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Fraud at Philly nonprofit should resonate across state

On the other side of the state, the man who headed a nonprofit on whose board indicted state Sen. Vincent Fumo served for many years has been charged with swindling the Independence Seaport Museum out of more than $1 million by using museum funds for his personal use.

John Carter, former president of the museum, who was paid $300,000 a year and lived rent-free in a townhouse owned by the museum, reportedly plans to plead guilty.

Federal prosecutors charge that Carter used $210,000 in museum funds to build a carriage house next to his vacation house on Cape Cod. They also say Carter used $375,000 of museum funds to buy a power boat and a custom-built wooden sailboat.

Carter allegedly got the museum to reimburse him $1,100 he spent on a suit, but listed as "marine water pumps" on his expense report. Carter also listed $6,400 worth of gym fees as "meeting" expenses. He is charged with submitting numerous false invoices to get the museum to pay for electronics and jewelry.

Carter, who had been at the museum for 17 years, was well-known in museum circles and was an expert on yachts, art and antiques.

Apparently, he also was highly accomplished at spending other people's money.

If the notion of spending other people's money for personal expenses sounds familiar, it is the same theme revealed in the indictment against Fumo, who coincidentally (or not-so coincidentally) was a longtime member of the board of the Seaport Museum. Fumo has been credited with helping direct millions of dollars in state grants to the museum.

The federal indictment against Fumo alleges, among many other charges, that the powerful Philadelphia Democrat used a yacht owned by the museum for his personal use. He even had himself piloted to Cape Cod for a vacation aboard the museum's yacht. Fumo's use of the museum yacht has been valued at $100,000 by investigators.

Though Carter, who was replaced at the museum in 2005, is planning to plead guilty, and his abuses of museum funds seem so similar to charges against Fumo, the former museum director is not expected to be a witness at Fumo's trial.

U.S. Attorney Patrick Meehan said in a statement that Carter "used the museum's funds as his personal piggy bank. He spent with reckless abandon and went to extraordinary lengths to conceal his fraudulent practices."

The same federal prosecutor said essentially the same thing about Fumo some months ago regarding his allegedly fraudulent use of taxpayer dollars for his personal benefit and enrichment. Fumo also is charged with using funds from another Philadelphia nonprofit for his personal use. That nonprofit, the Citizens' Alliance for Better Neighborhoods, had been headed by Fumo's former top legislative aide, who is a co-defendant in the federal indictment against Fumo.

Carter's pattern of spending other people's money for his personal benefit is so similar to the crimes Fumo is charged with that it would seem they must have shared notes.

The case against Carter appears to be the beginning of a crumbing of the house — or a wing of the house — of cards built by Fumo. The abuses Carter is planning to admit to and Fumo is planning to deny should alert people everywhere as to what can happen in an organization when there is more trust than oversight.

Carter was able to get away with his crimes because the museum's board trusted him and because internal financial controls were weak. That apparently changed with the arrival of a new chairman of the museum board who noted, "The lesson here is that volunteers on nonprofit boards need to understand that things can go bad, just like they can in a for-profit business."

Carter and Fumo might make bigger headlines in Philadelphia and the eastern part of the state, but the crimes they are charged with committing can happen anywhere — and they involve tax dollars belonging to citizens all across Pennsylvania.

Whenever and wherever identified, such abuses must be aggressively prosecuted. The case against Carter appears to be just the beginning.

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