The truth hurts Legacy Foundation

The American Legacy Foundation has suffered a “diversion” of funds estimated at $3.4 million, according to a story in The Washington Post, which has turned the spotlight on some of the U.S.’s nonprofit organizations.

Legacy was founded as a nonprofit organization in 1999 out of the funds raised by the Master Settlement Agreement that resolved health claims brought against U.S. cigarette companies.

The foundation declared on a 2011 federal disclosure form that it had become aware of a diversion in excess of $250,000 committed by a former employee.

It disclosed that the diversion was due to fraud and now says it believes it fulfilled its disclosure requirement.

But the Post story said that records and interviews revealed that Legacy had suffered an estimated $3.4 million loss linked to purchases from a business described sometimes as a computer supply firm and at others as a barbershop, and to a former assistant vice president.

The Post said too that the disclosure report had not given details about how Legacy officials waited nearly three years after an initial warning before they called in investigators.

“We’re not innocent in this,” said Legacy Chief Executive Cheryl Healton, who, in fiscal 2012, received a “compensation package” worth $729,000. “We are horrified it happened on our watch. . . . The truth hurts—we screwed up.”

With $50 million in annual expenditures and $1 billion in assets, Legacy is perhaps best known for its edgy, anti-tobacco advertising campaign known as Truth.

The full story is at http://www.washingtonpost.com/investigations/inside-the-hidden-world-of-thefts-scams-and-phantom-purchases-at-the-nations-nonprofits/2013/10/26/825a82ca-0c26-11e3-9941-6711ed662e71_story.html.