Brian Neal Foundation Admits to Mismanagement of Donations

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Felix deBruin, the executive director of the tax-exempt, not-for-profit Brian Neal Fitness and Health Foundation for the past year, has left the organization, accusing Neal of “skimming” funds from the foundation for himself.

Specifically, deBruin says Neal used the foundation’s ATM debit card to pay himself ‘consulting fees’ and ‘payroll expenses’ whenever he felt like it. An SFGN review of the bank statements, QuickBooks reports and cash receipts confirmed the allegations.

Bobby Blair, the foundation’s director, on Monday, June 17, acknowledged the mismanagement of the non-profit’s finances. Blair, also the publisher of the Florida Agenda, and Neal’s life partner, is the founder and director of the Brian Neal Foundation, and the one who signs the checks.

When first questioned by SFGN last week, Blair stated, “every dollar in and out is accountable and 100 percent to the betterment and fulfillment of Foundation needs to provide health and wellness services to the community it serves.”

Blair had also claimed in an email to SFGN that use of the foundation’s ATM debit card was “restricted.” However, deBruin said it was anything but so, and the facts bear him out.

Admitting that Neal used the foundation’s ATM card negligently, Blair promised in the future he “will do better… I accept responsibility for the mistakes.” Blair attributed the errors to his lack of experience in managing a 501 (c) (3) foundation. He further indicated that Neal would publish an apology in this week’s issue of the Agenda.

Blair also stated “we agree that no one will ever use the foundation debit card again for an improper purpose.” He nevertheless reaffirmed his commitment to the foundation, stating, “it provides a valuable service for the betterment of needy members of our community.”

But deBruin says he warned both Blair and Neal about the improper procedures, and accuses both of them of “covering them up.” Blair replied to the accusation by asserting that deBruin is ‘crazy’ and that he fired him from the foundation on April 10, 2013, a position he held as a volunteer, without pay. Blair said deBruin “was the weak link in the organization,” and he was terminated for cause.

Blair has denied any allegations of intentional wrongdoing. “We believe in 100 percent transparency,” he said, and turned over all the foundation bank statements and financial records to SFGN for review.

The documents substantiated deBruin’s charges, revealing that Neal took ATM cash withdrawals from foundation accounts at gay strip clubs such as the Boardwalk in Fort Lauderdale and the Bourbon Street Pub in Key West. The foundation QuickBooks reports classified those debits as either ‘payroll expenses’ or ‘management consulting fees.’

Blair acknowledged that Neal should have instead just been paid a salary or weekly stipend, because, “after two years of work for the foundation, he was entitled to earn a lot more than he actually took out” in fees. “He has put hundreds of hours into the foundation, and received minimal compensation,” Blair said of his partner.

Nevertheless, executives at the local chapter of the American Society of Fundraising Professionals censured the conduct, as did the Executive Director of the local LGBT charity, Our Fund, Tony Timiraos.

An accounting executive who has managed nonprofits for decades, Timiraos concluded, “Attempting to pay management consulting fees with unilateral and unaccounted for ATM withdrawals is an inappropriate way for a non-profit to conduct business. There should be payroll deductions, checks, guidelines and receipts to back up all transactions.”

The Brian Neal Foundation was first set up in April of 2011 to assist patients living with HIV to purchase gym memberships and take part in wellness programs, coordinated by Neal, a fitness trainer. Incorporated by attorney Dean Trantalis, now a Fort Lauderdale city commissioner, it was officially granted 501 (c) (3) status by the IRS in September of 2011. Some of its first transactions were payments to Brian Neal. Within a month of its formation, ATM cash withdrawals appeared at Dudes Bar and other watering holes, such as Rosie’s and the Hut Lounge.

Said Blair, “They could have been for legitimate expenses.” But they were listed as ‘management consulting fees’ on corporate records.

“I don’t think when the IRS granted that status they intended for Brian Neal to use the foundation’s ATM debit card to acquire cash for himself at gay strip clubs in the middle of the night,” deBruin told SFGN. He served for over a year as the ED. He accuses Blair of directing him to “adjust” the QuickBooks reports to “cover up” the improper debits. He says he refused to do so, and that led to their feud, and eventual parting of the ways. For his part, Blair vehemently denied the charges, calling deBruin “a disgruntled ex employee,” who was trying to sabotage the foundation.

