Girls Inc. Chapter Seeks to Avoid Returning Funds Donated by Ponzi Schemer

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February 13, 2012; Herald-Tribune | The Sarasota, Fla. chapter of Girls Inc. is facing the need to pay back $360,000 in tainted donations, plus $90,000 in interest, an amount that is nearly equal to half its yearly budget. The money came from Arthur Nadel (or “mini-Madoff”), who was convicted for running a Ponzi scheme worth $168 million.

Girls Inc. is among a half dozen Sarasota charities that owe a total of more than $1 million as a court-appointed receiver tries to claw the money back for bilked investors. Girls Inc., however, is one of a few charities pushing a bill to try to prevent such repossessions from charities. “At first I was appalled and then I think I went, ‘we need to find a solution for this,’” said Stephania Feltz of Girls Inc. “My heart breaks for the individuals that lost their investments. But I believe there are two victims.”

NPQ wonders about the ethical considerations of this in light of the fact that many lost their life savings. What do you think? –Ruth McCambridge

  • Ernest

    As the ED of a Nonprofit, I understand that we are businesses. I’m pretty sure that Girls Inc. was not the only business negatively impacted by this, and that there are other for profits that are hurt. It is unfortunate but I think they have to give the money back. On the positive side, this could provide a great fundraising opportunity for Girl’s Inc should they choose to use it in a marketing campaign.

  • david berardo, esq

    I have been asked to write an article in an international legal journal about the application of fraudulent transfer laws to clawback donations to charity. Does NPQ have a knowledgeable person on this subject that I could interview? Does NPQ have a resource file on this topic, by state?