summer to use the funds to make substantial changes, but confronted another obstacle when a legal challenge arose. After the SPCA withdrew money in May, its auditor notified the state Attorney General’s office, which took issue with the move.
A petition was filed in Delaware County Orphans Court and the case was heard before Zetusky Jan. 24. On Friday, Zetusky signed the order allowing the SPCA to use the $4.2 million from the $9.4 million fund, comprised of bequeaths dating back to the 1950s. "It will help us do our work better," new SPCA board President Ann Morris said.
Thereafter, the SPCA sent a petition to the Delaware County Orphans Court in December, asking for permission to withdraw $4,211,000 for the reserve fund.The article was quoting SPCA board Vice President Rick Beeman regarding the entire Orphans Court matter. He also said, "I don’t understand how this came to be a matter of contention." However, he did not fault the auditor or the Attorney General’s office, which did not contest the petition approved by the Orphans' Court Division.
To prove intent, the SPCA had to craft a 22-page business plan -- penned mostly by Beeman -- outlining what they planned to do with the money and by when.
"The case we were making to the Orphans Court is, ‘Times have changed and we need this money to make serious infrastructure improvements,’" he said.
Beeman took the stand Jan. 24 in Delaware County Court of Common Pleas for an hour and a half, as he laid out the SPCA’s plans.
"Judge Zetusky needed some convincing that this organization was getting on the right track," Beeman said. "The huge chunk of the money from this reserve fund is for the renovation and expansion of the shelter."
Neither of these actions were announced in press releases by the Attorney General's Office. But reporting of them in local newspapers reveals the ongoing involvement of that Office in matters of charitable trusts & organizations.
On February 11, 2007, an article appeared in the Delaware County Times entitled "Delco SPCA 'clawing' its way to improved, expanded facilities", by Kathleen E. Carey. She reports, in part:
On Jan. 26, Delaware County Judge Edward Zetusky ruled that the SPCA could use $4.2 million of its reserve fund to pay its bills, but also to renovate and expand the existing 6,000-square-foot facility that was built in the 1930s and modified in the 1950s and 1970s.
"It can’t handle the overpopulation (of animals) that we have for our county," Spraga said.
Of the fund, $3.5 million would be earmarked for the 8,500- to 10,000-square-foot addition that would include a new lobby area with adoption rooms that would allow visitors to spend time with prospective pets.
Engineering work is expected to begin shortly and the project is scheduled to be finished by the end of 2009.