At first, Blair sent an email to SFGN saying Neal was only paid funds “when they were available.” But the foundation’s bank statements do not indicate any regular stream of steady payments to Neal, just debits and withdrawals from an ATM card, at random times and dates.

“The only time Neal stopped using the debit card for his personal use was when I demanded it back in January of this year,” deBruin said. Indeed, the debit card was not used for any personal charges again until May of 2013, two weeks after deBruin left the foundation. Blair told SFGN on Monday that he realizes now the practice was inappropriate and “it would cease immediately, since it is apparently improper.”

The foundation’s published 2012 profit and loss statement lists only $500 in ‘payroll expenses’ and $1,196.34 in ‘management consulting fees.’ However, the total amount of money taken out of foundation funds by Neal, whether classified as consulting fees or payroll expenses and ATM debits, is over $3,300, a disparity of over $2,000.

There were no payroll taxes taken out and no contracts for consulting fees or employment. Timiraos categorized the accounting method as “an inappropriate way for the foundation to conduct itself. It invites not only an IRS audit but possible revocation of their tax-exempt status.”

Stated deBruin, “If we were paying Brian Neal, which to my understanding we were not, then it should have come in the form of a regular foundation check with a contract or written agreement.”

A volunteer executive director, who formerly ran the Pet Project, deBruin did not have any foundation check signing authority, no access to the books and records of the foundation, or control of the foundation’s ATM card. He told SFGN that he had no control over the finances of the foundation, and no way to stop the conduct.

Nevertheless, Blair says he relied on his “Felix and his accounting team” to manage the books. “I was only there to give money when they needed it.”

Blair stated if you want to know about the finances of the foundation, “you have to ask Jeff Sterling, our accountant or Jamie Forsythe, our bookkeeper. I do the marketing and promotions.”

1164 Enterprises Connection

However, it was Blair who seeded the foundation itself with capital, funding it from a separate for-profit corporation, 1164 Enterprises, owned and operated jointly by Bobby Blair and Brian Neal. The Chase Bank accounts for both are jointly linked, so funds could be transferred back and forth at will. In fact, they were.

Blair would infuse the foundation with funds whenever it fell short, transferring money into it as a ‘loan.’ As soon as the foundation raised funds through one of its tea cruise events, he would then pay himself back with a transfer of funds into the for-profit company, 1164 Enterprises.

One such instance was after the Christmas tea cruise of 2012, which left the foundation with the sum of $5,039 in its bank account, according to the Chase bank statements turned over to SFGN by Blair. The next day, the foundation transferred $3,000 to 1164 Enterprises, classifying it as a payback for a loan.

deBruin criticized the procedures used by Blair and Neal to collect and disburse the receipts and funds for the tea cruises.

“There was no oversight or accounting measures in place; no promissory notes, no nothing,” he charged. “Blair put money in and took money out when he felt like it.”

Jamie Forsythe confirmed to SFGN there are in fact no written notes or loans evidencing any agreements between the two entities.

“Everything was a short term no-interest loan to control cash flow and foundation expenses,” he explained.

The QuickBooks reports show that Blair infused the foundation with over $6,000 in its first 18 months, all categorized as “loans,” none as donations. According to the P and L, Blair has paid himself back over $4,500 so far, in one instance paying himself back more than he loaned, but covering the shortfall a few days later.

“It was sloppy and unacceptable,” deBruin asserted. “You should not just be shifting money back and forth like that with a non-profit. The procedures they used were highly irregular.”

Tony Timiraos also found fault with this practice, again referring to the activity of the foundation as “inappropriate. If the principals of both the foundation and the for-profit entity are the same people, then there should have been more independence between the two entities. It creates suspicion and they are inviting oversight and IRS review.”

deBruin also declared that Blair and Neal were reckless in their collection practices during promotional events. “They would collect cash payments on the day of the cruise and deposit whatever they wanted the next day. Only they could touch the money. I think they were skimming off the top,” deBruin charged. But he had no proof of that allegation, and cash deposits were routinely made into the foundation account the day after cruises left port. Blair vehemently denied those charges as “false and defamatory.”

‘Consulting Fees’

In its P and L statement for 2012, now posted on the Internet, the Brian Neal Foundation listed income of $33,310.16 for the calendar year. Of that, only $11,709.30 was spent on purchasing gym memberships.

