PA AG Polices Charitable Trusts & Organizations

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:

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.

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:

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.

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.

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.

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.

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.

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.

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."

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.

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.

* * *

Update: 02/17/07:

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.

Federal Geriatrics Funding Restoration Goes to President

In an email message circulated to various interested organizations, including some Pennsylvania Area Agencies on Aging, it was reported that, on February 14, 2007, Congress restored federal funding in the budget for geriatrics at $31.5 Million.

Geriatrics was the only Title VII program that had been eliminated in the Fiscal Year 2006 budget, but that can be restored for Fiscal Year 2007, if the President approves.

This restoration began in House Joint Resolution 20 (PDF, 137 pages). It passed the House on January 31, 2007, and also passed in the Senate on February 14, 2007, without amendment, by Yea-Nay vote (81-15).

Having passed both the House and the Senate, it will go to the White House for consideration. Such a joint resolution is used exactly as a bill to enact law, generally for limited matters. Used this way, it must be passed by both the House and Senate, and also must be signed by the President before becoming law.

Whether President Bush will sign it is unknown, according to its advocates.

To this point, approval has been a battle, according to the email's writer, Elyse A. Perweiler, MPP, RN, who is Associate Director of the New Jersey Institute for Successful Aging, of Stratford, New Jersey:

This has been a long and herculean effort. I thank you all for your help in contacting your legislators and pushing for restoration of funding for geriatrics. It speaks to the strength of our network and how important it has been to make our voices heard. * * *

We will have to rally once again as we seek funding for geriatrics in FY 2008, since geriatrics and other Title VII programs are once again $0. There is also reauthorization to think about.

For more details about H.J.R. 20, adopted by the 110th U.S. Congress (2007-2008), as a "Revised Continuing Appropriations Resolution, 2007", see its summary on GovTrack.Us (an independent website), found here.

IRS Tax Filing Deadlines Moved to April 17, 2007

This is not a premature April Fool's Day joke. The Internal Revenue Service announced that the filing deadline for many income tax returns otherwise due on April 15, 2007, will instead be due on Tuesday, April 17, 2007. See: "Questions and Answers — April 17 Deadline", posted by the IRS.

In 2007, April 15th falls on a Sunday. The IRS notes: "By law, filing and payment deadlines that fall on a Saturday, Sunday or legal holiday are timely satisfied if met on the next business day."

In most states, the next business day will be Monday, April 16th, when returns normally would be due. However, Monday, April 16th is "Emancipation Day"!

According to Wikipedia, Emancipation Day is a national holiday in the Bahamas that commemorates the emancipation of slaves in the British Empire on August 1, 1834. It is widely celebrated throughout the Caribbean or British West Indies by English-speaking people, generally on the first Monday in August, when they hold carnivals.

So what does that have to do with the IRS' extension of the tax-filing deadline in 2007? Stay with me.

President Abraham Lincoln signed the Compensated Emancipation Act, which affected only the District of Columbia, on April 16, 1862. This process freed individual slaves by paying owners a price for the release, and then prohibiting future slavery in that jurisdiction.

Washington, DC was the only place in the United States where compensated emancipation occurred. Eight months later, by issuance of the Emancipation Proclamation on January 1, 1863, slavery was formally abolished in the Northern states. Then after the Civil War, in 1865, the adoption of the Thirteenth Amendment to the United States Constitution officially ended slavery in America.

But the marking of Emancipation Day was not forgotten in the District of Columbia.

On January 4, 2005, Mayor Anthony Williams signed legislation making Emancipation Day an official public holiday in the District.

Each year, a series of activities will be held during the public holiday including the traditional Emancipation Day parade celebrating the freedom of enslaved persons in the District of Columbia.

The Emancipation Day celebration was held yearly from 1866 to 1901, and was resumed under the leadership of Councilmember Vincent Orange as a tradition and historic celebration in 2002.

