July 8 , 2008

Travel Crashes At Points Of Light Institute
Charity could be on hook for unfulfilled travel sold via its eStore
By Paul Clolery, Michele Donohue and Mark Hrywna | July 8, 2008

An estimated 1,100 customers who purchased travel vouchers for airline flights from the Points of Light Institute’s store on eBay have been left with nothing. The Points of Light Institute has closed that area of the eBay store and is working with law enforcement to investigate what it is calling “significant financial and operational irregularities.”

Each reservation is for one to four people, so as many as 4,400 travelers could be impacted. Sources told The NonProfit Times that travel had been booked through May 2009 that could total more than $1 million.

In a statement, the Points of Light Institute, the recently re-branded merger of the Points of Light Foundation and Hands on Network, said that law enforcement has been notified and that the organization is “cooperating with them.”

In the statement, the Points of Light Institute said: “irregularities appear to be isolated to travel transactions at the eStore and based on financial and legal findings, we must suspend fulfilling ticket bookings, purchased through the eStore, for travel after July 15, 2008.”

Points of Light will fulfill travel through July 15 and work to accept the applications for refunds thereafter, Michelle Nunn, president and CEO of the Points of Light Institute, told The NonProfit Times in an exclusive interview Tuesday afternoon. The goal is to refund people within 30 days and begin refunds as soon as possible, but that’s based on the capacity to verify and process and fulfill them.

How much it all adds up to is still unclear, Nunn said. “We’re still getting the information via our refund process,” she said, adding that a second round of emails has gone out as part of direct, regular communication with those affected. Several donors and financial supporters have offered donations and financing to ensure Points of Light solves the problem, Nunn said, and addresses it without “affecting the larger organization and ensuring no donated funds are directed toward it,” she said.

Two senior managers learned of the irregularities through customer complaints, which they explored and ultimately verified through an independent contractor, and reported to Nunn on the evening of June 26, she said. Customers were notified of the situation late Friday, July 4, at which time the refund application process began.

Because of the ongoing investigation, Nunn could not elaborate on the type of “irregularities.” She said the U.S. Attorney’s Office in Washington, D.C., was contacted within 24 hours, as was the organization’s counsel -- McKenna, Long & Aldridge -- which is doing its own investigation.

As people apply for refunds, Nunn said they will have a better idea of how much money is involved. So far the organization has contacted more than 1,000 people. “I would assume over the coming days and weeks we’ll have a lot more information,” she said.

Nunn said it took about a week to determine what happened and the organization is still determining what happened. “It took us a number of days to wrap our arms, even discover the issues based upon this being an independent contractor’s records and our having to try to interpret and understand the issues and to put a plan in place to address it,” Nunn said. That included putting an call center in place (800-886-6304) and contacting customers.

The independent contractor was terminated “as soon as we learned of these issues,” Nunn said. The contract was created and begun in 2003 as a program of the Points of Light Foundation, which merged with the Hands On Network last year. The independent contractor, Maria Herrmann, was a former employee in business development at the Points of Light Foundation, but Nunn did not know the duration of her employ prior to that.

Herrmann is no longer listed on the organization’s Web site and calls to her cell phone and home phone were not returned. A woman answering the door at Herrmann’s Washington, D.C. residence told a reporter she could not help her and declined to say if she was in fact Maria Herrmann.

Despite thousands of tickets being sold, Nunn described the eStore as a “very small enterprise,” grossing about $100,000 and netting $15,000 in the fiscal year ending 2007. She explained that the numbers "are the totals that were reported on our books and in our audited statements of Points of Light Foundation (pre-merger). The recent discoveries obviously do not align to these numbers and that is what is under investigation.”

Nunn stressed that the eStore was operated on the MissionFish platform but it was not part of the MissionFish business unit. “Funds that came and went through the store were not associated with MissionFish or its accounts,” she said.

Travel vouchers, generally purchased for less than you can get fares directly through the airline, have been very popular for the organization and in fact were getting high marks on eBay until the July 4 weekend. As of Tuesday, there were 172 positive comments on the organization’s eBay feedback profile about the program but the 68 negative comments have been popping up since July 1.

Mitch-Stuart Inc., from where The eStore purchased travel certificates, is stepping up as a white knight to try to help those stranded, said CEO Stuart Paskow. “They have been a customer since 2004. They ordered them, we fulfilled,” he said.

Paskow stressed that people who have already received vouchers have safe passage.

Michelle Cohen, president of Mitch-Stuart, said that “in cooperation with American Airlines, we are fulfilling orders through the July 15 cut-off date as determined by the Points of Light Institute.”

Mitch-Stuart provided copies of letters of appreciation they have received from the travelers. “We are working as fast as we can to help Points of Light work through their problem and get these people taken care of,” said Cohen.

The trips sold ranged in price from $399 to $1,099. There were a few trips, such as first class passage to Hawaii, which went for more money.

The eBay discussion boards have been flooded with comments and questions. Sharon Goldmacher, a spokesperson for Points of Light, made a posting on a blog whose writer was among the customers affected.

“Hello, this is Sharon, and I represent the Points of Light Foundation.

We are aware of your concerns and are working hard to resolve these issues. There have been some discussions here around the subject of refunds, and we want to reassure buyers that they will receive refunds for their travel and we will process these as quickly as possible, with the goal of a 30 day time frame, if not sooner. However, we do need to follow a uniform process for all the refunds and verify the amount due. So, buyers do need to apply for a refund for their specific purchase via this link: http://www.pointsoflight.org/estore/refund.html

We know there have also been discussions around the identity of the independent contractor involved. Unfortunately, we are legally unable to comment on this person’s identity or on more specifics beyond what we have already provided on our Web site: http://www.pointsoflight.org/about/mediacenter/releases/2008/07-04.cfm

We’d like to reiterate that we are working with legal and accounting experts and law enforcement to investigate this further and pursue all available legal recourse. We are unable to provide more information publicly beyond that.

Since we are working around the clock to resolve these issues, unfortunately we cannot monitor this board as closely as we'd like. Should you have additional questions, please visit our FAQ page on our Web site http://www.pointsoflight.org/estore/faq.html and/or contact our Customer Service team at 800-886-6304.

Again, we are deeply apologetic for the inconvenience this unfortunate situation has caused you. Thank you very much for your patience as we work to resolve this as quickly as possible and refund all buyers.”