AP IMPACT: THE QUILT THAT ISN'T

Kevin Held was earning a living as a self-employed handyman in Peoria, Ariz., when he formed Stage 1 Productions in 2003 to promote the American Quilt Memorial honoring the lives lost on Sept. 11. He said thousands of individual pieces would be crafted together on white, king-sized sheets that, when sewn together, would stretch 1 1/2 miles across an eight-lane highway.
That never happened.
The $713,000 that Held raised from students, school fundraising campaigns, T-shirt sales and other donations is gone. More than $270,000 of that went to Held and family members, records show.
In a July interview, Held said he hoped to finish the quilt in a few months. But he changed his mind a few weeks after the AP began asking questions, abruptly shutting the project because of "tough economic times."
Held has done an impressive job raising money, persuading students to hold "penny drives" and police officers to buy T-shirts promoting the quilt for $20 or more. But he's spent a lot in doing so.
Since 2004, Held paid himself $175,000 in salary, health insurance, other benefits and a weekly car allowance he received for most of that time. He's owed another $63,820 in deferred salary, according to the charity's most recent tax filing. Held argues that he's actually owed closer to $420,000, because he was supposed to receive $60,000 annually since 2003, and has received far less.
He told the AP in July that more than $50,000 paid in 2005 to satisfy a loan never reported by the charity went to his mother to repay "an accumulation of a bunch of small loans." But when pressed last week — after the AP pointed out that his mother died that year — Held said he paid himself more than $45,000 to repay the loan. He said he couldn't explain the other $5,000 without researching it.
He said he paid another $12,000 to his brothers, Dave and John, as consulting fees.
Held also charged the charity more than $37,000 for office rent, utilities and other related expenses, according to the group's tax forms. But the addresses reported by the charity for most years were Held's home and private mail boxes at PostNet and UPS stores in Arizona and south Texas.
Held said he received much of the office payments to cover the cost of working out of his home.
Held spent more than $170,000 on travel since 2004 to promote the quilt. He rarely traveled without his two Alaskan Malamute dogs, one at 120 pounds and the other 200 pounds. He also listed $36,691 in credit card and bank charges since 2005 and $10,460 for an expense listed as "petty" in 2009.
"I loved going out and traveling," he said. "I loved going to the police departments."
Held acknowledges he struggled managing the charity's finances, but he said he didn't live off the nonprofit. "If I made a mistake, I made a mistake. If I did, then crucify me. I never said I was a professional at this."
Still, he's come a long way since serving a few days in a Tampa jail in 1993 for misdemeanor theft and battery. With his wife, he's moving into a $660,000, five-bedroom house overlooking a lake in Chandler, Ariz.
The charity's finances surprised the Rev. Jude Duffy, identified in the charity's tax filings as board chairman. He said he had no idea that Held had collected more than $713,000 for the charity until the AP showed him the documents.
Duffy, who lives in St. Lawrence Friary in Beacon, N.Y., said he became suspicious several years ago after Held created a new fundraising project without finishing the quilt. The latest project — Operation Adopt-a-Soldier — promises students postcards and posters that they can send to soldiers in Iraq and Afghanistan if each class will send Held up to $40.
"Is this some kind of scam?" Duffy said he asked Held in an email. "Are you playing on the emotion of the people with this?"
Held responded that he was insulted by the suggestion and assured Duffy that he would finish the quilt project.
"As we look at it today," Duffy said, "certainly it seems to be that we were duped entirely by whatever he had in mind. I don't know what that is. But I would call it a scam or a clever scheme."
Even Held's story of how the quilt project started is suspect.
For years, he claimed he had come up with the idea for a student-led national tribute after hearing that Dominique Deal, a family friend's high school daughter, crafted her own memorial on a bed sheet.
But she says that story isn't true.
"I think he wanted people to think I came up with it. But I just helped," said the woman, now Dominique Greer, 25, and married in Peoria, Ariz. "I guess he thought it would be weird to say he started it."
Held now admits he made up the story because he didn't want to receive credit.
He insists he has accounted for every dime spent by the charity, even if he can't justify all the expenses.
"It doesn't mean I'm a bad person," Held said. "It just means I made a mistake."

