Friday, 08 July 2011 00:00
Andrew Smith of Aquebogue, who co-founded the CABC in 1995 with Garrett Morgan of West Islip, launched the organization “for their personal financial benefit when both were in need of cash,” the AG alleged. Smith was emerging from personal bankruptcy at the time and Morgan was being investigated for his role in a suspicious, now-closed, meals-on-wheels charity, according to the AG’s court filing.
Two anecdotes in the AG’s complaint jumped out at me. Both involved financial blunders committed by Smith.
The first revolves around an ill-fated $105,000 investment financed by the CABC, the AG contends. Smith received from the CABC’s board two CABC-funded loans, totaling $105,000, in 2008. What did Smith need the $105,000 for? The AG’s investigators say Smith took all of that money and invested it with Agape World. “Agape World was, in fact, a Ponzi scheme, and Smith lost his entire investment,” the AG’s lawsuit states. Perhaps a CABC-Agape World prison reunion is in the cards.
Smith, who once served as the CABC’s Treasurer (!), continues his starring role in the AG’s complaint for having acquired 2,500 shares of Empire National Bank’s stock for $25,000, or $10 per share, in January 2009. That transaction set into motion the second vignette, which caught my eye. Given Smith’s past performance chart, do I even need to tell you the $10 stock tanked?
The AG reports Empire National Bank’s shares were selling for $5.80 per share as of June 23, 2011, making those 2,500 Empire National Bank shares worth $14,500. But Smith lost only $5,000 on his $25,000 investment, not $10,500, because Smith, in what the AG describes as an unusual transaction, sold to the CABC in August 2009 his 2,500 bank shares for $20,000, or $8 per share. The CABC absorbed the additional losses that subsequently occurred, the AG’s complaint explains.
Still, while these tales may provide a chuckle, the AG’s lawsuit, filed in state Supreme Court in Suffolk County, is no laughing matter. It alleges that the CABC solicited $9.1 million from the public over a five-year period while spending virtually no money on the breast cancer programs the CABC said it supported. Indeed, the CABC spent less than 4 percent of all the donated monies it received within this same time frame on any of its supposed charitable initiatives, the complaint charges. The AG’s office asserts the bulk of the donated money was used by the CABC to pay exorbitant fundraiser fees to the Garrett Morgan-run Campaign Center, as well as unjustified salaries and benefits to the CABC’s insiders.
The state’s ‘do not call’ registry law, by the way, exempts charities. Because of this loophole, the Campaign Center’s telemarketers had no restrictions on who they could call when seeking contributions for the Coalition Against Breast Cancer.
Mike Barry, a corporate communications consultant, has worked in government and journalism. Email: MFBARRY@optonline.net