The state attorney general has already filed a complaint against John Hodson Sr. and his son.

http://www.phillynews.com/programs/aprint

The Philadelphia Inquirer, April 2, 1999
By Shannon O'Boye and John Way Jennings
INQUIRER STAFF WRITERS

The Camden County Prosecutor's Office has given a list of documents to the state Division of Consumer Affairs for review to determine if any criminal wrongdoing was committed by two former leaders of the locally based Multiple Sclerosis Association of America.
 

Prosecutor Lee A. Solomon said yesterday he had met with representatives from the state division but declined to discuss the details of that
meeting. A Consumer Affairs spokeswoman said it was division policy neither to confirm nor deny the existence of criminal investigations. Earlier this week, the state Attorney General's Office filed a 12-count civil complaint against the multimillion-dollar charity; its founder, John Hodson Sr., 66; and his son, John Hodson Jr., 37.

The civil complaint contends the Hodsons used association money for their personal gain and filed "incomplete and inaccurate information" with the Internal Revenue Service. The complaint also alleges that the two men condoned language used by telemarketers that misled potential contributors about how much of their donations would go toward providing actual services for people suffering from MS.

The civil complaints carry penalties of a maximum fine of $7,500 for the first count of a violation and $15,000 for each additional count. The MSAA board of directors cooperated with the state throughout the course of a 16-month investigation, according to MSAA spokesman Peter Damiri. On Wednesday, it severed all ties with Hodson Sr., the man who founded the organization in 1970 with his late wife, Ruth, in their Oaklyn home. Ruth Hodson, Hodson's second wife, suffered from multiple sclerosis for more than 40 years. She died in 1993.

Hodson Sr. stepped down as president and board chairman of the association in September and was removed from day-to-day involvement in November, but he retained the title of president emeritus of MSAA until this week, drawing half of his $154,000 yearly salary.

Following an internal investigation, the board in December fired Hodson Jr., who was vice president and director of operations, accusing him of using MSAA money for personal expenses, such as trips around Europe. Hodson Sr., who was recovering from gall-bladder surgery, did not return phone calls yesterday. Douglas Johnson, the younger Hodson's attorney, declined to comment on the accusations.

The board hired Douglas Franklin as the new executive director. Franklin, former director of social marketing for the International Youth
Foundation in Baltimore, officially begins April 26. He will earn $139,000 a year.

A portrait of a beaming, impeccably clad Hodson Sr. that used to hang in the lobby of the association's headquarters has been taken down, and his name has been removed from company letterhead. Still, Mark Allen, the interim executive director, said Hodson's legacy remains.

"His leadership style was very paternalistic," Allen said. "There are a lot of seriously mixed feelings among the staff. But that is exactly why the board took the drastic steps that they took. They needed to make it very clear that the focus must be on upholding the public's trust. Anyone can be removed who doesn't do that."

Allen said MSAA was in the process of restructuring and granting the board of directors more of a role in management of the association. "Any nonprofit charitable organization is not structured to be run like a family," he said. "No one should exert total control."

April 2, 2001

FOR FURTHER INFORMATION CONTACT:

Genene Morris 973-504-6327

Multiple Sclerosis Association of America Settles Charities Fraud Case settlement brings an end to State's suite

NEWARK - The Multiple Sclerosis Association of America ("MSAA") andtwo of its former officers, accused in a 1999 lawsuit of filing misleading financial reports with the State and of diverting charitable donations, entered into agreements with New Jersey to settle those allegations, Attorney General John J. Farmer and New Jersey Division of Consumer Affairs Director Mark S. Herr announced today. As part of the agreement, the defendants have paid the State $225,000 in civil penalties.

The settlements bring an end to the State's 12-count suit, filed in Camden County Superior Court in March 1999, against the nationally known
organization as well as John Hodson, Sr., MSAA's former president and principal salaried officer, and John Hodson Jr., MSAA's former vice president and director of operations.

MSAA, based at 706 Haddonfield Road, Cherry Hill, has been registered in New Jersey as a charitable organization since 1989.

The State's suit alleged that the organization and the Hodsons violated the New Jersey Charitable Registration and Investigation Act
("CRIA") by, among other things, making misleading statements to contributors about its programs and how much money would actually go to pay for programs geared toward helping individuals afflicted with multiple sclerosis.

The State's complaint alleged that MSAA overstated in financial reports to the State how much money went toward program expenses, thereby giving donors the false impression that a majority of the money was going to benefit programs for multiple sclerosis patients. The complaint alleged, however, that charitable donations were, in some cases, diverted to fund trips to Europe by non-MSAA employees. Donated funds were also allegedly used to pay the personal expenses of MSAA officers, including alarm systems, tickets to sporting events and insurance policies.

