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Seaport museum head siphoned over $1M - Soundings Online

Seaport museum head siphoned over $1M

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More than $900,000 in boats, $50,000 in antiques and $5,000 in tulip bulbs among fraudulent expenses

More than $900,000 in boats, $50,000 in antiques and $5,000 in tulip bulbs among fraudulent expenses

The former president of Philadelphia’s IndependenceSeaportMuseum pleaded guilty June 4 to federal charges of fraud and tax evasion, admitting he misused more than $1 million of museum funds.

He is to be sentenced Sept. 4 in U.S. District Court in Philadelphia and faces “potentially more than five years” without parole in a federal prison, according to Rich Manieri of the U.S. Attorney’s office.

The theft from the museum by former president John S. Carter might have grown larger had the new chairman of that non-profit organization not decided to take his job seriously.

Federal prosecutors in Philadelphia charged Carter, 57, of Osterville, Mass., with defrauding the museum on the Delaware River waterfront and evading taxes on funds he allegedly skimmed over 10 of his 20 years at the museum helm. U.S. Attorney Patrick Meehan says Carter used the money to finance a plush lifestyle on Cape Cod.

“The defendant used the museum’s funds as his personal piggy bank,” says Meehan in a press release. “He spent with reckless abandon, went to extraordinary lengths to conceal his fraudulent activities, and abused the trust placed in him by the museum.”

The press release says Carter “allegedly created phony invoices and charged a wide variety of personal items to the museum including, among many other purchases, the construction of a carriage home, expensive clothing, furniture for his home, artwork, audio, video and other electronics equipment, jewelry, a European vacation and landscaping services. He also allegedly obtained title to a rare boat that had been donated to the museum and then arranged for the museum to pay for the vessel’s refurbishment. He allegedly eventually sold the boat and kept the proceeds.”

All of these acts occurred before Peter McCausland, a board member off and on for 10 years, became board chairman.

“My first meeting as chairman in December 2005, I started asking questions and gathering information,” says McCausland, who says he felt that as chairman, he should be thoroughly informed about the museum’s operations. “And Carter started to interfere in my attempts to learn more about the museum. I asked questions and people came forward when people knew that I was interested in listening. It all snowballed.”

McCausland says he presented the stories the staff told him to the rest of the board, which on his recommendation then placed Carter on a leave of absence in April 2006. Then the board hired a forensic accountant, who unearthed the alleged financial misdeeds. By June 2006 Carter had been dismissed and the museum had begun civil action to recover its resources, McCausland says. The civil suit is ongoing, he says. A receiver has been appointed in that case for Carter’s assets, including his house in Osterville, and some bank accounts, McCausland says. “We want to satisfy the judgment with Carter’s assets,” he says, adding that the civil and criminal cases may be combined. “The U.S. Attorney is asking for restitution, and we’re the victim here.”

In the time when McCausland was on the museum’s board before he became chairman, he says, “there were four meetings a year and I maybe made two of them and I maybe wasn’t as diligent as I should have been.

“Looking back on it, John was a master thief,” McCausland says. “He was the only link between people, even within the museum, as a way to avoid being found out. This is a wakeup call for non-profits.”

Mark Cedron, Carter’s lawyer, did not return calls from Soundings magazine.

Among the government’s claims are that Carter passed along to the museum a bill for nearly $100,000 for a wooden boat that was built for him. He allegedly transferred title to himself of a unique boat owned by the museum and then had the museum billed $400,000 for renovations to the boat. The prosecutor alleges Carter used museum funds to pay $275,000 for a “modern luxury powerboat,” which he used on Cape Cod as a personal boat and then billed the museum $170,000 in storage and maintenance costs.

Carter was charged by the prosecutor with using $600,000 in museum funds for “personal and household items, which he disguised as legitimate museum business expenses.” These bills include more than $335,000 to build a new carriage house at his Osterville home, including “extensive landscaping work, a new sprinkler system, a new storage shed and a new roof for his home.”

Carter also used museum money, according to the government, to buy more than $5,000 in gold jewelry, antiques for $50,000 and another $50,000 worth of stereo and television equipment, outdoor furniture worth $30,000, gourmet food and kitchen appliances costing $5,000, “approximately 140 cookbooks from Kitchen Arts and Letters for $4,679 and an additional $1,263 in other book purchases.”

Carter’s interests, reflected in his purchases with museum money, also included woodworking, with more than $9,000 spent on industrial woodworking equipment, the government claims. At haberdasheries in New York, Boston and Philadelphia, he spent $25,000 on men’s clothing; a vacation in France cost the museum $8,000; artwork totaling more than $17,000 came from several galleries; garden supplies, including $5,000 worth of tulips and other bulbs, totaled more than $10,000, the charges allege.

Carter spent about $5,600 on tool sets, tool chests, shelving units and a wine rack, according to the charges. And the executive spent more than $15,000 for a “Tiger maple king-sized bed, sapphire water goblets and other furniture from Leonards New England.

“It is also alleged that defendant John Carter defrauded the SeaportMuseum of more than $900,000 in connection with three boats that Carter used for his personal enjoyment and pleasure at the expense of the museum: the Albacore, the Kiah/Cyrene and the Sadie.”

While the museum hopes to recover its money through the courts, McCausland says the institution is “already on the mend. The philanthropic community has come back to support us. They like what we’re doing,” he says.