Wednesday, September 27, 2023
Courthouse News Service
Wednesday, September 27, 2023 | Back issues
Courthouse News Service Courthouse News Service

Ex-CFO Alleges Funny Business at Charity

PHOENIX (CN) - Its former CFO claims in Federal Court that United Cerebral Palsy of Central Arizona fired him after he refused to approve spending "hundreds of thousands of dollars" on an ad campaign "to benefit Circle K," which would have violated the charity's nonprofit, tax-exempt status.

Garth Espe sued United Cerebral Palsy of Central Arizona. They are the only parties to the case.

Espe claims that after UCP hired Armando Contreras as CEO, it began "spending hundreds of thousands of dollars more on an advertising campaign to benefit Circle K, an amount that far exceeded what could reasonably be allocated to advertising and still maintain UCP's nonprofit and tax-exempt status under Arizona and federal tax laws."

UCP received about $4.1 million in donations in 2010 through a "Circle K campaign to collect change in its convenience stores," according to the complaint.

Espe claims that in July 2011 Contreras told him "that Circle K wanted and Mr. Contreras intended to provide Circle K with a bigger presence on the UCP-funded advertising billboards." Espe says he responded "that the plan was illegal in that it improperly inured a benefit to Circle K," according to the complaint.

Contreras "immediately expressed his unhappiness with plaintiff's resistance on those issues and expressed concerned about losing the Circle K donations to other nonprofits if UCP did not give Circle K the advertising exposure it wanted," the complaint states.

It continues: "As a result of the excess expenditure on advertising, Mr. Contreras needed plaintiff to falsely allocate the advertising expenses to program expenses to comply with the legal requirements to maintain UCP's status, but plaintiff refused to engage in that falsification of UCP's accounting and financial statements, which were records required to be kept for the government's review in the event of a tax audit."

Espe claims he also "expressed his objection to UCP inuring benefits to friends of Mr. Contreras while receiving no material benefit in return," and that he refused to "sign a contract providing a guaranteed monthly payment to one of Mr. Contreras' friends, Theresa Cordova, when the contract required no performance benefiting UCP."

Espe also "reported his concern that UCP was failing to pay overtime compensation to Day Treatment and Training staff for respite services in violation of the Fair Labor Standards Act overtime law," according to the complaint.

Espe says he "first became concerned about the overtime violation in the spring of 2011, when he learned of a similar agency that lost a United States Department of Labor investigation under similar circumstances," but when he told Contreras, "he ignored it."

Espe says he complained of the labor violation to the human resources director, managers and the finance committee, and was fired in August 2011.

He seeks lost wages and damages for violations of the Arizona Employment Protection Act and the Fair Labor Standards Act. He is represented by David Kresin and Samuel Randall with Robaina & Kresin.

Follow @@jamierossCNS
Categories / Uncategorized

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.