What happens when the unethical director of a nonprofit agency goes unsupervised? It could result in fraud amounting to more than a half million dollars.
In an article by journalist Dan Kane appearing The News & Observer (August 3, 2015) entitled: “Former SEANC director Dana Cope to face felony charges,” we learn of the unethical going’s on of Dana Cope.
“Dana Cope, the former longtime head of the 55,000-member State Employees Association of North Carolina, was indicted Monday on felony charges that he took $570,000 of the organization’s money and spent it on flight lessons, landscaping, home appliances, vacations and other unauthorized purchases.”
Cope has six charges against him, and each charge constitutes $100,000. The former association head could be looking up to a 15 year jail sentence, which is a little ironic as he was the director of SEANC for 15 years as well.
I suppose what bothers me the most is the following:
”Cope improperly took dues contributed by employees making an average of $30,000 a year and who joined the association expecting it to help them with better pay and working conditions.”
The unethical games of privilege
It is easy to fixate on the things he bought with the stolen funds; for example, nearly $14,000 to send his wife and kids to China and more than $31,000 for flying lessons. However, I prefer to focus on intention. Take, for example, the way in which he stole funds to pay for landscaping his home:
“Cope had directed SEANC to spend $109,000 with a landscaping firm that had also done the work on his home. One check, for nearly $19,000, was made out to a defunct computer company with a name similar to the landscaping company.”
The landscaping company cashed a check intentionally “fashioned” by Cope that was made out to a company with a similar sounding name that had gone out of business. Cope knew exactly what he was doing. He used a very calculated manner to commit fraud.
The landscaping company was roped in as well. It appears as though the landscaping company did some work on SEANC business, but used most of the funds to landscape Cope’s home. The $19,000 mentioned above was an extra bonus. Part of the funds were apparently to be used for a new swimming pool in Cope’s backyard.
Interestingly, the path to Cope’s conviction was sparked by two former SEANC board members (one of whom was the treasurer) who noted expenditure irregularities. Amazingly, the board members were censured by the association’s executive board and they were voted out of office!
The two expelled board members noting irregularities most probably represents the first time that anyone had come along challenging the lack of supervision and the financial irregularities.
How this occurs
Most board member positions are not full-time positions. They are largely honorary, and frequently voted in by organizations they represent to the board, or they are invited by the membership to sit on the board. Board members don’t normally get involved with day to day operations, they may chair committees but my experience is that most board members are perfectly content to socialize following the reading of reports or quarterly updates rather than rock the boat.
Even though SEANC has 55,000 members, if we look behind the scenes, there is a relative handful of staff people actually running SEANC (or most governmental associations). The membership does not keep track of the day-to-day goings-on, so it usually falls on a CEO or director to make all of the major decisions.
Directors such as Cope might have their contracts renewed every year or so, but in-depth, due diligence is rarely practiced, and so they are infrequently questioned or even challenged. I have seen boards where the same directors have been in place for 20 years or more, largely unsupervised and largely ignored as to what they are doing. For the director, a dull but steady board job is like an ATM!
It is not so unusual that the director of an association just sits there at the whim of the board while the board pontificates over the presentations served up by staff. In other words, the director is frequently a politician far more concerned with keeping the board members happy, than in accomplishing meaningful direction. If he or she can achieve that balance, the ATM works for them year in and year out.
With no true oversight, no membership expectations and little in the way of setting expectations for the director, the directors are largely free to go on, year-to-year untouched. He or she may get involved with all types of staff decisions, top down, but careful examination of what the director is doing is not necessarily the rule.
Whether Dana Cope was ever planning to give the money back is one matter; the fact that he was allowed to take it, almost unhindered, is quite another. He had the motive, he had the means and he had the opportunity.
As he unethically wasted hundreds of thousands of dollars on self-indulgence, 55,000 members, barely making minimum wage, were putting their hopes in his guidance. He didn’t deliver.
He was a crook, but his board and the lack of oversight were ultimately to blame.
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Actually the two members were NOT censured and were voted out of office BEFORE they brought the irregularities to the attention of the N&O. Even though they were officers of SEANC, and one was the treasurer, they never report any of Cope’s irregularities to the Board. Makes one wonder how much they were going to report if they had been re-elected.