The bulk of the foundation expenses were spent on promoting tea cruises and a “Dancing with the Stars” event, a popular social gathering for the LGBT community at the Manor. The costs encumbered by planning these events were $14,388.71, including ‘management-consulting fees’ of $1,196.34.

The foundation first published a profit and loss statement on its Facebook website in January of 2013. According to that P and L statement, the foundation raised $33,520.16, and spent $37,381.75. That was replaced this month with a revised statement, now showing total losses of $7,621.59 for the calendar year 2012.

The foundation produced no checks for ‘management consulting fees’ in 2012. Instead, bank statements revealed random ATM withdrawals on August 10, August 13, August 24, and September 4. A week later, on September 13, two new back-to-back separate ATM withdrawals of $125 and $122 were posted as ‘management consultant fees.’

One such fee was paid out at the Bourbon Street Pub in Key West on August 10. It is a gay strip club at 724 Duval Street. Another ATM debit on Sept. 13 was taken from the Boardwalk, another gay strip club on Andrews Avenue in Fort Lauderdale. Even in 2011, one of the fitness foundation’s debits was for a $22 charge at Dudes Bar in Fort Lauderdale, yet another gay strip club.

ATM withdrawals of $43.50 and $202.99 were also made at a CVS pharmacy and South Beach nightclub, on November 2 and November 5, in 2012, respectively, each classified as ‘management consultant fees’ to Brian Neal.

Stated deBruin, “I did not know about any of this and there was no consulting I got from Brian, and no work we had in Key West or South Beach. I did all the work, and scheduled all the programs, and he rarely if ever showed up at them.”

 ‘Payroll Expenses’

Meanwhile, Neal was also apparently being reimbursed at the same times for ‘payroll expenses,’ which are not accounted for on the foundation’s publicly accessible profit and loss statement.

According to the P and L statement filed by the foundation, a total expense of $500 was paid out in ‘payroll expenses’ in 2012. But the foundation spreadsheet provided to SFGN by deBruin shows Brian Neal, apart from his ‘management consulting fees’, also received close to $1,500 in payroll expenses for that year, including $1,000 as a lump sum on August 13, 2012. It was not paid by a check, but a cash withdrawal.

Blair says for all he knows it could have been used as a down payment for the boat. But Timiraos again told SFGN “that is exactly why you should have had receipts and records and written a check. The method used was inappropriate for tax accounting purposes, and it should not have been allowed.”

The Foundation’s QuickBooks account report also lists Brian Neal getting ‘payroll expenses’ from ATM withdrawals of $60 on March 19, $200 on June 4, $122.95 on June 12, $19.25 on July 3, and $43.44 also on July 3. Blair now admits these were “probably misclassified” and will “have to be readdressed in the future.”

Neal Arrested for Meth, DUI

The payment of $1,000 to Neal as a payroll expense on August 13 of 2012 is particularly eye opening. It came his way just two weeks after he was arrested by the Fort Lauderdale police for possession of methamphetamines, DUI and resisting without violence. The police had to tase him in order to subdue him during the July 31, 2012 arrest and altercation.

While the fitness instructor’s felony possession charge for crystal meth was dropped by the state, Neal pled guilty to the charges in February of this year, and is now on misdemeanor probation for DUI and resisting arrest without violence.

“As you can see,” deBruin noted, “Brian had impairment issues and legal problems. I ran the foundation, so why he was allotted management fees and payroll expenses is beyond me.”

While calling the arrest the “best thing that ever happened to Brian Neal because it helped him turn his life around,” Blair felt he was not a public figure and it was a “private matter.” However, Blair now says that Neal will “open up” about his arrest in a column in this week’s Agenda.

None of the foundation’s applications for grants disclosed the arrest of its namesake. Stated Tony Beall, a local grant writer, known as ‘Mr. Non Profit,’ locally,

“the parameters of the grant request do not require us to list the status of the person requesting the same.” He was paid $1,000 by the foundation to help secure a grant from the Community Foundation of Broward, which he did. The Foundation received $1,000. It had requested $25,000.

Other donors of $500 or more in 2012 and 2013 have been the Runyon Law Firm, Island City Eye Care, Dean Trantalis, Arthur Davidson, the Gibson Leon Trust, and Pride South Florida.

