Kane In Your Corner: NJSPCA no-bid contracts questioned

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Since 2012, the New Jersey SPCA spent hundreds of thousands of dollars of donated funds on no-bid deals with companies run by its trustees, officers or their spouses, a Kane In Your Corner investigation has found. The group also failed to accurately report the spending to the IRS, as required by law.

Until mid-April, Chief Frank Rizzo was also the long-time treasurer of the state’s animal police. But many of the bills paid on his watch went to his own companies. A review of the NJSPCA’s check registers shows that since 2012, the group paid Rizzo’s companies nearly $110,000 for everything from the badges on officers’ uniforms to the clothing resold at fundraisers. 

It’s an arrangement Rizzo doesn’t want to talk about. He failed to return phone calls and refused to answer questions from Kane In Your Corner after a recent NJSPCA board meeting.

Rizzo isn’t alone. Public records show over the past five years, the NJSPCA has handed out more than $314,000 in no-bid deals to companies with ties to its officers and trustees.  

Richard Yocum was NJSPCA President from 2012 to 2015. During his tenure, the group spent more than $100,000 on promotional items with Ubiquity, LLC. Yocum admits his wife, Susan Jones, was in charge of marketing for Ubiquity for most of that time. Once Yocum resigned the presidency at the end of 2015, the NJSPCA abruptly stopped doing business with Ubiquity.

Kevin Rudolph is a former NJSPCA investigator and trustee. Kane In Your Corner found his auto repair shop, Midland Auto, did over $40,000 in no-bid business with the NJSPCA from 2012-2015.

And Lt. Joe Biermann wrote many of those checks. His company, JB Broadcast Media Inc., was contracted to handle bookkeeping and process public records requests. Check registers from the NJSPCA show deposits to JB Broadcast Media Inc. from 2012-2016 totaling approximately $64,000.

Daniel Borochoff, president of Charity Watch, says these no-bid deals with insiders are a bad idea in the nonprofit world. “It looks like there could be self-dealing, like these people are directing people to benefit themselves and their businesses rather than benefiting the charity,” he says.

In a written statement, NJSPCA Spokesman Matthew Stanton defends the arrangements. “With no financial support from the State of New Jersey, the NJSPCA must raise funds to support (its) core functions. Fortunately we have individuals active in this organization that are able to provide these necessary services at low costs,” Stanton says.

But are the costs really low? Animal reform group founder Collene Wronko argues that without competitive bidding, there’s no way for the public to know. “It should have been a closed bid and it should have been open to the public,” she says. 

Borochoff agrees. “There needs to be a bidding policy. Otherwise, how can they know whether they’re getting a good deal?”

A spot check of some of the purchases by Kane In Your Corner raises questions about just how good a value the NJSPCA has been getting. Last year, the NJSPCA bought 1,500 pink and grey t-shirts from one of Rizzo’s companies, Premiums and Promotions, for $7.95 and $8.95 each. Bulk t-shirts with custom single-color logos can be purchased online for as little as under $3 apiece. And a few years ago, the group bought checks from another Rizzo company, FMS Graphics, for $147. Based on its usage, the NJSPCA could have bought a five-year supply of virtually identical checks from a big-box store like Costco for under $30.

While these deals, officially known as “interested party transactions” may be troubling to some, they are allowed under IRS rules if accurately disclosed. However, Kane in Your Corner found the NJSPCA dramatically underreported them. Of the $264,300 spent from 2012 to 2015, the NJSPCA only reported $85,794; that’s 32 cents of every dollar. Kane In Your Corner found the NJSPCA underreported payments to every interested party, and failed to report any payments to Ubiquity.

In a written statement just before airtime, NJSPCA President Steve Shatkin admitted that every number the agency had provided to the IRS from 2012 to 2015 was incorrect. He said the group had hired a new accountant to review the returns.

This is the group’s third accountant in six months. The NJSPCA says, after filing the 2012 return, its first accountant had health problems and failed to file tax returns for three consecutive years, prompting the IRS to revoke the group’s nonprofit status last October. The second accountant filed the belated 2013-2015 tax returns, but the NJSPCA now says he, like his predecessor, drastically underreported transactions.

Along with the Shatkin statement, the NJSPCA also provided News 12 New Jersey with updated numbers, which it said are still subject to change. Those numbers are closer, but not identical to the numbers calculated by Kane In Your Corner. In some cases, the NJSPCA’s numbers still appear inaccurate. The group seems to still not be counting any of the payments it made by credit card, for example. In other cases, the reasons for the discrepancy were not immediately apparent.

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