California AG Looks into Finances of Farrah Fawcett Foundation Amid Hints of Fraud and Asset Diversion

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September 27, 2011; Source: HollywoodNews | The foundation named after Farrah Fawcett was created to honor the actress’s hope that it would support alternative methods of cancer research.  At the moment, the California Attorney General is investigating the Farrah Fawcett Foundation on charges of fraud.  The head of the foundation is Alana Stewart, Farrah’s longtime friend and the former spouse of actor George Hamilton and singer Rod Stewart, who issued a public statement about the investigation, welcoming “any and all inquiries into the operations and management of [the foundation’s] works and endeavors” and promising transparency. 

As a coda, Stewart added, “there has been a plethora of misinformation in the media spread by a few disgruntled ex- employees of Ms. Fawcett’s, looking to bring down the Foundation for their own self-serving and misguided needs.”  She told the Hollywood News that the disgruntled one were “exes“, including a former boyfriend of Fawcett’s (though the article is a bit unclear, making it sound like some of the exes might have been Stewart’s).  Elsewhere, she called the AG’s investigation “outrageous.”  Richard Francis, the chair of the foundation and the former business manager of Farrah Fawcett and Ryan O’Neal, described the investigation as a “witch hunt.”

The “former boyfriend” is Greg Lott, who ABC News identifies as a longtime friend and college boyfriend of Fawcett’s.  Based on information from Lott and others, the AG is looking into “potential mismanagement of funds, diversion of assets, and fraud” at the foundation.  Per typical procedure, the AG’s office won’t confirm or deny that it is conducting an investigation.

But something rings wrong, starting with the “outrageous” and “witch hunt” reactions of Stewart and Francis, an example of protesting a bit too adamantly.  So we pulled up the 990s–actually 990PFs since the foundation is mostly funded by Fawcett’s trust.

According to the 990PF for 2009 (the previous years, the foundation existed largely on paper), the foundation had revenues of $4.8 million (almost all from Fawcett’s trust plus donations of $5,000 from actor Harrison Ford and $4,500 from Stewart herself), but expenditures of only $99,000, including $85,000 in grants ($5,000 to St. Jude’s Children’s Hospital and $80,000 to the Angeles Clinic Foundation).  With virtually no foundations expenditures, it’s hard to see red flags that would link to Lott’s charges of fund and asset diversion, though the 990PF indicates that $1,348,250 of the foundation’s assets are invested in unspecified “real estate partnership interests” and $715,385 in a similarly opaque “public energy partnership interest.”  Unless there are very different numbers evident in the foundation’s expenditures after 2009, one would think that the investment of assets would be an area of interest for the AG if there is concern about asset diversion. 

The nonexistent payout of the foundation is understandable.  Fawcett died in 2009, so it is kind of difficult to imagine that the newly capitalized philanthropy run by her best friend could gear up quickly.  Given that 2009 was really the foundation’s first year, it is odd that the foundation would get this kind of scrutiny so quickly.  It would be good to learn after all of this that Farrah Fawcett’s charitable wish is honored rather than being turned into a Hollywood soap opera.–Rick Cohen