More MS news articles for January 1999

Charity probed over misuse of funds

Saturday, January 30, 1999
The Associated Press

TRENTON -- State and federal investigators are looking into whether a charity duped donors, misspent money, and deducted personal expenses -- such as two trips to Paris -- as charitable ones.

The ongoing probe into the Multiple Sclerosis Association of America by state and federal investigators already has uncovered  misappropriation of funds by the founder's son and vice president.

Meanwhile, the board has been struggling to attract and reassure donors that contributions are being applied to patient equipment, research, and education.

The association was founded in 1970 by John Hodson Sr. and his wife out of their home in Oaklyn. It raised $11.4 million in 1997, and is one of the largest charities in the country associated with the nerve disorder. The largest, the New York-based National Multiple Sclerosis Society, collected nearly $50 million in 1997.

In interviews with The Associated Press on Friday, lawyers and officials with the charity confirmed that there had been financial wrongdoing. They refused to comment specifically on what they said were "personnel matters."

They said the association in late 1997 received federal and state subpoenas requesting information and records.

The state's Division of Consumer Affairs does not confirm or comment on state investigations. But Director Mark Herr said charities in violation of New Jersey consumer guidelines face up to $7,500 for the first violation, and $15,000 for each thereafter.

The founder's son, John Hodson Jr., allegedly used charitable contributions to make two trips to Paris while in the Netherlands on business, according to a published report. The report also said Hodson Jr. had been gone from work for long periods, had employees perform work on his home, and had made sexually inappropriate remarks to employees.

Errol Copilevitz, a Kansas City, Mo., attorney for the association, said employees had questionable expenditures, took cash advances and were reimbursed for inappropriate expenses.

"They have taken action to restore assets to the organization," he said.

"In almost every instance, the matter was corrected," he said, adding that some violating employees are still on the association's staff of 29.

Peter Damiri, spokesman for the charity, said the association has been overhauling its structure, oversight, and image.

Hodson Sr. quietly stepped down as president and board chairman in September. And after 10 years as vice president, Hodson Jr. was removed from office last month. Tax returns from 1996-97 show he made more than $100,000 that year. Hodson Sr. remains president emeritus, a "ceremonial" title, according to Damiri. He said the board now has more say over how the association is run.

"It's important to know that we have not changed in providing service to people with MS," Damiri said. "We're a much better and stronger organization than we were a year ago."

An interim executive director has been hired and the association is conducting a search for a permanent head, said Damiri.

He said the organization focuses on practical issues such as building barrier-free housing and helping people with multiple sclerosis get the equipment they need.

The disease affects 350,000 to 400,000 Americans. Their symptoms include numbness and tingling, vision problems, muscle spasms, and difficulty in walking.

Federal tax returns for the fiscal year ended June 30, 1997, show the amount spent on programs such as public education, housing for the handicapped, and equipment loans totaled $8.1 million, or 71 percent of the association's total revenues.

Herr said there is no state requirement on what portion of revenues should actually be applied toward the organization's mission.

Copyright © 1999 Bergen Record Corp.