Nature of Complaint against Joseph Barrett and Lift Kids
* Misappropriation of Funds
* Corporate Governance
* Self Enrichment
* Transparency and Accountability
* Theft of Intellectual Property and Fraudulent Fund Raising
* Action by the Minnesota Attorney General
Misappropriation of Funds
Mr. Barrett has misappropriated most grants and donations awarded to Lift Kids. The total amount misappropriated by Mr. Barrett exceeds $100,000.00. As the following examples show the stated project or partner NGO (non-profit organization) for which the grant was awarded simply did not receive their money.
The most egregious example is a $25,000 grant awarded from a foundation. This grant was for the construction and operation of a technical school, and was received as a result of a collaborative effort between Lift Kids, an MBA class taught by Mr. Barrett and an NGO working in Guatemala. Lift Kids received the $25,000 grant in early 2008, then Mr. Barrett simply refused to send any of the money to, and ended all communications with, partner NGO. To date not one dollar of this grant went to its stated purpose, yet in April 2009 Mr. Barrett issued a press release representing the technical school as a successful and ongoing project.
Similarly, in the summer of 2007, Lift Kids received a $25,000 donation from a large corporation. This money was donated to support a project in Africa. Mr. Barrett used about $5000 of this money to pay his personal travel, but then Lift Kids refused to send any money to the project. Causing incredible hardship to those on the ground in Africa as they made had made a large capital investments once they received news the grant was awarded.
A final example of Mr. Barrett's fraudulent statements and blatantly misuse of funds is related to a donation where the company had detailed specific uses for the funds before arranging the donation. Mr. Barrett replied to an explicitly clear e-mail but then refused to distribute the funds accordingly.
So, where did the money go?
Lift Kids has hired numerous consultants, despite the fact Mr. Barrett continues to perpetuate the false impression that Lift Kids is a volunteer ran organization. Under Mr. Barrett's sole discretion, Lift Kids paid out more than $25,000 in consulting fees. The amount paid to these individual consultants varied, from an office assistant earning $10 per hour to a social entrepreneur who received $800 per month for living expenses. Unsurprisingly, the best paid consultant was Mr. Barrett himself.
Mr. Barrett used the money from these grants and donations to enrich personally. In 2007 Lift Kids reported $10,000 in compensation to Mr. Barrett. This represents 16.8% of their annual budget. Lift Kids also funded a $5000 trip to Africa for Mr. Barrett. Because, no major donation was received to support his personal compensation, Mr. Barrett is literally paying himself with money Lift Kids raised under the pretense of helping starving children in Africa.
This egregious misappropriation of funds is a result Mr. Barrett being in sole control of Lift Kids, with no accountability or transparency to anyone inside or outside the organization. Mr. Barrett, serving as: founder, President, CEO, board member and treasurer of Lift Kids, eschews proper oversight as a tactic to mislead donors, misappropriate funds and enrich himself. As a result, this organization has no means with which to hold Mr. Barrett accountable.
Lift Kids lacks the legally required controls and corporate governance practices. In defiance of a Minnesota law this organization is operating without a fully staffed board. Mr. Barrett refused to appoint a Board of Directors despite concerns expressed by numerous volunteers that he was legally required to have a board of at least 3 individuals to fund raise in the State of Minnesota.
In addition to having an incomplete and ineffective Board of Directors, there are no other individuals within this organization that hold any sort of power or decision making authority (such as a treasure or controller). There is simply no way to confront Lift Kids about Mr. Barrett's fraudulent fund raising claims, egregious misappropriation of funds and personal enrichment.
Furthermore, there is a conflict of interest because Mr. Barrett serves as both a Board Member and Treasurer; for him to receive compensation violates the Charities Review Council standards of accountability and conflicts of interest.
Transparency and Accountability
By not properly recording decisions or expenditures, Mr. Barrett undermines the transparency of the organization. Mr. Barrett deliberately avoids having things in writing as a way to evade accountability. There is no formal process for bookkeeping, entering in arrangements, contracts, and other obligations. As a result of this incredible lack of accountability, combined Mr. Barrett's unchecked power, Lift Kids has accumulated numerous liabilities. For example, Mr. Barrett sign a two year $1200 a month lease for an office, ignoring concerns raised by numerous volunteers about not having a source of funding. Eventually, Lift Kids was evicted from this office space in NE Minneapolis.
Theft of Intellectual Property and Fraudulent Fund Raising
In its attempts to fund raise Lift Kids refers to numerous projects that either are no longer viable or simply do not exist. For example, the volunteer who created the Egg Module left the organization over a year ago, yet this project is still represented on the home page. A similar situation exits with the project in Guatemala, which is still featured on the website despite Mr. Barrett's refusal to send the money to and ending communications with the NGO. In short, Lift Kids has little or no involvement with the projects it claims to be raising funds. Essentially, the Lift Kids projects are little more than smoke in mirrors to dupe donors and volunteers.
Even the original concept for the Lift Kids was stolen from one of Mr. Barrett's MBA students.
The following is a slightly edited (to protect confidentially) comment from a individual familiar with the founding of Lift Kids This organization was not founded by this man named Joseph Barrett. A native Kenyan had the original vision for Lift Kids. Every Saturday morning this student, presented her real life story raising money for children in Kenya. This individual and other student volunteers worked long and hard to raise the money to in the end get nothing. Joseph Barrett is not being honest. He is a deceitful man that has blatantly lied to the Project donors. Their money has not been used at all to the cause they donated to. I pray and hope that Lift Kids has a long and prosperous venture, but I just wish they would be honest in the accounts on how their organization was originally founded .
Action by Minnesota Attorney General
There have at least three complains filed with the Minnesota Attorney General. While the AG has yet to shut down the organization or criminally charge Mr. Barrett they have responded to some of the afore mentioned issues. On March 14th 2008 Mr. Barrett entered into an Assurance of Discontinuance and promised to correct some of governance issues. However, Mr. Barrett has continued to operate Lift Kids with a blatant defiance of this agreement, despite a $5000 stayed civil penal.
It is very unfortunate that such an well meaning organization, built by so many talented people, has been hijacked a meglamanic fraudster. To prevent future harm the international development movement it is imperative that Lift Kids be shut down and Joseph Barrett be held responsible for his behavior.
Here is what you can do to make this happen.
First, tell volunteers, donors, and others involved to with draw their support of the organization and association with Mr. Barrett.
Second, contact the Minnesota Attorney General and ask them to enforce the civil penalty as detailed in Assurance of Discontinuance. Or file your own complaint if you have first hand experience.
Finally, contact local media , such as Minn Post, as ask them to publish the story how Mr. Barrett has ruined the dreams of so many well meaning volunteers and starving children.
Please help use bring an end to this unfortunate ordeal.