Parade Limbo: No Puerto Rican Day Parade for New York City?
One week ago,
LatinTRENDS reported that a decision would soon be made regarding the
Attorney General’s Charities Bureau probe into the financial handlings and other issues regarding
six board members of the National Puerto Rican Day Parade also known as the
NPRDP. While
Attorney General Eric Schneiderman
is still preparing to release the findings of the investigation some
disturbing news is coming out today regarding whether or not there will
be
Puerto Rican Day Parade this year.
According to
State Senator Ruben Diaz Sr. of
The Bronx the prospects of the parade happening this year may be up in the air.
Why? Well, the length of the investigation into the
NPRDP.
“
Last year after the parade [ Schneiderman] could have taken the whole board into receivership and allowed a new board to coordinate the parade,” said
Diaz, seemingly questioning the handling of the investigation. “
Now months before the parade he wants to remove the president?”
Senator Diaz Sr. added that he did not find nothing wrong with the board members of the
NPRDP being investigation. However, he believes the investigation and the recent resignation of the board’s chairwoman
Madelyn Lugo would “
destroy the parade and destroy the community” which is celebrated by an estimated 1 million of
New Yorkers.
Although she resigned from her position as chairwoman,
Madelyn Lugo is doing so as a sign of protest against
Attorney General’s Charities Bureau and
Attorney General Eric Schneiderman. In a statement released yesterday,
Lugo defended herself and the other board members who risk to lose their positions.
“
I believe that this is injustice for me, to resign as a member of the board,” said Lugo, about the investigation. “
I’ve been working with this board for a very, very, very long time.”
The spotlight fell on the
NPRDP last year after the controversial dealing with
MillerCoors which had
Coors beer cans wrapped in the
Puerto Rican. The sponsorship between the two set off questions regarding the board of the
NPRDP’s sponsorship arrangements.
In-addition to sponsorships, the
NPRDP finances also came under question.
In tax documents, the
NPRDP finances were in
disorder believed to be at the mishandling of the board members. A
deficit at the end of 2011 was discovered to be around $880,000 despite
having raised more than $2.4 million from the years 2007 to 2011. Also,
in 2011 there were no traces of scholarships being distributed in said
year’s tax filings. The deficit in the 2012 tax reports showed that the
deficit grew to an estimated $1 million or so.
The tax documents of the
NPRDP also revealed a relationship between the board and
Carlos Velasquez, president of
GALOS Corporation, who was the parade’s marketing agent.
Velasquez’s company was paid an estimated $85, 919 in 2011 for fundraising events held in the name of the
NPRDP.
The relationship drew attention because of allegations that
Velasquez was using the
NPRDP to market other events for
GALOS.
Lugo talked about the sponsorship handlings denying any allegations that she and the board had not “
misappropriated any sponsorship monies,” and on the matter of
Velasquez she felt, “
disappointed and betrayed.”
Despite her resignation letter acknowledging there was no mishandling,
Lugo did admit to failing to properly oversee the
NPRDP finances. She points the finger at someone else concerning the finance issues of the
NPRDP.
The blame, according to
Lugo, goes to the
NPRDP’s outside business and marketing agent who happens to be
Velasquez.
Velasquez is accused of having taken money from the
NPRDP.
“
We always at the table asking for documentation, but you receive
a report and you receive some backup documentation to the report, you
cannot go to a private company and look into the records,” said
Lugo, trying to explain the issues regarding finances
Before resigning,
Lugo suggests she wanted to stay on as the chairwoman of the
NPRDP board commented that she repeatedly asked
Schneiderman to remain on the board.
However, in her letter
Lugo wrote: “
He refused” and that “
I have been informed by the Attorney General that I have no other choice.”
With the recent events unfolding,
Senator Ruben Diaz Sr. said he will hold a press conference on Thursday in-which
Lugo will appear. While
Senator Diaz Sr. has been outspoken about the investigation hindering the parade this year others are not as concerned.
Attorney for the
Boricuas for a Positive Image,
Ramon Jimenez finds the concern for the parade felt by
Senator Diaz Sr. ridiculous.
“
It’s a historical moment where we can reclaim our parade, which has become about the stereotyping of Puerto Ricans,” said
Jimenez. “
There
is still enough time to hold a parade that highlights our history and
culture but there might be less floats advertising beer and less naked
women.”
Seeing the investigation as a chance to “better” the parade,
Jimenez
also added in his statement that he has been asked by the attorney
general’s office for a list of candidates who might be able to sit in
the board and in the short amount of time remaining help organize this
year’s parade.
“
We recommended people that have a long history of service to the community and integrity,” said
Jimenez, about the list of candidates who could do the job of the exiting
NRPDP . “
This is not just about this year’s parade — it’s about the future.”
The
Boricuas for a Positive Image is a group known for protesting the flag’s image on the cans of
Coors and the dealing of
NPRDP with
MillerCoors which allowed it.
While
Lugo is no longer apart of the
NRPDP board, and
Attorney General Eric Schneiderman’s findings have yet to be released, the story is still developing on whether or not there will be a
Puerto Rican Day Parade come this June.
