WildEarth Guardians finds evidence of internal fraud

May 14, 2019

Santa Fe-based WildEarth Guardians is investigating whether a former employee schemed with a contractor to embezzle funds from an array of state and federal grants, and its executive director said the conservation group has referred its findings to the U.S. Attorney in Albuquerque.

At a Monday morning news conference in Santa Fe, WildEarth Guardians Executive Director John Horning said it’s not yet clear how long the alleged fraud had been going on, or how much money was involved.

He said the agency’s leaders submitted a forensic audit for 2018-19 to the U.S. Attorney on Monday. That audit, Horning said, found evidence that the former employee and a contractor colluded to overbill the nonprofit by skimming grant funds.

Horning said he wants the U.S. Attorney’s Office to investigate the matter and, if necessary, press criminal charges.

Tipped off to a potential problem in April, WildEarth Guardians’ board of directors hired the McHard Accounting Consulting firm of Albuquerque to conduct an investigation into the allegations. Within two weeks, the board had enough information to fire the individuals in question, Horning said.

The New Mexican is not naming them because they have not been charged with a crime. A spokeswoman for the Department of Justice declined comment.

The nonprofit’s annual budget is about $4.7 million, Horning said — roughly a $1 million of which goes into its river restoration program. That grant money is used to conduct ecological and hydrological assessments of river and stream conditions, acquire plant materials used to jumpstart the ecological recovery of a waterway and for efforts monitoring the effectiveness of the restoration work.

The incident may point to the vulnerability many nonprofits face, according to fraud experts. In 2016, the Association of Certified Fraud Examiners estimated not-for-profit organizations had suffered annual fraud-related losses of $77 billion. A year later, that association said the average nonprofit loses an estimated five percent of its revenue to fraud.

Many nonprofits choose to keep such misdeeds secret for a variety of reasons, including fear that donors and supporters will be turned off, the association reported.

Horning said WildEarth Guardians wanted to be transparent about the problem to maintain trust among its supporters, donors and granting entities, such as the U.S. Forest Service and the New Mexico Environmental Department.

“I feel like anytime anyone in an organization has been dishonest, it’s important to be open about it,” he said. Because federal and state entities were involved, his group “has an ethical duty to tell the public.”

He said he knows the news could damage the organization, at least in the short term.

“There’s nothing good about a headline about WildEarth Guardians and embezzlement, so I don’t see how we can’t suffer some harm from this,” he said at the agency’s Santa Fe office.

“But cutting against that is a feeling that there is a lot of faith in our work,” he continued. “A lot of people feel betrayed but don’t want the action of one or two people to malign our reputation.”

He said he has apologized to every granting organization that his agency relies on .