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Bookkeeper of Veterans Charity Faces Felony Larceny Charge

—Published June 2014

Writing more than 135 unauthorized checks in 2013 alone, Cynthia Tanner, the now-former bookkeeper at National Veterans Services Fund (NVSF), a long time "F" graded charity by CharityWatch, is under police investigation for allegedly embezzling over $185,000 from the veterans charity in 2013. Police believe that over the last five years Tanner may have misappropriated more than $830,000 from NVSF, according to a June 2, 2014 release by the Darien, Connecticut Police Department (DPD). The DPD release reports that NVSF discovered Tanner's alleged misconduct by way of its auditors who found irregularities in NVSF's financial statements, and NVSF subsequently filed a police complaint in late May of 2014. Tanner now faces a first-degree larceny class B felony charge that carries a maximum sentence of 20 years in prison and up to $15,000 in fines.

NVSF, located in Darien, Connecticut, has a mission to educate and inform the public about armed service-related illnesses and the contributions of veterans to our society, and to help veterans and their families by assessing needs and providing assistance, relief, and referral to appropriate agencies. NVSF employs a staff of two full-time and two part-time employees, according to its website. As NVSF's bookkeeper, Cynthia Tanner's responsibilities included payroll and the disbursement of funds to the charity's clientele, according to the DPD. She allegedly perpetrated the embezzlement by fabricating a financial ledger to show that checks were written to the charity's clientele when in actuality the checks were written to herself and her family members, including 33 checks written to her son and daughter, each in their twenties, in 2013 that totaled over $62,000, according to a June 2, 2014 Darien News report. Tanner also used NVSF funds to make personal car loan payments and used NVSF credit cards for things such as personal online purchases, airfare, and vacation expenses, according to the DPD. Tanner claims that the funds she allegedly misappropriated were advances from NVSF that she would later pay back through monthly paycheck deductions but that she sometimes would forget to make the paycheck deductions, partly due to a head injury she suffered in 2011, according to the Darien News.

The DPD's investigation concerning Cynthia Tanner also has found that she volunteered as the "bookkeeper" for the Darien chapter of Veterans of Foreign Wars (VFW) for several years, according to a June 4, 2014 release by the DPD. The DPD discovered that VFW's financial statements also contain irregularities, but the investigation is ongoing and no further information regarding any monetary losses for VFW was released by the DPD as of June 4, 2014. The Darien News reported that no plea was entered by Tanner at her June 2nd arraignment for the first-degree larceny charge related to the alleged NVSF embezzlement, and she is being held on a $500,000 bond according to the June 4th DPD release. Tanner's attorney reportedly requested that she be placed on medical watch for various medical conditions, including sleep apnea, intracranial hypertension, and extreme vertigo, according to the Darien News. Tanner reportedly has a court appearance scheduled for June 30, 2014; the DPD expects additional charges to be filed against Tanner.

CharityWatch currently grades NVSF an "F" for having a $75 cost to raise every $100 in funds and a program services percentage of 18% for its fiscal year 2012. NVSF has a history of low program spending and high fundraising costs based on CharityWatch's analysis of NVSF's finances dating back to at least 2004. With respect to NVSF's high fundraising costs, NVSF's fiscal year 2012 tax filing reports that it used Direct Response Consulting Services as its fundraising counsel to raise $3,934,035 in gross contributions, which is over 40% of NVSF's total contributions for the fiscal year, but out of this $3,934,035, Direct Response was paid $3,297,885 (or 84%), leaving just $636,150 in net contributions for NVSF. In total, NVSF receives just 10% to 15% of the contributions raised by the various professional fundraisers it uses to solicit via direct mailings, telemarketing, and vehicle donations, according to NVSF's 2012 and 2011 audited financial statements.

Although NVSF may have been a victim, the reports concerning Cynthia Tanner's alleged misconduct leave CharityWatch questioning NVSF's internal procedures and controls. One employee alone should not have full control over approving, recording and verifying charitable disbursements, check writing, check signing, and reconciling bank account activity. If this was the case at NVSF with Tanner, NVSF partly is to blame for not having tighter internal procedures and controls in place. In the June 2, 2014 Darien News report of Tanner's alleged embezzlement, NVSF's executive director, president and treasurer, Phillip Kraft, tries to reassure donors that the charity still is operating and that it is safe to make donations. However, given NVSF's history of poor financial efficiency and "F" grades from CharityWatch, and NVSF's apparently weak internal procedures and controls that have come to light with Tanner's arrest, calling any donations made to NVSF "safe" is highly questionable at best.

 
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