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News from Attorney General Eric T. Schneiderman
FOR IMMEDIATE RELEASEFebruary 13, 2014
New York City Press Office / 212.416.8060Albany Press Office / 518.473.5525 nyag.pressoffice@ag.ny.gov Twitter: @AGSchneiderman
A.G.
SCHNEIDERMAN JOINS CITY COUNCIL SPEAKER AND COMMUNITY LEADERS IN
ANNOUNCING NEW LEADERSHIP AND $1.1 M IN DEBT RELIEF AND PAYMENTS FOR THE
NATIONAL PUERTO RICAN DAY PARADE
Governance
Reforms To Be Adopted; Prominent Puerto Rican Leaders Are Newly
Appointed Directors; Parade Board President, Treasurer, General
Coordinator Stepping Down
For-Profit
Parade Fundraiser Carlos Velasquez Required To Forgive Organization’s
$1 Million Debt And Repay $100,000; Is Permanently Barred From Any
Association With The Parade
Schneiderman: Settlement Offers This Remarkable NY Event A New Beginning
NEW
YORK – Attorney General Eric T. Schneiderman today joined New York City
Council Speaker Melissa Mark-Viverito and other community leaders in
announcing new leadership and a comprehensive settlement his office has
reached with the National Puerto Rican Day Parade, Inc. (NPRDP) and its
long-time exclusive marketing agent and professional fundraiser,
G.A.L.O.S. Corporation, Inc. (GALOS). The agreement resolves the
office’s investigation into the misappropriation of NPRDP’s charitable
assets and the conduct of its board of directors. Under the settlement,
GALOS is required to forgive approximately $1 million in debt that NPRDP
owed to GALOS and to pay NPRDP an additional $100,000. In addition, the
fundraising and marketing agreement between GALOS and NPRDP is
rescinded and GALOS and its president, Carlos Velasquez, are permanently
barred from any future business role on behalf of the NPRDP or in
connection with the Puerto Rican Day Parade.
As
part of the settlment, ten new directors are being added to the NPRDP
board; three of the board’s six current directors -- President Madelyn
Lugo, her husband, General Coordinator Luis Rivera, and Treasurer
Shirley Cox -- and its two honorary directors have stepped down; and the
organization is required to adopt governance reforms and strengthen its
internal controls.
"The
National Puerto Rican Day Parade is a key cultural institution for New
York City and for the Puerto Rican community worldwide,” Attorney General Schneiderman
said. “As the parade organizer, this nonprofit has a responsibility to
the Puerto Rican community, and to its donors, to ensure that the parade
is a source of pride for all New Yorkers. With the reforms we are
announcing, the new board can now take responsibility for putting the
NPRDP on firm footing, so that the parade can be a success both this
year and well into the future.”
City Council Speaker Mark-Viverito
said, “The Puerto Rican Day Parade has been recognized as an iconic
cultural event that celebrates the contributions that Puerto Ricans have
made, not only in New York City, but also across the nation. I thank
the Attorney General for his leadership and look forward to many more
years of the Puerto Rican Day parade.”
NPRDP
is the not-for-profit corporation that organizes New York City’s annual
Puerto Rican Day Parade and other related cultural events. The parade,
held on the second Sunday in June, is the nation’s leading event
celebrating the heritage and culture of the Puerto Rican community. For
more than three decades, Carlos Velasquez’s company GALOS, a for-profit
fundraising and marketing firm, has served as the exclusive fundraiser
and marketing agent for the parade. Under its contract with NPRDP, GALOS
was authorized to retain 27 to 35 percent of the funds it raised on
NPRDP’s behalf, and to charge for specific expenses.
The
Attorney General’s investigation found that, over the past six years,
GALOS and Mr. Velasquez consistently underreported to the NPRDP the
revenues they raised from sponsors of the parade. From 2008 on, the
total amount of revenue that GALOS and Mr. Velasquez failed to report
was approximately $1.4 million. Net of the commissions that GALOS would
have received on these revenues, the result was that GALOS effectively
misappropriated for its own and for Mr. Velasquez’s benefit
approximately $1 million of NPRDP’s money.
In
addition, GALOS and Mr. Velasquez used for their own purposes a
significant number of travel vouchers that had been provided to NPRDP as
a form of in-kind payment by two airline carrier sponsors of the
parade. GALOS’ false reporting, the investigation found, was not limited
to the information it provided to its client NPRDP, but carried over as
well to the false forms GALOS filed with the Attorney General’s
Charities Bureau, which were signed by Mr. Velasquez.
The
investigation did not find evidence that the members of NPRDP’s
all-volunteer board engaged in any improper conflict-of-interest
transaction. NPRDP and its board, moreover, fully cooperated in the
Attorney General’s investigation. The investigation determined, however,
that under the leadership of long-time President Madelyn Lugo, NPRDP’s
board had failed to implement basic financial controls or exercise
adequate supervision over GALOS’ conduct.
Among
other things, the board failed to require any substantiation from Mr.
