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Post: Financial Crime: Florida charity king charged with raising millions for firefighters, veterans and cancer survivors but keeping the cash for himself

The callers claimed that they were raising money for charities to help firefighters, wounded veterans and even breast cancer survivors.

But prosecutors say that behind it all was a dizzying array of tax-exempt shell companies, management vehicles, Super Pacs and vendors that obscured the fact that almost all of the millions of dollars raised went into the pockets of one man: Douglas Sailors.

The 71-year-old charity operator is accused of appointing nominees with little experience to run the various umbrella groups set up to manage the network of charities he had created. But federal prosecutors and the IRS say Sailors called all the shots from behind the scenes, despite being listed as only a management consultant.

As a result, they say that for nearly a decade as much as 98% of the donations taken in went to Sailors or was used to pay accountants and lawyers to make sure all the tax filings and legal paperwork appeared legit.

“Sailors formed and operated charities for his personal benefit,” the IRS said in a statement. “To confuse donors, he chose names that sounded similar to legitimate charities — such as Breast Cancer Research and Support Fund; Disabled Veterans Services; United States Firefighters Association, among others.”

Each of those funds were operated by a group of umbrella companies called at various times, Seven Sisters of Healing, Inc., Community Charity Advancement, Inc, National Community Advancement, Inc. and F.U.M. Management Corp., prosecutors said. 

Sailors, who was arrested last week in Kentucky where he moved after living in Florida for years, used much of the cash to buy a yacht, multiple homes and luxury cars, according to court documents. He was released on $250,000 bond pending trial in federal court in Miami.

Sailors waived his right to an attorney for his first appearance in Kentucky and it is not immediately clear if he has retained an attorney. Calls to numbers listed in his name were unanswered.

According to court records, Sailors was convicted in 1999 in Tennessee on federal charges of Medicare fraud in connection to a home health business he and his then-wife ran. He was released from prison in 2002. 

Prosecutors say Sailors began setting up the charities in Florida around 2007 and over the next several years created a network of management companies to run them. He opened a call center in Las Vegas that utilized phone operators in the Philippines, Honduras and Nicaragua to solicit funds using pre-written scripts.

Investigators say as little as 2% of all the money raised actually was given to charities, with the rest being used to pay vendors and employees and cover the cost of raising the cash. But most went to finance Sailors’ lavish lifestyle, prosecutors said.

In one instance, prosecutors say Sailors diverted hundreds of thousands of dollars from a charity that was intended to financially support nurses in the Dominican Republic. Sailors also steered over $1 million into a defined pension plan for himself. 

Each of the charities identified by federal investigators reported raising between $5 million and $13 million a year, according to publicly available tax filings. Prosecutors say they are seeking to recover at least $22 million from Sailors as well as seize property he owns in Kentucky.

For years, Sailors’ operation came under the scrutiny of several attorneys general offices and media organizations

In 2017, Florida’s attorney general filed suit against Sailors’ charity network. Federal prosecutors say Sailors then transferred control of some of his charities to several Super Pacs he had set up, as those operate outside of the scrutiny of state attorneys general offices.

Several of the charities changed their names or ceased operating over the years, records showed.

Sailors faces up to 29 years in prison if convicted of conspiracy to commit mail and wire fraud charges.

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