CHARITY SCAM? GREED AND FRAUD IN THE NON PROFIT WORLD

Vending-Machine Charity Suspect

Father Joe Carroll and his charity venture, St. Vincent de Paul Village, have deservedly good names. But if the promotion-minded Father Joe strays too far, he risks besmirching those reputations.

It could happen in North County. With Father Joe's blessing, a for-profit vending company claims it is part of St. Vincent's nonprofit operation, when in fact the vending firm gives only a percentage of its profits to the charity.

In a signed letter, Father Joe identifies Poway's Lee Dooney as "Project Coordinator of the Vending Outreach Program" of St. Vincent de Paul Village. In that letter on St. Vincent de Paul's letterhead, Father Joe solicits companies and institutions to place a candy-vending machine on their property.

Father Joe asks them to place "our candy machine at your location."

But by Father Joe's admission, Dooney runs a for-profit vending company that owns and services the machines. "We don't want to be owning [vending machines] or maintaining them. It's an awful lot of work," says Father Joe. Dooney "is a businessman; he pays taxes. We don't want to be in competition with businesses. He uses our name; we get a cut; we are happy."

Why does he refer to "our" machines? "Technically, they are our machines because we get paid for each location. That is the way we look at it," says Father Joe. Sorry. That's a rationalization that just doesn't wash.

"It's really a racket," says Edward Murphy, a marketing consultant from Pacific Palisades. "A lot of people in the bulk candy business will say a part of proceeds go to whatever charity. But you should not masquerade as the charity. You should say you are a private vendor that gives a portion of returns to charity."

The recorded message at Dooney's company says, "You have reached St. Vincent de Paul Vending Outreach Program."

Murphy says he was hired by Dooney to find 75 locations for vending machines in North County. "I asked him, 'Are you St. Vincent de Paul's?' " says Murphy. "He said 'yes' and I took him at his word. That's what I was telling the accounts."

After he placed eight machines, saying that he represented St. Vincent de Paul, he went to see Dooney at his Poway digs. They are in pricey "horse country -- really nice," Murphy says. Dooney told him he had 2000 accounts, according to Murphy, who did some arithmetic. Dooney should be generating gross of half a million dollars a year on that many machines.

But Father Joe's letter to potential locations says that St. Vincent gets $25,000 a year from the so-called outreach. Even after subtracting product, labor, machine maintenance, and other expenses from the $500,000 gross, St. Vincent is getting "a small slice of a rich pie," figured Murphy.

Enraged, he called his eight accounts and said he had mistakenly misled them. He suggested they take the machines out. "I sent [Father Joe] an e-mail. I blasted Dooney. I said I know what's going on," says Murphy. The pictures on the machines should be of Dooney and not Father Joe, Murphy told the priest.

Father Joe has equally unkind things to say about Murphy. "He was a guy who wanted a cut of the pie. He tried to get in with Dooney's company. It's sour grapes," says the priest.

Murphy heatedly denies that any such thing happened, adding, "I am not in the vending business."

Tom Koppel set up the business and after 15 years sold it to Dooney. From the outset, Father Joe "wanted me to identify myself as being from St. Vincent de Paul," says Koppel. Initially, there were donation boxes on top of the machines, and those who provided locations were encouraged to donate "old office furniture, food, refrigerators. But we needed to have a for-profit company. By law, a nonprofit cannot be involved in [certain] for-profit deals."

As soon as I asked Koppel about Father Joe's reference in his letter to "our" machines, Koppel said he had to go: someone was at the door.

Dooney says he bought the business only last September and can't comment. "I am carrying forth everything that was already in place with Father Joe," he says.

People in the vending industry see problems in this marketing approach. Charles Hanna is a vending-industry ethicist. He runs the Hanna Group in Lenexa, Kansas, and is author of The Vending Industry: History, Trends, Secrets, Opportunities and Scams . He says it is not unusual for small vending-machine operators to hook up with a charity as a marketing ploy. But "people have to say who they are," says Hanna. There should be full disclosure of who is operating the machine. "Most charities say XYZ Vending Company is associated with us. A lot of nonprofits have withdrawn from these plans when anybody makes any noise."

The Chicago-based vending trade association, the National Automatic Merchandising Association, says that "a vending company misrepresenting its profits as charitable contributions...[is] something NAMA would never condone." It says that St. Vincent de Paul's Vending Outreach Program is not a member of the association.

Competitors have problems with the Dooney/Father Joe approach too. "If all the money [less costs] does not go back to the church, it is unfair to other vendors," says Rhett Edwards, office manager of San Diego's Sunset Vending.

The exact relationship of the vending company and the charity "should be clearly stated on the sticker on the machine," says Rick Pierce of Pierce Vending in Temecula.

Murphy agrees, saying that stickers should make clear that only a portion of vendors' profits go to charity. "Dooney's machines simply display big stickers that feature a smiling Father Joe accompanied by text that reads, 'Help Father Joe feed the hungry, shelter the homeless and clothe the naked,' " says Murphy. Potential locations can't resist such a pitch, he says.

Ron Wright, director of residence services at Bright Gardens, a home for the elderly in Carlsbad, says that the solicitation call he received was from a person purportedly "putting in candy machines for St. Vincent de Paul." Recently, Wright got a call (obviously from Murphy) apologizing for the untrue pitch, saying Father Joe gets only a small percent and suggesting the machines be removed. Wright hasn't decided what to do. A small percent "is better than no percent."