The previous executive director of the National Plasterers Council has been arrested on racketeering charges related to his company’s work with the trade association.
Mitch Brooks, 52, was arrested Wednesday afternoon at his home in Port Charlotte, Fla. He is charged with three first-degree felonies, including two counts of grand theft in the first degree of $100,000 or more, and one of racketeering. He is being held on $1.5 million in bail. If he does post bail, he must surrender his passport and is prohibited from communicating with the NPC.
An arraignment is scheduled for Feb. 29. If convicted, he could face a prison sentence up to 90 years.
Brooks and his company, Port Charlotte-based Visioneering Consultants, managed the NPC for 10 years for an agreed-upon $36,000/year, paid in monthly installments of $3,000, plus reimbursement for certain expenses. Brooks departed abruptly in late 2013. At the time, the organization characterized it as a resignation, but it has come to light that Brooks was terminated after NPC officials suspected bookkeeping irregularities, but the organization kept mum because an investigation was being opened.
“From the period of 2009 to 2012, Visioneering Consultants Inc., was used by the defendant to commit theft,” said the Charlotte County Sheriff’s Office in its arrest affidavit. “Many of the funds used were personal in nature.”
According to court documents, NPC officials noticed bookkeeping irregularities, found out that the IRS had revoked NPC’s tax-exempt status (it used to be a not-for-profit organization), and was informed of settlements that had been made to hotels that had been due payment. The association’s treasurer, Robert Chiapelli, and attorney, Todd McKee, went to Port Charlotte to investigate VCI and take control of NPC’s bank accounts and documents from VCI.
Chiapelli and McKee spent several hours over two days at the bank trying to obtain control of the accounts. “A cursory review of the accounts showed multiple cash transfers from NPC to VCI on a regular basis,” the affidavit read. “It also showed the existence of two outstanding loans to NPC and National Plasterers Council Foundation.”
They also realized that VCI had not filed a 990 tax report for NPC since 2007, the document stated.
The arrest affidavit included an account of a lengthy conversation that later took place between Brooks and McKee: The attorney informed Brooks that NPC had identified more than $1 million is missing funds that had been transferred to VCI, either directly or through checks written to cash. Brooks replied that the money had been transferred to his company because its credit cards were used to pay NPC’s expenses, but he said he had stopped using expense reports and receipts to document reimbursements in 2007. He also blamed NPC’s financial difficulties on the recession, and the subsequent decline in collected membership fees and conference revenue, the document said.
When asked about the gap in tax filings during this conversation, Brooks responded that his accountant had retired in 2007 and he’d forgotten to hire a new one to file the documents, the affidavit stated.
When asked if Brooks would state that all money transferred to his company from NPC was for legitimate purposes, “he stated that he was not willing to say yes or no,” the affidavit said. He told McKee that some funds and records had been treated inappropriately, but replied, “I don’t know” when asked if he ever used the funds for his own benefit. He also said that VCI had probably transferred more NPC funds than the agreed-upon $3,000 per month to its own accounts, the affidavit said.
NPC then hired a forensic accountant, who reported that between 2007 and 2012, VCI had taken in nearly $1.5 million in excess of the contracted amount. “Mr. Brooks stated he was not willing to substantiate the expenses reimbursed to VCI at this time,” the report noted. “Mr. Brooks also stated he essentially stopped substantiating the expenses for which he was using cash after 2007.”
After Brooks stopped managing NPC, in October 2013, Chiapelli and McKee filed a fraud report with the Charlotte (Fla.) County Sheriff’s Office.
Investigators spoke with a former VCI employee, who told them she had left the company because she suspected Brooks was misappropriating funds for his own use, the report stated. She said she noticed that financial reports given to NPC had been changed from the information reflected in QuickBooks records to show positive balances where they had been negative. She said he once borrowed $10,000 from her to make payroll.
“On one occasion, he stated to her something to the effect that if VCI started to fail, he would have to ‘come up with a creative exit plan to make a quick exit,’” the affidavit said.
Another examination of the key bank account was performed, this one by a volunteer for the Economic Crimes Unit, who concluded, “In summary, it appears that Brooks used funds from NPC and NPCF to support both a VCI operation much too large for its client base and a personal lifestyle.” That report said funds were used to pay personal credit cards, make mortgage payments, support Brooks’ mother, and cover other bills and costs not associated with VCI.
Brooks could not be reached and was still making arrangements for an attorney at press time.
Shortly after Brooks left, the association suffered financial difficulties. It put a temporary hold on its work at the National Pool Industry Research Center, for instance. While no doubt, part of the problem sprang from the economic downturn of the time, NPC officials also believed Brooks’ activities to be part of the problem.
“There are a number of impacts that negatively affected the NPC as a result of Mitch’s actions,” said Jeff Henderson, NPC’s current executive director and vice president of The Sanford Organization in Wauconda, Ill. He declined to go into detail, pending the ongoing investigation and case.
In a statement, NPC said, “While Mr. Brooks’ actions certainly harmed the organization financially, the leadership, members and volunteers of NPC have worked hard to recover from his actions and are very pleased that the organization is now in a sound financial condition and positioned to thrive for years to come.”
Henderson said the NPC has fully recovered. “NPC’s financial position is outstanding,” he said. “It was demonstrated to the industry by our underwriting and investment in the evaporation study [conducted last year at NPIRC] … and also the heavy lifting that we did in supporting and working with the APSP on the first-ever plastering standard.”
To help prevent such activity, Henderson recommended hiring association management firms that have been accredited by the Association Management Company Institute, a trade association for such management firms, which performs audits as part of the accreditation process.
NPC has not filed suit against Brooks, and would not comment about future plans.
The local media outlet SUN Newspapers reported that Brooks had founded the Boys & Girls Clubs of Charlotte County, but had not been affiliated with the group for the past few years, and that he recently had worked in the area as a Santa Claus.