AP IMPACT: Some 9/11 charities failed miserably

By BRETT J. BLACKLEDGE and DAVID B. CARUSO

NEW YORK – Americans eager to give after the 9/11 terrorist attacks poured $1.5 billion into hundreds of charities established to serve the victims, their families and their memories. But a decade later, an Associated Press investigation shows that many of those nonprofits have failed miserably.
There are those that spent huge sums on themselves, those that cannot account for the money they received, those that have few results to show for their spending and those that have yet to file required income tax returns. Yet many of the charities continue to raise money in the name of Sept. 11.
One charity raised more than $700,000 for a giant memorial quilt, but there is no quilt. Another raised more than $4 million to help victims, but didn't account publicly for how it spent all of the money. A third helps support a 9/11 flag sold by the founder's for-profit company.
There are other charities that can account for practically every penny raised — except that all the money went to pay for fundraising, and not the intended mission.
To be sure, most of the 325 charities identified by the AP followed the rules, accounted fully for their expenditures and closed after fulfilling identified goals.
There have been charities to assist ill and dying first responders, to help families of the dead, to help survivors and to honor the memory of victims. And there are charities that revolve around the flag, patriotism, motorcycle rallies and memorials of all sizes and shapes.
But in virtually every category of 9/11 nonprofit, an AP analysis of tax documents and other official records uncovered schemes beset with shady dealings, questionable expenses and dubious intentions. Many of those still raising money are small, founded by people with no experience running a nonprofit.
• The Arizona-based charity that raised $713,000 for a 9/11 memorial quilt promised it would be big enough to cover 25 football fields, but there are only several hundred decorated sheets packed in boxes at a storage unit.
One-third of the money raised went to the charity's founder and relatives, according to tax records and interviews. The chairman of the board, an 84-year-old Roman Catholic priest, says he didn't know he was chairman and thought that only small amounts of money had been raised. He says he was unaware that the founder had given himself a $200 per week car allowance, rent reimbursement and a $45,000 payment for an unreported loan.
• There's a charity for a 9/11 Garden of Forgiveness at the World Trade Center site — only there's no Garden of Forgiveness. The Rev. Lyndon Harris, who founded the Sacred City nonprofit in 2005, spent the months following 9/11 at ground zero helping victims, relatives and first responders. He said he formed the charity to fulfill "our sacred oath" to build the garden. Tax records show the charity has raised $200,000, and that the Episcopal priest paid himself $126,530 in salary and used another $3,562 for dining expenses between 2005 and 2007.
Harris said he sees his charity's work as a success even if there is no garden at the site. "I saw our mission as teaching about forgiveness," he said.
• Another Manhattan 9/11 charity, Urban Life Ministries, raised more than $4 million to help victims and first responders. But the group only accounted for about $670,000 on its tax forms. Along with almost four dozen other 9/11 charities, Urban Life lost its IRS tax-exempt status this year because it failed to show how money was collected and spent.
• The Flag of Honor Fund, a Connecticut charity, raised nearly $140,000 to promote a memorial flag honoring 9/11 victims. The flag, which contains the name of every person killed on Sept. 11, 2001, is on sale today at Wal-Mart and other retail stores. But only a tiny fraction of the money from those sales goes to 9/11 charities, with most going to retail stores, the flag maker and a for-profit business — run by the man who created the flag charity.
The AP examined charities that received tax-exempt status from the Internal Revenue Service by promising to serve victims of the 9/11 tragedy, build memorials or do other charitable works in honor of the dead. The charities were identified using data maintained by Guidestar, a private database of nonprofits that the IRS recommends.
The $1.5 billion donated to these charities was in addition to the billions spent by Congress and states and established nonprofits like the Red Cross.
Most of the 9/11 charities fulfilled their missions, but the AP analysis found dozens that struggled, fell short of their promises or did more to help their founders than those affected by the terrorist attacks.