Abby & Jennifer Recovery Foundation for years has been out of compliance

By {screen_name}
Friday, April 27, 2012

Ten years ago this month, hundreds of people gathered in Grand Junction to look for a mother and daughter the vast majority of them had never met.

For 11 days, with the assistance of a Texas-based nonprofit organization, they scoured canyons, sagebrush-covered hills and the Colorado and Gunnison rivers, trying to learn what had become of 34-year-old Jennifer Blagg and her 6-year-old daughter, Abby.

Connie Flukey, a mother of eight, joined the initial wave of volunteers, drawn by the pleas for help from Jennifer’s mother. She quickly formed a spin-off of the Texas group and vowed to search for missing persons in the name of Jennifer and Abby.

But a Daily Sentinel investigation found the Abby & Jennifer Recovery Foundation has been out of compliance with state and federal regulations—and possibly in violation of state law—for years.

The Colorado Secretary of State’s Office dissolved the organization in 2004 for failing to file the annual reports required of all businesses and nonprofits registered with the state. The Internal Revenue Service revoked its nonprofit status two years ago because it hadn’t submitted the requisite tax forms for three consecutive years.

In fact, the foundation has never filed documents with the IRS indicating how much money it has raised and spent. Yet it continues to solicit contributions, creating a Facebook page earlier this month that included a post about the creation of a PayPal account for donations.

The troubles raise a host of red flags about the group, said Lindsay Nichols, spokeswoman for GuideStar, a Washington, D.C.-based nonprofit that gathers and shares information about the roughly 1.8 million IRS-recognized nonprofits operating in the U.S.

“In a word, we say, ‘Don’t,’ ” Nichols responded when asked what she would tell people considering donating to a group that has had its nonprofit status revoked. “You just can’t donate to an organization that is not a sanctioned nonprofit. Especially in this economy when money is getting tighter, (people) are getting smarter about how they donate their money.”

Flukey, the executive director of the Abby and Jennifer Recovery Foundation, said she didn’t know until roughly a month ago that the foundation wasn’t keeping up on its paperwork with the state and the IRS. She said the foundation’s treasurer, E. Michael Hale, was in charge of those responsibilities, and she assumed he tended to them.

In an extensive interview with the Sentinel, Flukey said she knows nothing about the legal and financial aspects of the nonprofit, focusing instead on the day-to-day operations, but she acknowledges she should have been more involved. She also insisted all money raised over the years has gone to pay for searches or to the families of missing persons, and there has been no malfeasance on her part. And she vowed to reorganize and rebuild the foundation.

“If I didn’t feel this could get fixed, I would never tell people to contribute,” she said. “I would never tell somebody it was a not-for-profit if I knew it was not.”

THE GROUP’S BEGINNINGS

Flukey showed up on the first day of the search for the Blaggs in April 2002, agreeing with her husband, Kent, that they would want such assistance if one of their children were missing.

Initially, the Laura Recovery Center, a Friendswood, Texas-based nonprofit group founded in response to the 1997 disappearance and murder of a 12-year-old girl, asked Flukey to assist with the crush of media covering the search.

But when the Laura Recovery Center pulled up stakes after a few days, leaving it to local residents to take charge of combing a 45-mile radius around the Blagg house, Flukey stepped forward. With the blessing of Jennifer Blagg’s brother, David Loman, the Abby & Jennifer Recovery Foundation was born out of the 11-day search for the Blaggs.

Two months after the Blagg search concluded, the foundation and its growing volunteer group—at the time, Flukey said she had a group of 300 people she could call anytime—traveled to Salt Lake City to look for Elizabeth Smart.

The group filed its articles of incorporation with the Secretary of State’s Office in July 2002. Its initial board of directors featured Loman as the president, Kent Flukey as vice president, Hale as treasurer and Roxie Willbanks as secretary. Hale was listed as the registered agent.

 

TROUBLES WITH THE STATE

After the search for Smart ended, the foundation’s activities quieted down considerably for the next few years, according to Connie Flukey. Volunteers were rarely, if ever, called upon during that time.

