A Fraught Nonprofit Fraud Story from New York City’s Elites

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July 9, 2013; New York Times


Where is Dominick Dunne when you need him? This story, about a suit brought by the New York Attorney General against the former president of the National Arts Club, is worthy of a long article in Harpers. O. Aldon James headed the prestigious club in Gramercy Park for 25 years, and the story is chock-full of accusations of bullying, animal cruelty (abandoned finches), compulsive hoarding (of stuff bought at flea markets with club credit cards and checks that filled seven apartments and various offices in the club), and gross financial self-dealing. Furthermore, there is a twin brother.

After spending $1 million on legal fees in a series of suits and countersuits, O. Aldon James Jr. has settled the suit against him for $950,000. He, his twin brother, John, and a family friend have agreed to move out of the apartments they inhabited in the club’s residence tower by the end of July. They also agreed that they would not ever again serve as officers or directors of a nonprofit organization in New York.

A longer article that’s well worth reading discusses the fact that O. Aldon had built the membership and financial stability of the club significantly over his tenure, but points out that the attorney general is not the only one who thinks he and his brother and friend were out of line. The article cites a previous case involving O. Aldon, John, and the club’s dining room operator. All three pled guilty to tax evasion, and John James was ordered to cough up $500,000 in fines and restitution and spend three months in a psychiatric facility for using the club’s tax exemption to buy and sell jewelry.

The other club members are not of a mind and the dispute has caused deep divisions. Ted Andrews is a member of the group pursuing the ouster and, in his opinion, “Aldon James and his group created a mini-communist state there, with portraits and busts of him everywhere…If you were friends with Aldon, things went smoothly, and if you weren’t friends, there was a lot of direct and indirect social pressure put on you. I was put off the admissions committee; I felt pressure from other club members. He controlled people’s lives to some extent because he controlled the apartments in the building. Control was his middle name.”

But Laurence S. Cutler, the chairman and founder of the National Museum of American Illustration in Newport, R.I., and a member of two decades, says of the current president, “Dianne Bernhard is a cultural fraud…If you look at her art, it’s the kind of stuff you see on velvet. I could never understand how Aldon could have this vacuous woman at his side, and then she turned out to be Brutus.”

When another member started trying to clear out some of the rooms in which the hoarding had occurred, she came across not only uncashed rent checks and donations, but romantic letters between O. Aldon and some potential benefactors of the club.

And finally, in September of last year, according to this article, “members returned to a club transformed: new leopard-print rugs in the parlors, tiger-striped upholstery on couches, turquoise suede on the dining room chairs. A Tiffany fountain was replaced by a large mirror.” The renovations prompted a former board member to comment that it looked like a brothel.

But resident and member Esther R. Dyer thinks that O. Aldon’s faults are outweighed by his contributions to the club. “There’s a way to do transition that honors the past,” she said. “I don’t believe you need to destroy the person who built the club.”—Ruth McCambridge

  • Nikki Oldaker

    So sorry to hear all of this…Aldon was very kind to me during the launch of my Samuel J. Tilden books. The mansion is a historical landmark because it was the home of one of New York’s greatest Governors, Samuel J. Tilden…It was also where he lived during his 1876 Presidential campaign…

    As for Diane -finally, someone has brought to light how I’ve felt about her betrayal to him…The Brutus comparison fits. All Aldon needed was someone to assist him in organizing the mess –just as any good CEO needs organizing Managers to keep them on track.

    I hope this is this is the end of the Club’s nightmares and the members, Artists, Performers and Writers will continue to enjoy and flourish in Tilden’s magnificent Gramercy estate. When I walked through the doors there I couldn’t stop for a moment visualizing the man and what he accomplished in his lifetime, especially his dedication to rid our country corruption.

    Thank you for a very well penned article not slanted as others have been at one person. There is always more than one side to a story.

  • Barbara Ann Jackson

    It is good that the New York Attorney General filed that lawsuit in the National Arts Club matter –that case was indeed necessary. But permit me to point out that NONPROFIT FRAUD victims almost NEVER RECEIVE recompense for being exploited. It goes without saying that nonprofits are often formed for purposes of addressing some social condition to benefits the public. Therefore, when fraud is committed, such purposes and the people who were supposed to be helped with the resources and money that was fraudulently taken and misused, usually don’t fare as well as Attorneys Generals. In fact, if victims of Nonprofit fraud don’t always have the means for filing lawsuits or for acquiring pro bono legal representation –and often victims don’t know what laws were broken. So, those victims remain defrauded victims. Accordingly, the NONPROFIT FRAUD VICTIMS I’d like to call attention to, are victims of Disaster Relief Fraud –when nonprofit organizations take advantage of Federal and State programs such as DHAP programs and funding intended to aid disaster victims.

    Since DISASTER RELIEF FRAUD IS A RECURRENT BILLION DOLLAR pervasive social problem ANYTIME serious hurricanes, tornadoes, wild fires, floods, and so on occur, it is imperative to expose and explore THE EASE in which nonprofits are able to access all sorts funding unlawfully, and fail to use those funds in the manner for which it was intended. Even worse, it is imperative to expose the nonprofit fraud associated with Disaster Relief, because as evident from Katrina and Rita victims, considering the massive amounts of federal money given to Gulf Coast recovery, too few of us have rebuilt our lives. Hopefully, disaster relief fraud executed by nonprofit organization –and methods as to how easily it occurs, is something that publications like yours can help get the word out. A TRUE case In point Nonprofit Fraud situation involving HUD funds and other federal programs, has been filed in federal lawsuit: Jackson v. Walker, Civil Action No. 5:13-CV-02247. The Amended Complaint can be found here: http://www.lawgrace.org/2013/10/11/lawsuit-seeking-10-million-against-lake-community-development-corp-shreveport-housing-authority/