Ambulance Disservice

When the recent scandal regarding misuse of funds at various Long Island volunteer fire companies was breaking, I was ready to bet the mortgage money that there were more such instances in other localities, perhaps a bit more egregious. Unfortunately, nobody took me up on the wager.

Harvey S. Grossman, the ex-Treasurer of the Plymouth Community Ambulance Association has just been sentenced to 5 to 20 years for using over $2 Million in PCAA funds for personal expenses such as furniture, home improvements, travel, jet skis, his daughter's bat mitzvah party, racing his stock car, et cetera.

Co-defendants Jeff Cohen and George Gilliano, who didn't embezzle nearly as much as Grossman did and who apparently cooperated in making the case against Grossman, are slated for sentencing in a week and a half. The way I'm calling it: Jeff and George have good odds for seeing some amount of jail time, but not nearly as much as Harvey got.

And the way I'm calling it for Harvey: In 5 years, when he theoretically becomes eligible for release, the IRS crackdown against abuses by nonprofit organizations will have raised the public consciousness so as to make it politically unwise to spring Mr. Grossman the first time up. But he is likely to behave reasonably well in prison, so he is quite unlikely to stay in for the entire 20 years.

[Disclosure: A number of years ago, under circumstances having no relevance to the Blog and having no relevance to ambulances, I had several occasions to respectively meet both Harvey and Jeff. I do not recall ever meeting with George Gilliano.].

It is a maxim among tax enforcement personnel, in whose ranks I formerly served, that whenever money changes hands, information also changes hands. I have no particular personal ill will towards Harvey or Jeff (or, for that matter, George), but am taken aback by the crass stupidity respectively displayed by two individuals of above-average intelligence. The embezzled funds were, by and large, filched via credit card and check, two money transfer modes which tend to leave clear verifiable trails of information. If Harvey would have been content with less than two million bucks, he could have found some indirect ways to transfer assets without the tracking inherent in credit card postings and checking account drafts. Like syphoning a few gallons of gasoline from an ambulance every week, grabbing an occasional gallon of windshield washer fluid, et cetera.


This, by the way, is quite likely just the beginning of Harvey's and Jeff's and George's legal problems. Surely the IRS smells some tax potential in their cases. Embezzled funds count as gross income for taxation purposes, so Harvey, Jeff and George can expect to hear from the IRS (if they have not been contacted by the IRS already).

But never mind the income tax. The Internal Revenue Code also provides for what are euphemistically called "excise taxes" on improper transactions between tax-exempt organizations and the key personnel thereof. Without going into the complex convolutions of the Internal Revenue Code, there are instances, possibly applicable to at least some extent here, where the "excise tax" is equal to twice the benefit received! It is also worth noting that where there are more than one individuals involved in the scheme, they all can be jointly and severally liable for this "excise tax."

So, in addition to having to reimburse the PCAA, Harvey, Jeff and George most likely have some accounts to settle with the IRS (and, for that matter, the Pennsylvania Department of Revenue).

And if that were not problematic enough, I will note that the Form 990 which tax-exempt organizations are required to file with the IRS is, unlike other tax returns, open to public inspection. It takes a while for these forms to post on the Internet, but the PCAA 990s for 2003 and 2004 were each signed by Harvey. One need not be a tax lawyer with a MBA to know that Internal Revenue Code provides criminal penalties for filing false tax returns. Well, the IRS knows where to find Harvey for the next 5+ years.

I do feel bad for Jeff and Harvey (and George, too, even though I have never met him). But I feel even worse for the taxpayers of Plymouth Township.