The IRS Announcement explains the effect of D.C.'s local, legal holiday -- Emancipation Day:

Under a federal statute enacted decades ago, holidays observed in the District of Columbia have an impact nationwide, not just in D.C. Under recently enacted city legislation, April 16 is a holiday in the District of Columbia. The IRS recently became aware of the intersection of the national filing day and the local observance of the new Emancipation Day holiday after most forms and publications for the current tax filing season went to print.

Individuals in the District of Columbia, as well as in six eastern states, already had an April 17 filing date prior to this announcement because they are served by an IRS processing facility in Massachusetts, where Patriots Day will be observed on April 16. These individuals are still required to file on April 17.

The IRS lists certain tax return filing deadlines that will be postponed to April 17, 2007:

• Calendar-year 2006 federal individual income tax returns, whether filed electronically or on paper (Forms 1040, 1040A or 1040EZ).
  
• Requests for an automatic six-month tax-filing extension on an individual return for calendar-year 2006, whether submitted electronically or on Form 4868.
  
• Tax-year 2006 balance-due payments, whether made electronically (direct debit or credit card) or by check.
  
• For calendar-year taxpayers, individual estimated tax payments for the first quarter of 2007, whether made electronically or by check. In rare cases, estimated tax payments for the second, third and fourth quarters may be affected for individuals operating on a fiscal year that is not a calendar year.
  
• Individual refund claims for tax year 2003, where the regular three-year statute of limitations is expiring.
  
• For calendar-year taxpayers, tax-year 2006 contributions to a Roth or traditional IRA.
  
• Corporation income tax returns, including S corporations (Forms 1120, 1120-A and 1120S) for a fiscal year ending on Jan. 31, 2007, and any balance due.
  
• For a calendar-year corporation, the estimated tax payment for the first quarter of 2007. In some cases, estimated tax payments for the second, third and fourth quarters may be affected for corporations operating on a fiscal year that is not a calendar year.
  
• Calendar-year estate and trust income tax returns (Form 1041) and any balance due.
  
• For calendar-year estates and trusts, the estimated tax payment for the first quarter of 2007. In some cases, estimated tax payments for the second, third and fourth quarters may be affected for estates and trusts operating on a fiscal year that is not a calendar year.
  
• Calendar-year 2006 partnership returns (Form 1065).
  
• Annual information returns (Form 990) and unrelated business income tax returns (Form 990-T) for tax-exempt organizations with a fiscal year ending on Nov. 30, 2006.
  
• Calendar-year 2006 Form 990-T for certain employee trusts, retirement plans and education savings plans.
  
• Extension requests for any return.
  
• The March tax deposit for employers (generally, small businesses) required to deposit withholding taxes on a monthly basis.
  
• Withholding-tax deposits for larger employers, subject to the next day deposit rule.

The IRS Announcement says it all; and you should read it. Again, it is found here.

So, now you know that you will have an extra day to file tax returns. It is like a "leap day" for accountants. Use it for celebration, not procrastination.

But don't count on it happening every year.

The IRS notes: "The next year that Emancipation Day could affect filing deadlines is 2011."

"Tuesdays With Morrie" Staged in Malvern, PA

Mitch Albom's best-selling book, "Tuesdays With Morrie", will be presented in a stage adaption at the People's Light & Theatre Company, 39 Conestoga Road, in Malvern, PA, from February 7th through March 4th, 2007. The drama, promoted online by the Company here, chronicles the author's time spent with a beloved college professor dying from amyotrophic lateral sclerosis (ALS) (better known as "Lou Gehrig's disease").

An old man, a young man, and life’s greatest lesson. Everyone has somebody who made a difference, somebody who launched them on their way. Someone they haven’t thought of in years. What if you had a second chance to connect? For Mitch Albom, that person was his former professor Morrie Schwartz. But when Mitch reconnects with a dying Morrie, their "classes" teach Mitch how to laugh, cry and truly live.

The script was written by Mitch Albom, with Jeffrey Hatcher; and the production in Pennsylvania is directed by Stephen Novelli.

