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Bonding not required for nonprofits, charities that take public money

CHARLESTON, W.Va. -- Within the past month, people who handled money for Charleston's Multifest cultural festival and the Institute Volunteer Fire Department pleaded guilty to embezzling from their nonprofit organizations. Both entities receive public funding.

But state and local officials say there is no law requiring those who handle funds for nonprofits or charitable organizations to post a bond in case they mishandle public money.

"I'm required to be bonded," said Kanawha County Commission President Kent Carper. "Certainly, if a [group] is involved with public money, that would be a prudent thing to do."

Earlier this month, former Institute Volunteer Fire Department treasurer Ethel Andrews pleaded guilty in Kanawha County Circuit Court to embezzling $25,000 from the fire department in 2009 and 2010. She also pleaded guilty to embezzling $33,000 from the West Virginia State University Alumni Association, for which she also served as treasurer.

Institute Fire Chief Andre Higginbotham said the department does require officials who handle money to post a bond. C.W. Sigman, deputy emergency services director for Kanawha County, said the department's insurance carrier has already settled the matter.

In January, Deborah Starks, wife of former Multifest Executive Director Stephen Starks, pleaded guilty in U.S. District Court to federal tax fraud after admitting embezzling more than $300,000 from Multifest between 2005 and 2010. Deborah Starks handled much of the financial activity for the festival.

Multifest relies largely on corporate sponsorships to hold the annual cultural festival. But the event has historically gotten public funding from the city of Charleston and the Kanawha County Commission. Kanawha County officials also provide public funds to help support the county's 27 paid and volunteer fire departments.

Jake Glance, spokesman for Secretary of State Natalie Tennant, said nonprofit organizations and charities are not required under state law to bond officers who handle money.

Although some fire departments do bond officers who handle money, Sigman said they are not required by law to be bonded.

"It would be nice if they were, because they'd get their money back [if someone mishandled funds]," he said.

However, Sigman said conscientious fire officials will write language into their fire departments' bylaws requiring fire officials who handle money to post a bond. He said volunteer fire departments in Belle and Alum Creek are among departments that require department officials who handle money to be bonded.

Carper said any nonprofit group or charity that receives public money should be required to post a bond so money can be replaced if it's misappropriated.

"I don't know what percentage of misconduct there is out of 100 examples, but one is too many," he said. "Lately, it seems like it's been more than one."

Vicky Keene, new executive director for Multifest, hung up on a reporter before she could be asked whether the group was bonded, or whether festival organizers are going to require officers who handle money to post a bond.

Reach Rusty Marks at rustymarks@wvgazette.com or 304-348-1215.


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