Five ways the 501c3 diverts money into the bank accounts of the Teachers Group
by Tvind Alert
Links restored
Planet Aid Inc was started in 1997 by Michael Norling and Ester Neltrup as a non-profit 501c3 (tax exempt) organization, and has quickly grown into the largest Tvind / Teachers Group used clothing operation in the USA.
It now has over 12,000 donation bins in 23 states which collected nearly $26 million worth of used clothing in 2008 alone. Planet Aid claims to use the proceeds from the sale of the clothing to fund humanitarian projects in several developing countries. These projects are not run by independent charities, but by the parent organisation Humana People to People.
Money scam 1: not much given to charity
Planet Aid Inc generates millions of dollars through used clothing donations, but only small percentages are ever given away. The rest is said to be spent on ‘operating costs’. But what are they? These costs are much higher than most 501c3s. The same claim is made by Tvind charities all over the world.
In 2006 the American Institute for Philanthropy gave Planet Aid an “F” rating because only 28% of its funds were used for charity purposes. Likewise, the Better Business Bureau refused to accredit Planet Aid in January 2008, in part due to its low charity funding.
Planet Aid has always maintained that because its operational costs are high, it has less to give. But a closer look at Planet Aid’s tax returns and audits shows that Planet Aid’s financial dealings are even more questionable.
Money scam 2: the USDA ‘Food For Progress’ grants
Since 2005 Planet Aid has received millions of dollars each year in funding from the USDA’s Food For Progress program. This is a programme by which U.S. agriculture commodities are provided for the benefit of developing countries. The USDA donates the produce directly to NGOs and pays for it to be sent abroad; the NGOs are responsible for distributing it and using it effectively, or selling it to fund development.
In 2004 Planet Aid received only ‘soya produce’ which it used in its ADPP soy restaurants in Africa. (ADPP and DAPP are Tvind-run financial entities in southern Africa.) Since 2005, USDA has made grants of wheat instead, which Planet Aid was told to sell in Mozambique and Malawi. The proceeds were used to finance ADPP projects such as Teacher Colleges and its so-called One World University in Malawi. Planet Aid has received more than many millions of dollars from USDA since 2004.
But since Planet Aid started receiving the money, a strange thing has happened. As the grant funding increased, the percentage of funds Planet Aid has donated to the developing country projects from its used clothing proceeds has gone down – and this despite a steady increase in the quantity and value of clothing collected.
In 2004, when Planet Aid received soy products but no money from the USDA’s generosity, it donated over 22% of its used clothing proceeds to humanitarian projects. By 2005, when the USDA wheat grants began to be turned into hard cash, the percentage of the budget from clothing had dropped to less than 21%. And by 2008, the figure was roughly 8%.
In 2008, Planet Aid’s used clothing collections soared to almost $26 million, but the Humana projects received only $2.1 million from these clothing donations…roughly 8%. The remaining proceeds, a reported $14.3 million in 2008, came directly from the USDA grants.
In other words, each year, Planet Aid’s clothing collections increased and their total charity ‘donations’ went up as well, so it looked good. But a closer look reveals that these donations were largely due to US tax payer funded USDA grants, with less and less coming from the clothing given by the public. What happened to the remaining proceeds from the clothes collections?
Planet Aid is reported to be the biggest recipient of USDA funds in the Food for Progress scheme. The USDA recently said it would investigate how Planet Aid is using the cash.
Money scam 3: ’Membership fees’ paid to Humana Federation
Planet Aid is a member of ‘The Federation for the Associations Connected to the International Humana People to People Movement.’ This ‘membership’ connects Planet Aid to the rest of the Tvind / Teachers Group financial network. The 36-member ‘Federation’ was formerly run from Denmark, but since around 2001 it has operated in Switzerland, from an address that it shares with at least one other mysterious international Teachers Group financial trust.
According to a recent independent auditors report, Planet Aid is “required to pay an annual membership and program facilitation fee based on a specified percentage of the larger of actual or budgeted contributions.”
A quick calculation from published accounts shows how much they have paid and we can calculate that this fee averages 5.5% of a reported total of $2,276,826 raised by Planet Aid since 2004.
