Puerto Rican Day Parade Leadership Axed

February 14, 2014

juan13nweb-3-webAttorney General Eric Schneiderman will announce Thursday that he is ousting more than half the leadership of the National Puerto Rican Day Parade Inc. for financial mismanagement and is reconstituting its board of directors.

The shake-up of the nonprofit group — sponsor for decades of one of the country’s best known ethnic parades — follows a 9-month probe in which Schneiderman found the event’s longtime private fund-raiser, Carlos Velasquez and his GALOS Corp., siphoned off more than $1.4 million in corporate donations since 2008, largely because of lax oversight by the parade committee’s directors.

The stunning announcement, coming just four months before this year’s annual parade in June, casts a cloud over this major showcase of Latino ethnic pride, but it was welcomed by critics who have long sought reforms in the parade’s management.

Schneiderman found unreported revenues, massive misuse of donated airplane tickets and non-existent scholarships. His findings, spelled out in a legal agreement he and parade leaders signed during the past few days, and obtained by the Daily News, include:

  • From 2008 to 2013, two airlines (American and Jet Blue) contributed more than $275,000 in flight vouchers, but Velasquez failed to fully disclose those contributions to the parade committee. Instead, he “repeatedly redeemed the vouchers for personal use by him or his family members, [and for] business purposes unrelated to [the parade],” the probe found.

Carlos Velasquez and his GALOS Corp. were found to have siphoned off more than $1.4 million in corporate donations since 2008, according to an attorney general investigation revealed.

  • A separate nonprofit foundation created by Velasquez and marketed by him as a vehicle for providing parade scholarships to Puerto Rican youths reported on its 2012 tax forms giving out $41,000 in scholarships, but Schneiderman could find documentation for just $9,500.
  •  In 2012, an academic institution donated $68,000 to the parade, yet GALOS only reported $15,000 to the committee.
  •  That same year, a major bank contributed $75,000, but GALOS only reported $20,000.

Under the agreement, Velasquez will repay $100,000 to the parade committee, cancel nearly $1 million he has claimed was owed to him for marketing commissions and relinquish 95 airplane vouchers for trips to Puerto Rico. He is also banned from future dealings with the parade.

Velasquez declined Wednesday to discuss his role until Schneiderman officially releases the results of his probe. Lugo said she had been “betrayed” by her fund-raiser.

Gov. Cuomo marches up 5th Ave. with other dignitaries during the National Puerto Rican Day Parade last June.

In addition, three of the parade committee’s six voting directors, Chairperson Madelyn Lugo, Lugo’s husband Luis Rivera, who was the parade’s coordinator, and treasurer Shirley Cox have resigned. So have two non-voting honorary directors, Maria Roman Dumen and Rosalinda Ortega, who dated back to the era when South Bronx power broker Ramon Velez ruled the parade as his private fiefdom.

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Schneiderman’s report found “no evidence that the members [of the board] engaged in any improper conflict-of-interest transactions.” Still, it blasts all the directors for their failure “to implement the most basic financial controls or exercise meaningful oversight” over Velasquez.

As part of the agreement, nine new directors have already been named to the parade committee’s board. They include Maria Elena Girone, president of the Puerto Rican Family Institute; former Secretary of State Lorraine Cortes-Vazquez, and Ululy Rafael Martinez, an executive with Cablevision.

The stunning reorganization was immediately hailed as “long overdue” by Ramon Jimenez, a South Bronx lawyer and community activist. Jimenez is a member of Boricuas for a Positive Image, the group that raised a public furor last spring over the parade committee’s decision to allow the Miller Coors Company, a corporate sponsor of the event, to produce a Coors Light beer can with a likeness of the Puerto Rican flag.

Their protest drew the support of East Harlem City Councilwoman and now Council Speaker Melissa Mark-Viverito, and it eventually triggered Schneiderman’s probe.

Their protest drew the support of City Councilwoman and now Council Speaker Melissa Mark-Viverito, and it eventually triggered Schneiderman’s probe.

Attorney General Eric Schneiderman launched a 9-month probe into the finances of the National Puerto Rican Day Parade.

This is not the first time, however, that parade finances have come under scrutiny. In both the late 1970s and the late 1980s, the state attorney general’s office stepped in to reform parade management and even removed specific board members.

But no one has gone so far as to reconstitute the entire parade board. Once Schneiderman decided late last year that such an overhaul was needed, he convened a secret meeting in early December with a half dozen of the city’s top elected officials, where he asked them to recommend respected Latino leaders to sit on the board.

But negotiations between his office and lawyers for Velasquez and the parade committee dragged on for two more months.

During that time, word of the secret talks dribbled out in some news outlets. Then last week, Latino leaders like Bronx State Sen. Ruben Diaz and musician Willie Colon, who had not been consulted, suddenly began accusing Schneiderman of sabotaging the parade by trying to oust Lugo and other experienced directors so near to this year’s event.

“Diaz and these other critics had no problems when the parade was being pilfered and plundered all these years,” Jimenez said in defense of Schneiderman.

“Maybe now we’ll finally get a parade less concerned about beer sales and more concerned about celebrating Puerto Rican culture and history,” Jimenez said.

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