Mitchell David Albom is an award-winning American sportswriter, novelist, philosopher, newspaper columnist for the Detroit Free Press, syndicated radio host, and TV commentator. Before becoming a journalist, Albom was briefly an amateur boxer, nightclub singer, and pianist. He graduated from Akiba Hebrew Academy, Brandeis University, and Columbia University. With that range of life experiences, his views on life, sickness, and death are fresh, although labeled by some as overly sentimental.

According to his biography posted on his website, he is the author of nine books, including his newest, “For One More Day”, published September 26, 2006. That book tells the story of a son who gets to spend "one more day" with his mother, who died eight years earlier.

His first novel, "The Five People You Meet in Heaven", (9/03) is the most successful U.S. hardback first novel ever and has to date sold over 8 million copies worldwide.

"Tuesdays With Morrie," (1997) his chronicle of time spent with a beloved but dying college professor, spent four years on the NY Times bestsellers list and is now the most successful memoir ever published. Both books were eventually turned into celebrated TV films.

The critically acclaimed “Five People You Meet in Heaven” aired on ABC in winter, 2004. Oprah Winfrey produced the film version of "Tuesdays With Morrie" in December 1999, starring Jack Lemmon and Hank Azaria. The film garnered four Emmy awards, including best TV film, director, actor and supporting actor.

The Company's production was favorably reviewed by the Philadelphia Inquirer on February 13, 2007, in "'Morrie,' from the page to the stage", by Wendy Rosenfield.

By now, just about anyone who can read a book cover is familiar with the Mitch Albom mortality juggernaut.

Albom, a sportswriter and columnist for the Detroit Free Press, penned Tuesdays With Morrie, The Five People You Meet in Heaven and For One More Day, all works that dig deep into the big questions and try to unearth some practical answers.

But it was Tuesdays With Morrie, Albom's memoir of his former college professor's battle with Lou Gehrig's disease, and the wisdom he imparted before his death, that really tapped into the national chicken-soup-for-the-human-condition zeitgeist.

In this People's Light & Theatre production, Jeffrey Hatcher's adaptation stays true to its roots. The script is lively, characters accessible, themes as unambiguous as the dividing line between life and death.

If you cannot see this "Tuesdays With Morrie" production, you could read the book (1997), or perhaps view the movie (1999), instead.

* * *

Update: 03/05/07:

Author Mitch Albom will visit Central Pennsylvania on Saturday evening, April 14, 2007.

See: PA EE&F Law Blog posting on March 5, 2007, Author Albom to Speak at Hospice Event April 14th.

Comment Sought on Guardianship Revision Proposal

In a prior post dated September 28, 2006 (Guardianship Review for PA House; Input Sought), I passed along the invitation of the Ad Hoc Legislative Guardianship Study Group (which operates under the Joint State Government Commission), for anyone interested to offer suggestions regarding its study of the current Pennsylvania Guardianship statute. The Guardianship Study Group now offers its preliminary draft of potential revisions to Title 20, Chapter 55, for review by anyone who wishes to offer comments for further consideration.

The Guardianship Study Group was constituted on May 11, 2005, by a unanimous vote (196-0), of the Pennsylvania House of Representatives, which adopted House Resolution 131 (Printer's No. 1861). The Resolution was sponsored primarily by Rep. Glen Grell, who now chairs meetings of the Group, along with 33 other co-sponsors in the House. Its purpose is summarized as follows:

A Resolution directing the Joint State Government Commission to review current guardianship statutes and programs and make findings and recommendations on the effectiveness of these statutes and programs in meeting the needs of vulnerable incapacitated persons.

The working members of the Guardianship Study Group were appointed to represent various viewpoints, interests, organizations, & expertise. Sally Schoffstall, Esq., of Orefield, and I are members representing the practicing bar. Judge Stanley Ott, of Norristown, and Judge Carol Van Ormer, of Chambersburg, represent the Orphans' Court Division Judges. Professor Larry Frolik, of the University of Pittsburgh School of Law, is active. Departments of state government (Health, Aging, Public Welfare), non-profit organizations, advocacy groups, and elected officials also are represented.