But in fact these fees were NOT based solely on the value of clothes donated by the public, but on everything that Planet Aid raised – including the USDA grants. We can calculate that $1.38 million paid to the Humana Federation came directly from the USDA grants. The USDA is not just paying money to Planet Aid, but directly supporting this mysterious ‘Federation’.
Money scam 4: the Garson and Shaw connection
Garson and Shaw is a commercial used clothes company based in Atlanta, Georgia. It is the main purchaser and broker of clothes collected by the three Teachers Group clothing enterprises in the USA – Planet Aid, U’SAgain and Gaia. We know that Garson and Shaw is itself controlled by the Teachers Group: its managers are all TG members, and it is owned by Fairbank, Cooper and Lyle, the offshore company at the heart of The TG’s property empire (which also owns U’SAgain).
Since 2004, Planet Aid has collected and sold over $82 million worth of used clothing. Some of it may be sold to independent dealers, but it is no secret that Planet Aid’s biggest customer is Garson and Shaw.
Garson and Shaw acknowledges its commercial business with Planet Aid. G&S states on its website that Planet Aid is a supplier of ‘credential clothing’ (unsorted used clothes) which G&S buys and then sells on to other companies.
But Planet Aid and Garson and Shaw have a second commercial relationship. Besides supplying large amounts of product to Garson and Shaw’s customers, Planet Aid also uses Garson and Shaw as its own sales broker. Simply put, Garson and Shaw gets a percentage of the proceeds for possibly every sale that Planet Aid makes. G&S is also the main broker for U’SAgain and Gaia. The accounts for Planet Aid show that sales commission expenses for 2006 and 2007 charged by Garson and Shaw totaled $1,311,601.
The Teachers Group is ‘trading with itself’ and the commercial Teachers Group company Garson and Shaw is reaping a steady profit from the income generated by the Teachers Group’s supposedly ‘humanitarian’ clothing charities. Once again, the Tvind Teachers Group finds a way to bank some of the proceeds for itself.
Money scam 5: the loans from Denmark
But the scandal does not end here; the money trail is much more complex. We may not yet know all the other ruses means the Tvind Teachers Group has used to move money from its charities into its private and offshore accounts, but here is a further hot money scam – the interest on loans.
Den Selvejende Institution Faelleseje (The Faelleseje Savings Institiute) is a Danish registered trust, founded in 1977, which is at the heart of the Teachers Group’s financial network. Following police enquiries in around 2001, and the decision to prosecute Amdi Petersen for fraud, the Danish government placed two independent members on the Faelleseje board to monitor transactions. But despite this vigilance, Teachers Group members have managed to retain considerable control.
In 2006, Faelleseje, developed a new way of making money; through loans to member organisations in the Humana Federation, and especially to those running schools and clothes schemes. In Faelleseje’s 2006 annual report, the following passage appears: “Besides the donations mentioned above Faelleseje has made a new sort of donations.
These donations are loans for purposes, that are expected to generate cash flow, e.g. buying containers for the purpose of collecting used clothes. The loans are given on terms equal to that of a credit worthy lender.”
In other words, Faelleseje is advancing money on a commercial basis at normal or above normal commercial rates of return, to its sister organisations in Tvind. It is selecting those Tvind organisations with the most available money.
In 2006, the Teachers Group’s IICD school in Williamstown, Massachusetts received a loan from Faelleseje of $180,077. By year’s end, this loan had generated interest of over $13,000. In 2007 and 2008 more loans were given out to several other Humana Federation members and schools, including all three Tvind schools in the US, in Massachussets, Michigan and California.
Interestingly, the largest loans of all were given to the very same Federation members that had received grant money through the USDA ‘Food for Progress’ sch with established used-clothing programs, or to projects that had already received large donations from Planet Aid, Inc. Therefore, each recipient had a known cash flow.
It is not clear from the US schools’ published annual accounts whether these loans have been repaid or are being allowed to accumulate, and at what interest. (By failing to document and report these loans properly, IICD Massachusetts and the two other US schools are breaking IRS rules.) If these loans are allowed to set and generate interest, Faelleseje stands to make several thousands, if not millions, of dollars as a result – again, from money donated for humanitarian purposes.
It appears that Faelleseje has developed yet another way to divert charity funding into Tvind’s bank accounts.
Do you have information on a TG company? Tell us.
Revised: 1st March 2010
