Upham's Corner Online

Wakeup Call for Boston Main Streets Organizations and all Nonprofits

Carlos SchillaciThe indictment of Carolos Schillaci, former executive director of the Hyde / Jackson Square Main Street, provides an opportunity for all groups specifically involved in this incident to review the sequence of events, to learn from the errors and to assess if adequate controls have been put in place to prevent a recurrence. 

The seriousness of what happened, how easily it happened and how apparently naive the "victims" were is pause for reflection.  All nonprofits, certainly all Boston Main Street groups including Uphams Corner would do well to view this incident as a "wake-up call."

This article details what happened in Hyde / Jackson Square and how the HJSMS and the City of Boston responded.  It also includes an official statement from the Department of Neighborhood Development and an interview with Nicholas Chernoff, Board President, Uphams Corner Main Street.

Recommended to UC News by Rev. John Odams, UCMS Board member. is this document:

The Attorney General’s Guide for Board Members of Charitable Organizations


Hyde / Jackson Square Main Street website

New Executive Director Hired

Hyde / Jackson Square Main Street (HJSMS) hired Carlos Schillaci, a native or Argentina, as their new Executive Director in early 2009 (or late 2008). The Main Street board of directors was impressed with his 20 years of marketing and operations experience and its potentially positive effect on what the Main Street group referred to as Boston’s Latin Quarter.

Two and a half years later (July 14, 2011), Mr. Schillaci was no longer associated with Main Street. While he told the Jamaica Plain Gazette he was injured at work on July 14 and was on medical leave, the HJSMS board’s lawyer, Marc LaCasse, said Schillaci was suspended.

This was two days after the HJSMS board had contacted the Boston Police (July 12, 2011) regarding financial "discrepancies."

 Department of Neighborhood Development Responds

Evelyn Friedman The Dept of Neighborhood Development (DND) is the City of Boston’s department that oversees the Main Street organization.  Evelyn Friedman, DND executive director, stated that it appeared the funds given to HJSMS by the city that should have been handed over to the Jamaica Plain Neighborhood Development Corporation (JPNDC) were not making it there.

The Boston Main Street (parent organization in City Hall) immediately began a review of all practices and looked at the possibility of instituting new rules.  While DND regularly reviews Main Streets’ tax forms and balance sheets, it was not systematically looking at payments and receipts.  A simple analysis of payables, they said, would have brought this problem to light much sooner.  In August 2011, DND announced that it was planning new financial oversight measures for 20 Main Street programs in Boston.

At the same time, the city stepped in to keep HJS Main Street running as the volunteer board conducted its investigation and while it looked for a new director.  Friedman said. "Our staff is working with the board to assist with any projects that were started."

Charges Filed against Schillaci

The investigation proceeded over the next year.  Copies of all financial documents related to Main Street bank accounts - including statements and transactions records - were used to create a detailed cash flow audit to determine what happened to the missing funds.

In May 2012, the HJSMS board hired an interim executive director, Jamaica Plain resident Katie Reed, to hold that position until a full-time director could be chosen by the organization’s board. Several months later, the board hired Gerald Robbins as their new executive director, formally replacing Carlos Schillaci.

On October 17, 2012, fifteen months following his suspension from the executive director position, Carlos Schillaci, was arraigned on charges he stole almost $20,000 in funds intended to benefit the businesses and residents of Hyde and Jackson Square.  According to the Suffolk County DA’s office, the misuse of funds began in April 2009 which was soon after he was hired. 

Improprieties and Lack of Controls

What came to light shortly after the start of the investigation were two points of exposure - two areas where standard financial controls were missing.

The first was the lack of adequate reporting requirements between the funding agency, the City of Boston’s Dept of Neighborhood Development (DND) and the organization receiving the funds, the local Main Street organization.  DND issued funds to HJSMS for a specific purpose but did not require proof the funds were so used.

Second is a change made just after Mr. Schillaci was hired.  Prior to that, HJSMS required two signatures for any check (transaction) over $50.  This was changed (after hire) to provide Mr. Schillaci with a debit card on which there were, in effect, no financial controls.

Board of Director Responsibilities

Why it took over two years for the HJSMS board to become aware of the problems points also to potential issues with the HJSMS board’s financial oversight arm (Treasurer?).

While the most important role of the board of directors of a nonprofit organization consists of raising funds to use in accomplishing the business mission, board members are also charged with program and operations oversight. While organization staff carry out daily program operations, board members must exercise fiduciary oversight, either directly or through an appropriate third party. The board must protect the funds and assets of the nonprofit business by ensuring their proper use.

The board’s decision to issue Schillaci a debit card suggests the board lacked a basic understanding of financial controls.  Even more baffling is the board not identifying a payables problem for as much as two years.  Where were the normal financial reporting, analysis and assessment activities? 

Also that JPNDC elected to raise the issue of financial problems with the executive director without also notifying the board suggests that no one was taking the situation seriously enough.  This, in turn, allowed Schillaci, allegedly, to continue the theft.