Velasquez for the figures in the extremely cursory revenue reports
provided by GALOS; failed to adopt annual budgets; and failed, in
contravention of its own by-laws, to establish a functioning finance or
audit committee. The lack of financial controls and the excessive
delegation to Mr. Velasquez of financial decision-making, the
investigation found, led NPRDP to spend far beyond its means, eventually
accumulating a nearly $1 million debt to GALOS on account of expenses
that GALOS incurred on the parade’s behalf. Further, GALOS’ contract
was renewed for a new 10-year term in 2010, when the organization
already was hundreds of thousands of dollars in debt to GALOS, and
without the board obtaining any competitive bids from other marketing
agents or fundraisers.
The
Attorney General’s investigation also found that the Diversity
Foundation, Inc., a New York not-for-profit corporation run out of
GALOS’ offices whose directors all had close ties to Mr. Velasquez,
improperly allowed itself to be used to advance GALOS’ commercial
interests ahead of the foundation’s charitable mission of providing
scholarships for college students of Puerto Rican or other Hispanic
descent. Among other things, the investigation found that the Diversity
Foundation was used to commingle funds that had been raised to benefit
the NPRDP’s separate scholarship program; that Diversity’s name was used
on behalf NPRDP without NPRDP’s consent; and that Diversity spent less
on scholarships than it stated in its public filings.
Pursuant
to the settlement reached by Attorney General Schneiderman’s office,
the NPRDP-GALOS contract is terminated effective immediately, GALOS may
not collect any portion of NPRDP’s nearly $1 million debt, and GALOS is
required to pay NPRDP an additional $100,000. In addition, GALOS and Mr.
Velasquez are required to cooperate with NPRDP in its reorganization of
the parade with new personnel, and any acts of interference on their
part could result in additional monetary penalties. GALOS and Mr.
Velasquez are permanently banned from further fundraising on behalf of
the NPRDP or any marketing of the parade.
The
settlement also contains provisions designed to substantially strengthen
the NPRDP board and enhance its ability to carry out its mission in a
transparent and financially responsible manner. First, as required by
the settlement, former Chairperson Madelyn Lugo, NPRDP Treasurer Shirley
Cox and Lugo’s husband, Luis Rivera, the General Coordinator of NPRDP,
have resigned their positions, as have honorary board members Rosalinda
Ortega and Maria Roman Dumen. Three current board members, Vice
Chairperson Melissa Quesada-Carino, Secretary Trinity Padilla and
Director of External Affairs Rafael Dominguez, will remain on the board.
Second, the agreement calls for the nomination by NPRDP of ten new
directors acceptable to the Attorney General’s office. Working
cooperatively, the NPRDP board has nominated, and the Attorney General’s
office has approved, the following nine new directors; together, they
bring a much broader range of competencies and perspectives to the
leadership of the parade than it has ever enjoyed before:
- Lorraine Cortes-Vazquez, Executive Vice President for Multicultural Markets & Engagement at AARP
- Anthony Diaz, a Senior VP in Sales & Trading for a prominent blue chip company
- Maria Elena Girone, President & CEO of Puerto Rican Family Institute
- Rosa Gutierrez, Vice President in finance at AIG
- Louis Maldonado, Partner and Managing Director at d expósito & Partners, a multimedia communications agency
- Ululy Rafael Martinez, community activist, attorney and Bronx Community College Foundation board member
- Carmen A. Pacheco, Esq., founding Partner at Pacheco & Lugo, PLLC
- Orlando Plaza, owner of Camaradas El Barrio, a restaurant and cultural mainstay in Spanish Harlem
- Lorraine Rodriguez-Reyes, actress and producer with extensive experience in the film, television and theater industry
Third,
the agreement requires NPRDP to amend its by-laws and adopt new
policies and procedures to enhance its internal controls and financial
oversight, including the formation of an audit committee, processes for
the nomination and election of new directors, the adoption of
anti-nepotism rules and conflict-of-interest and whistleblower policies,
and the requirement to obtain competitive bids from prospective
fundraisers or marketing agents. In addition, all directors, both the
remaining ones and the newly elected, will be required to complete an
ethics and non-profit compliance training course.
The
settlement agreement also requires the dissolution of the Diversity
Foundation, with any remaining assets to be distributed by the Attorney
General’s office in a manner consistent with the scholarship purposes
for which the funds were solicited. In addition, for a period of five
years, the members of the Diversity Foundation’s board, its Executive
Director Debra Martinez and its advisor Karen Pillot are barred from
serving as an officer, director or employee of NPRDP or in connection
with any parade-related activity.
The
investigation of this matter was conducted by Executive Division Senior
Enforcement Counsel David Nachman and Assistant Attorney General
Jennifer Michael of the Charities Bureau, with the assistance of Senior
Accountant Cintia Brown-Felder, Principal Accountant Judith
Welsh-Liebross and Research Analyst Liam Arbetman, under the supervision
of Executive Deputy Attorney General for Social Justice Alvin Bragg.
A copy of today's settlement can be viewed here.