In May 2004, the Secretary of State’s Office dissolved the foundation for failing to remit an annual report, which effectively lets the state know a business or nonprofit is still operating and protects the organization’s trade name. That prevents somebody else from using the name.

Andrew Cole, spokesman for the secretary of state, said it’s not unusual for an entity to fail to file an annual report, often because of an oversight or because a business simply has closed. But in the case of most nonprofit agencies, state law mandates registration.

The Colorado Charitable Solicitations Act requires charities that go after contributions to file a registration statement and financial report with the secretary of state. There are multiple ways a nonprofit group can violate the law, ranging from simply not filing required paperwork to misrepresenting its purpose or work, according to Mike Saccone, spokesman for the Attorney General’s Office.

“If they are misrepresenting their status as or as not being a charity, there could be an issue,” Saccone said, adding his office would have to receive a complaint about a nonprofit group in order to conduct an investigation.

Penalties can range from simply dissolving the organization or obtaining a restraining order preventing a nonprofit group from soliciting to imposing fines or filing misdemeanor or felony charges.

Cole said his office is more interested in getting nonprofit agencies to comply with the law than punishing them.

“The whole point of the law is that people who are contributing money to charitable organizations have the information they need to make a good decision,” he said. “If you’re not registered, people lack that information.”

He said the state would have mailed a notice to the foundation informing it that it risked being dissolved without filing an annual report.

 

TROUBLES WITH THE FEDS

In addition to not complying with state requirements, the foundation failed to file a Form 990, something all tax-exempt organizations must submit annually to the IRS. The IRS and GuideStar say they have no record of the foundation ever filing the form, which details how much money is collected and spent each year.

Prior to 2006, nonprofits that received less than $25,000 in contributions annually weren’t required to file information returns with the IRS. That changed with the passage of the Pension Protection Act, which, among other things, required all nonprofit groups, regardless of how much money they received, to file with the IRS, according to GuideStar’s Nichols.

Those small groups that previously weren’t mandated to file were given three years to come into compliance, IRS spokeswoman Karen Connelly said.

The foundation’s 501(c)3 status was revoked in June 2010 for failing to file a Form 990 for three consecutive years.

Nichols said a total of 275,000 nonprofit groups lost their tax-exempt status when the law took effect in 2007. It’s a significant change not only for the groups who lost their status because they legally would have to report donations as income, but potentially for donors who could be fined if, believing they contributed to a nonprofit group, attempted to deduct their donation from their taxes, she said.

“It’s a big, hairy mess, frankly,” she said.

Like the state, the IRS would have mailed letters to the foundation, not only giving it a heads-up about the 2006 law requiring it them to file paperwork, but notifying it that it was out of compliance after it failed to file, Connelly said.

 

WHO’S RESPONSIBLE?

Flukey said she had no idea the foundation wasn’t registered with the state and that the IRS had yanked its tax-exempt status until Carrie Capra, who Flukey said has assisted the foundation in developing maps for searches, notified her.

“I flipped,” Flukey said.

She claimed she delegated those responsibilities to Hale, the treasurer and registered agent.

“I just assume that things are good,” she said.

Hale, she said, told her and her husband that as long as the foundation pulled in less than a certain amount of money—she said she didn’t remember how much—it wouldn’t have to file any paperwork with the IRS. Flukey said she wasn’t aware of the 2006 law change until the Sentinel told her about it.

Hale, who owns Hale Accounting and Financial Consulting, with offices in Grand Junction and Charleston, S.C., told the Sentinel he hasn’t been in contact with the Flukeys for several years outside of preparing their personal income taxes a few years ago.

“I thought it was dead and gone,” he said of the foundation, indicating the Flukeys had no money to pay for registration with the state and were operating on their own resources.

He said he didn’t file reports with the secretary of state because the board gave him no indication it wanted to keep the foundation active. Hale, whose profile on social networking website LinkedIn indicates he worked as a special agent with the Criminal Investigation Division of the IRS between 1986 and 1997, also gave no indication he filed the required tax forms with the IRS, suggesting there was no income to report. The IRS’s Connelly, however, said foundations must file even if they collected no money.