As part of the settlement, MSAA and the Hodsons have denied any wrongdoing.

"We believe that the penalties involved in this case will help deter those who may consider violating our state's charitable giving laws,"
Farmer said. "At the same time, we have tried to balance deterrence with a desire not to penalize unduly the ongoing operations of a charity that is essentially working for a good cause."

"The agreement we now have with the charity, which is under new management, requires it to take control and establish safeguards that
ensure all duties carried out by its employees are performed for the benefit of the organization and in accordance with the law," Herr said.

As part of the agreement, MSAA will maintain greater control over its fund-raising activities, the activities of its officers, directors,
employees and volunteers and its bank accounts to ensure potential donors are not deceived.
MSAA, which paid the State $150,000 in civil penalties, also agreed to cooperate with a State-appointed compliance officer, and to provide, for a one-year period, semi-annual "Program Reports" to Consumer Affairs, detailing its program service activities.

The agreements with the Hodsons bar them from having any affiliation with MSAA or any other charity in New Jersey. Hodson, Sr. and Hodson, Jr., also paid civil penalties of $40,000 and $35,000, respectively.

Assistant Attorney General John G. Holl and Deputy Attorney General Elizabeth Fligner handled this matter for the State.

http://www.bergen.com/region/charity30199901306.htm

Saturday, January 30, 1999
By S. MITRA KALITA
The Associated Press

TRENTON -- State and federal investigators are looking into whether a charity duped donors, misspent money, and deducted personal expenses -- such as two trips to Paris -- as charitable ones.

The ongoing probe into the Multiple Sclerosis Association of America by state and federal investigators already has uncovered misappropriation of funds by the founder's son and vice president.

Meanwhile, the board has been struggling to attract and reassure donors that contributions are being applied to patient equipment, research, and education.

The association was founded in 1970 by John Hodson Sr. and his wife out of their home in Oaklyn. It raised $11.4 million in 1997, and is one of the largest charities in the country associated with the nerve disorder. The largest, the New York-based National Multiple Sclerosis Society, collected nearly $50 million in 1997.
 

In interviews with The Associated Press on Friday, lawyers and officials with the charity confirmed that there had been financial wrongdoing. They refused to comment specifically on what they said were "personnel matters."

They said the association in late 1997 received federal and state subpoenas requesting information and records.

The state's Division of Consumer Affairs does not confirm or comment on state investigations. But Director Mark Herr said charities in violation of New Jersey consumer guidelines face up to $7,500 for the first violation, and $15,000 for each thereafter.

The founder's son, John Hodson Jr., allegedly used charitable contributions to make two trips to Paris while in the Netherlands on business, according to a published report. The report also said Hodson Jr. had been gone from work for long periods, had employees perform work on his home, and had made sexually inappropriate remarks to employees.

Errol Copilevitz, a Kansas City, Mo., attorney for the association, said employees had questionable expenditures, took cash advances and were reimbursed for inappropriate expenses.

"They have taken action to restore assets to the organization," he said.

"In almost every instance, the matter was corrected," he said, adding that some violating employees are still on the association's staff of 29.

Peter Damiri, spokesman for the charity, said the association has been overhauling its structure, oversight, and image.

Hodson Sr. quietly stepped down as president and board chairman in September. And after 10 years as vice president, Hodson Jr. was removed from office last month. Tax returns from 1996-97 show he made more than $100,000 that year. Hodson Sr. remains president emeritus, a "ceremonial" title, according to Damiri. He said the board now has more say over how the association is run.

"It's important to know that we have not changed in providing service to people with MS," Damiri said. "We're a much better and stronger
organization than we were a year ago."

An interim executive director has been hired and the association is conducting a search for a permanent head, said Damiri.

He said the organization focuses on practical issues such as building barrier-free housing and helping people with multiple sclerosis get the
equipment they need.

The disease affects 350,000 to 400,000 Americans.
Their symptoms include numbness and tingling, vision problems, muscle spasms, and difficulty in walking.

Federal tax returns for the fiscal year ended June 30, 1997, show the amount spent on programs such as public education, housing for the
handicapped, and equipment loans totaled $8.1 million, or 71 percent of the association's total revenues.

Herr said there is no state requirement on what portion of revenues should actually be applied toward the organization's mission.

Copyright © 1999 Bergen Record Corp.