The Group held its first meeting on January 26, 2006. Now, one year (and many meetings) later, it has coalesced its considerations and concerns into a discussion draft of proposed revisions to the Guardianship statute.

The draft is fifty pages long. Today, I will post it as an attachment onto the listservs of both the Elder Law Section and the Probate & Trust Division (of the Real Property, Probate & Trust Law Section), of the Pennsylvania Bar Association, requesting comments.

Unfortunately, I cannot attach the draft to this blog. However, if any reader desires to review a copy of the discussion draft, please request a copy from me (HendershotNE@gmail.com) confirming your reply email address capable of receiving an attachment.

Several of the proposed amendments reflect certain policy decisions by the Group. Other proposed provisions, such as the expanded & specified administrative powers set forth in Section 5521, are more technical in nature.

Many of the proposed amendments are based on the proposals of a prior JSGC Guardianship and Power of Attorney Drafting Subcommittee, chaired by Jack Lombard, which were contained in a May, 1996 Report issued by JSGC (not adopted by the Legislature, to date).

The Guardianship Study Group seeks input from practitioners, and from other people who are involved in the Guardianship system, regarding the discussion draft. Already, the Orphans' Court judges have posed significant questions regarding the workability of proposed Section 5521(b), which, therefore, likely will be restated.

Comments on the discussion draft should be sent by e-mail to JSGC Staff Attorney Steve Rehrer (srehrer@legis.state.pa.us) by March 1, 2007.

The Guardianship Study Group then will review all the comments at its next meeting on March 28, 2007, in Harrisburg.

* * *

Lancaster County Coroner Charged Criminally

On October 6, 2006, I posted "In Amish Tragedy, Autopsies Required, Acceptance & Faith Abound", which related to the schoolhouse shooting on October 2, 2006, in Lancaster County, that drew worldwide attention. My posting focused on the role of Dr. George G. Kirchner as Lancaster County's investigating, elected Coroner. Now, he is under indictment for his operations of the Office of Coroner.

On February 5, 2007, Pennsylvania Attorney General Tom Corbett announced, in a Press Release, that computer crime and conspiracy charges were filed against that Coroner.

[A]gents from the Attorney General's Public Corruption Unit have filed criminal charges against Lancaster County Coroner George Gary Kirchner, M.D., accused of compromising the security of the Lancaster County 9-1-1 computer system and conspiring to provide newspaper reporters with illegal access to confidential information.

Corbett said that Kirchner, 73, of 610 Millcross Road, Lancaster, was charged today following an extensive grand jury investigation by the Attorney General's Office concerning unauthorized access to confidential information stored on a 9-1-1 system website operated by the Lancaster Countywide Communications system. * * *

According to the Press Release, the grand jury found that Kirchner conspired to provide reporters from the Lancaster Intelligencer Journal newspaper with unauthorized access to confidential information on the Lancaster 9-1-1 website. The grand jury also found that in 2005, confidential information from the secure section of the 9-1-1 website was included in articles published by the Intelligencer Journal.

The Press Release contained a link to the nineteen-page Grand Jury Report , which reported specific findings that led to the criminal charges. That Report reveals much data obtained by the Attorney General's Office through subpoenas issued to third-parties and in oral testimony before the "Twenty-Fourth Statewide Investigating Grand Jury".

The crimes charged include:

• Unlawful use of computer and other computer crimes, under 18 Pa. Consolidated Statues §7611(a)(1). A person violates this criminal statute if he, “intentionally or knowingly and without authorization gives or publishes a password, identifying code, personal identification number or other confidential information about a computer, computer system, computer network, computer database, World Wide Web site or telecommunications device.”
  