Hale said he didn’t remember receiving any notices from the state or IRS about the foundation’s failure to file the necessary paperwork with those agencies. The IRS, however, lists the foundation’s mailing address at 359 Colorado Ave., Suite 303, an office Hale previously occupied. Hale said mailings probably went to the Flukeys’ address. Connie Flukey said she never received anything from the state or the IRS and insisted Hale’s address was on the foundation’s paperwork.

Without any forms on file with the IRS, it’s impossible for donors or anyone else in the public to know how much money the foundation has collected or spent, or how money has been spent over the years.

Flukey estimated the foundation raised roughly $8,000 in its 10 years while she and her husband have spent more than $20,000 out of their own pockets supporting the foundation. She said most of the money raised and spent relates to the 2007 search for Grand Junction mother Paige Birgfeld, whose remains were found last month.

 

SUPPORT, CONCERN

FOR THE FOUNDATION

Birgfeld’s father, Frank, said the problems plaguing the foundation strike him “more as omission rather than commission,” and he’s not concerned. He said the group was founded for good reasons and is an underappreciated asset in the community.

“Certainly without question our family is hugely indebted to them for what they did on behalf of Paige,” he said. “Few of the people knew Paige, and none of them knew me.”

Birgfeld, who guessed he’s donated hundreds of dollars to the foundation, said he saw the Flukeys routinely dip into their own pockets to cover the costs of the search for his daughter.

“I’m not surprised that somebody didn’t know to file, but I don’t see anything to suggest dishonesty,” he said. “I will continue to support them.”

Bob Wolcutt, executive director of the Laura Recovery Center, was in Grand Junction at the beginning of the Blagg search and thought Flukey performed good work and has her heart in the right place. He said it’s not unusual for organizations similar to the Laura Recovery Center to form in communities to help search for missing people, and that initially there’s a lot of emotion and enthusiasm that serve to invigorate the group.

“But the reality is, over the long haul, the organizations do fail because they haven’t really figured out there generally isn’t a whole lot of money,” Wolcutt said. “Once the initial crisis is over, they have to figure out how to raise the money and all the paperwork involved (with) state and federal requirements.”

Wolcutt said there is a lot of work involved in running as a nonprofit an organization that searches for missing persons.

“It doesn’t run on its own. You have to be as actively involved as you can to make sure everything gets done,” he said.

He said he’s glad to see Flukey is trying to keep the foundation running and believes it can do a lot of good “if they have the right people involved.”

Mesa County Sheriff Stan Hilkey said the foundation’s struggles could harm not just it, but law enforcement and other agencies involved in missing-persons searches.

“From the standpoint of when this organization was helping law enforcement, I think the public often believes they’re part of the law-enforcement agency,” he said. “This stands to hurt everyone’s credibility in those kinds of operations. I hope they can get this issue resolved quickly.”

 

THE FUTURE

Flukey says the foundation is taking steps to recover and reorganize.

She said her family hosted a yard sale to raise money to re-register the organization with the Secretary of State’s Office. Records show that happened Wednesday, with the foundation now registered under the Flukeys’ home address. Reinstating its tax-exempt status also is on the to-do list, she said.

Volunteers next month will begin calling the 2,000 or so people listed in the foundation’s database to enlist their help. She said she started putting together marketing packets and will seek financial backing from corporate sponsors. Someone agreed to donate a fifth-wheel trailer in which searchers can travel and sleep, saving on lodging costs, she said.

Flukey said she intends to enlist the help of attorneys to ensure everything is being done legally and convene a new board whose members will stay committed to the cause.

“I will be aware of every single thing with every single board member,” she said. “It shouldn’t have to be that way. But I guess it has to be that way. I have way too much trust that this is other people’s passion.”

What if she’s unable to generate the necessary resources?

“We would still continue to do it,” she said of searching for missing people. “We will, no matter what, continue to do it.”