No donations are listed from 1164 Enterprises. But Blair attributes his time and energy as “donations that were never accounted for.” He adds there were dozens of times he spent his own money on the planning for both the cruises and dancing events where he took cash out of his pocket and never kept records.

“Well, that is not the way you run a community foundation,” deBruin stated. “Who is on the board, Bobby and one other guy? The bottom line is I was keeping up my end, recruiting volunteers and running valuable programs to aid the HIV community. It is a shame they did not keep up their end. They have done this to themselves.”

Brian Neal refused to come in and answer any questions. Instead, he sent an email to SFGN on Monday, explaining that he has now been informed his practices were “inappropriate” and “in the future I will only take compensation in the form of a check.” He stated that he would continue to “supply high quality fitness and health programming in our community… Which is a great passion of mine.”

While declining to answer questions one on one about his misuse of foundation finances, Neal instead sent over testimonials from individuals whose lives were enhanced by community programming.

Bobby Bobby Blair

BLAIR: “It has come to my attention that a disgruntled former executive director is making false claims towards our Foundation. We are happy to answer such claims. Slander, defamation and tortious interference are in play here with Mr DeBruin and you if anything is printed that is not true.”

“Valuable services are being provided to help community members on a weekly basis. Every dollar in and out is accountable and 100 percent to the betterment and fulfillment of Foundation needs to provide health and wellness services to the community it serves…. The weak link was Felix de Bruin as you will find in foundation members inquiries. Consequently he was fired.”

Felix Felix deBruin

Felix de Bruin: “ I was not fired. I never was an employee, and I walked out after I was used to run the entire Dancing with the South Florida Stars III…. Bobby Blair always introduced me as the hardest working Executive Director in Wilton Manors…And I was the only person working because Brian Neal never showed up for the classes and events I put together. I got all the presenters of all the classes. I was totally in charge to arrange every fundraiser including the gay tea cruises. Neither Bobby not Brian Neal brought any fund raising money in to the Foundation. They also did not donate anything themselves. Brian Neal was totally inactive…”

“I don’t think the IRS intended that a 501(c)(3) organization was designed for a lead officer to get cash withdrawals in the middle of the night from an ATM at gay strip clubs in Key West and then classify it as a payroll expense or management consulting fee.”

Foundation Continues Its Programs  

Despite the turmoil administratively, the Brian Neal Fitness and Health Foundation is trying to maintain a consistent schedule of programs in order to benefit the HIV community.

Without deBruin’s supervision, some of the programs of the foundation have ceased. Nutrition, wellness, and aerobic Zumba classes have been cancelled. However, the gym and fitness components are still functioning with participants actively involved. A June schedule of activities is posted on their website, with Neal conducting some of the classes himself.

Rigoberto Ng, a registered dietician, started a monthly nutritional lecture last June, recruited by deBruin. While he says scheduling conflicts have impaired recent classes,he indicated he is “passionate about volunteering for HIV causes.” Ng says he has spoken with Neal and is planning to resuscitate his course program for the end of this month. A session is presently being promoted on the Brian Neal Foundation Facebook page.

Elizabeth Davis, a wellness instructor and life coach told SFGN that “I had a very good experience with Felix and believe in the mission of the organization.” She said she has not been contacted by anyone to continue running classes since Felix’s departure as executive director, but that she is “ready and available to continue the mission.” Davis commended the foundation for filling a “community need.”

Similarly, stated Leor Barak, who hosted a monthly wellness seminar, “Brian Neal said he would call me after Felix left in April, but I simply have not heard from him, so no classes have been scheduled.” A local businessman who owns Nuts About Yogurt, Barak applauded the goals of the foundation. “We were doing good,” he said.

Obey Pardo, the Zumba aerobics instructor agreed, “I think the participants are grateful that we conducted these classes, and our response was positive.” He acknowledged, however, that no one has followed up with him since deBruin’s departure.

The director of Pride South Florida, Marc Hansen, sent a letter to SFGN saying that his health issues had improved drastically, and he has the Brian Neal Foundation to “thank for it.” So did Mitchell Grant, who criticized deBruin, but said the foundation “through trial and error is becoming a shining star.” Another party, David Richardson, praised the foundation for helping him reach his fitness goals.

Chris Barr is another community resident who has given supportive testimonials for the foundation’s work. “If the gym memberships are properly allocated to persons who are needy, then they are fulfilling an important mission,” he stated. Norm Kent