• Unlawful use of a computer under 18 PA.C.S. §7611 (a)(2). This crime involves anyone who, “intentionally and without authorization accesses or exceeds authorization to access … any computer, computer system, computer network, computer database, World Wide Web site or telecommunication device”.
• Criminal conspiracy under 18 Pa. C.S. §903. This crime involves persons acting “with the intent to promote or facilitate the commission of a crime,” when a person “agrees with such other person or persons that they or one or more of them will engage in conduct which constitutes such a crime.”
  

The Lancaster Intelligencer Journal published six articles on the matter since the indictment was announced, and to date:

• "Kirchner disputes jury’s findings", by Jeff Hawkes (02/07/07):
  

  Lancaster County Coroner Dr. G. Gary Kirchner said Tuesday he is disappointed, but not angry, with reporters who provided grand jury testimony leading to his arrest on charges he gave them a password to a restricted part of the county's 911 communications Web site.

  "Anger is not my shtick," Kirchner said in a phone interview in which he said he has no memory of providing Intelligencer Journal reporters with his password to a Web log of incidents for the coroner, fire officials and emergency responders. * * *
  

• "Defiant coroner fires back", by Tom Murse & Janet Kelley (02-06/07):
  

  "Lancaster County Coroner Dr. G. Gary Kirchner came out swinging today, saying he is innocent of felony criminal charges and that Intelligencer Journal reporters who testified against him did so "in violation of all journalistic ethics."
  
  Kirchner, by turns defiant and angry, also disputed the newspaper's claim that its reporters believed he, as the elected coroner, had the authority to grant them access to sensitive information on a county 911 Web.
  
  "They were not permitted into that Web site," Kirchner said today. "If I gave you an ATM number, does that authorize you to clean out my bank account? That argument is thin."
  
  "And if that's the case, why do they have to seek immunity from prosecution?" Kirchner asked. "If they're innocent and nothing wrong has been accomplished, and everybody agrees to that, they don't need to seek immunity from prosecution. They don't need to testify against me if that argument is correct." * * *
  

• See also: AG accuses coroner of violating 911 site (02/06/07); The long and winding feud (02/06/07); Pa. charges coroner with breach of secret police files (02/05/07); and Kirchner term marked by errors, disputes (02/05/07).
  

Neither the testifying reporters, nor their publications, were charged.

The Intelligencer Journal carried a front-page editorial on February 6, 2007, indicating that its staff did nothing wrong by accessing the Web site, despite the site's separate warnings that it was to be accessed "for official and Government business by authorized personnel." However, the Editorial admitted that Kirchner freely provided his password to the coroner's section of the 911 Web site to an Intell staff member who accessed the site over a period of many months.

Somewhat related is an article published in the Lancaster New Era twelve days before the indictment was announced. See: "Diamantoni enters coroner race", published January 24, 2007:

Dr. Steve Diamantoni has announced that he will challenge incumbent Dr. G. Gary Kirchner in the Republican primary for the coroner's post.

Diamantoni, a family physician and former Lancaster City Council president, said he wants to bring a spirit of cooperation to the way the coroner's office interacts with other law-enforcement agencies.

"Timing in life is everything."

-- Leonard Maltin, American Literary Critic

Update: 10/15/08:

The prosecution ended in a plea and a sentencing in Lancaster County Court, according to "Ex-coroner who gave password is sentenced" posted September 24, 2008, by the Morning Call (Allentown, PA):

A judge on Tuesday sentenced a former county coroner to probation for giving newspaper reporters the password to a restricted 911 Web site and accused the journalists of violating their professional ethics.

Dr. Gary Kirchner, who left office at the end of last year, pleaded no contest Tuesday to two misdemeanor counts of obstruction of administration of law. He was sentenced to one year of nonreporting probation and fined $500.

Lancaster County Judge Dennis Reinaker praised Kirchner's career as a surgeon and his community involvement, but reminded him that voters placed their trust in him and said his actions could have jeopardized criminal investigations.

''This whole scenario does not represent your finest hour,'' Reinaker said. * * *