Event TimeLine
Late 2008 / early  2009  HJSMS hires Carlos Schillaci as Executive Director
Prior to April 2009 HJSMS changes its rules. Instead of requiring two signatures for every check over $50, the board gave Schillaci a debit card.
2009 /2010 / 2011 JPNDC which provides payroll services for HJSMS (for a fee) was used to slow payments (4-8 wks in arrears) from HJSMS.  HJSMS had a history of debt of $5k, $10k, even $15k but they always managed to pay it down.

Late winter 2011 JPNDC notifies Executive Director, concerned about mounting debt.  HJSMS staff assure JPNDC that the problem will be rectified.

July 2011 Debt continues to climb and exceeds $20k.  JPNDC notifies HJSMS board.

July 12, 2011 HJSMS board contacts Boston Police.

July 14, 2011 Carlos Schillaci suspended.

May 2012

Jamaica Plain resident Katie Reed hired as interim director until a full-time director can be chosen by the organization’s board.

Sep 2012 ?
Gerald Robbins hired as new executive director.

Oct 17, 2012

Carlos Schillaci  arraigned on charges he stole $20,000.

Suffolk County DA's Office Charges Schillaci

Suffolk County District Attorney Daniel F. Conley stated that the former director of a Jamaica Plain non-profit organization was arraigned on October 17, 2012 on charges he stole almost $20,000 in funds intended to benefit the businesses and residents of Hyde and Jackson Square.

CARLOS SCHILLACI (D.O.B. 10/7/54), formerly of Jamaica Plain, and now a resident of Easthampton, was formally charged with two counts each of larceny over $250 and larceny by scheme for allegedly using funds from the Hyde-Jackson Square Main Streets Program for his own benefit. Both offenses carry a maximum penalty of five years.

Assistant District Attorney Michele Granda of Conley’s Special Prosecutions Unit told the court that Schillaci embezzled $19,490.65 from HJSMS between April 2009 and July 2011, when he was suspended from his position as the program’s executive director.

The theft, prosecutors say, took the following form:
  • 42 separate unauthorized ATM withdrawals totaling $11,714 using the HJSMS debit card
  • 119 unauthorized purchases made on that debit card totaling $4,971.23
  • 2 unauthorized HJSMS checks made out to himself totaling $2,805.42.
"The evidence suggests this defendant was putting funds intended to help the community to purely personal use," Conley said. "Instead of promoting a vibrant neighborhood, it was paying for his parking tickets and computer accessories."

The investigation started on July 12, 2011 when the HJSMS board reported the problem to the Boston Police and ended with Schillaci’s indictment.

Department of Neighborhood Development Issues Statement

On October 22, 2012, Kerry O’Brien, spokesperson for the Department of Neighborhood Development,  said DND is confidant that the Hyde / Jackson Main Street program going forward is being run properly.  Since July 2011, the City’s collaboration has helped Hyde / Jackson Main Street get back on track.

In the one year since suspending the prior executive director, HJSMS has secured their finances, implemented new internal operating procedures to ensure fiscal financial stability and hired a new executive director, Gerald Robbins. 

The city is confidant that the Hyde /Jackson Square Main Street will continue their revitalization work.  In addition, Boston Main Street, in response to this incident, has instituted new auditing and reporting procedures for all Main Street organizations which will ensure tighter controls.

Is the Uphams Corner Main Street Organization Vulnerable?

Uphams Corner Main Street Board chair (president), Nicholas Chernoff, had not heard about the Hyde / Jackson Square Main Street problems.  Despite this, he expressed confidance that a similar situation could not occur with Uphams Corner Main Street. 

"It's pretty easy," he said. "Max [MacCarthy, executive director] does not reconcile the books; the treasurer  does. Any expenses that come out of our bank accounts are reviewed by the treasurer then reviewed again at executive meetings that we have after our board meetings.  And this takes place every month."

Nick wasn’t willing to guarantee that financial mismanagement would never / could never occur.  "I couldn't say that he [Max] couldn't hide anything. I'm quite sure that if he wanted to get creative enough… There may be some loophole somewhere … I personally feel very confidant that we have eliminated as many of those as humanly possible. "

Nicholas Chernoff
UCMS Board Chair
 Nicholas Chernoff
Max MacCarthy
Executive Director
Max MacCarthy

Has he seen any tightening up - not for any reason per se - of how the organization is being run in the one year Max has been on board?  Nick said no.  "Max’s predecessor, Zachary Cohen, had put some really good controls in place when he was there."

Nick pointed out another factor that distinguishes how Uphams Corner Main Street is being run in comparison with the HJSMS board and that is "the level of scrutinization."  And why?  Simply because Max is new.  "We need to make sure that everything is going according to what we expect, and we need to verify that closely."

Since Max was hired in July 2011, the UCMS Board has gone into closed executive session following every board meeting (The public is welcome to board meetings but excluded from executive reviews). 

"So a normal part of the review process is that we continue to look at Max and his behavior, and we ask: 
  • Does everything still look okay?
  • Do the books look ok?
Reviewing Max’s behavior is important," Nick emphasized.  "Any raised eyebrows might give cause for a deeper look."

So far, so good. 

The Uphams Corner Main Street board believes they have enough controls in place to prevent even the slightest inappropriate use of funds or other questionable behaviors.

Posted: October 30, 2012     Nancy J Conrad

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