Attorney General's News Release

December 28, 2007

Nixon says proposed court orders will help Carthage Humane Society get back on right track

Jefferson City, Mo. — Attorney General Jay Nixon today filed proposed consent orders that Nixon said will enable the Carthage Humane Society (CHS) to get back on the correct track.

The consent orders and judgments in quo warranto filed with the Jasper County Circuit Court come after a year-long investigation by Nixon into allegations of mismanagement and a lack of financial control at CHS. The investigation showed that, in addition to a loss of tax exempt status for several years and a lapse in insurance, CHS directors and officers failed to implement financial controls or procedures, failed to issue financial reports, failed to prepare and maintain budgets and failed to maintain adequate financial records - all of which led to a loss of fiscal integrity and a lack of financial oversight.

As a result of the investigation, Nixon took legal action against CHS, former executive director David Butler, former CHS president Charles Miller and former treasurer William Johnson.

The proposed orders, Nixon said, allow CHS to move forward to fulfill its charitable purpose.

"We are pleased that the Carthage Humane Society has taken steps since the beginning of our action to correct some of its previous breaches of duty, such as regaining its tax-exempt status and putting another director on the board with real financial expertise," Nixon said. "The proposed judgments filed today set out additional requirements that will return the Carthage Humane Society to its role as a vital community asset."

The orders outline standards that will ensure the CHS board maintains independence, including providing specific detail as to the requirements for recordkeeping and transparent decision making. In addition, Miller and Johnson stepped down from the board and are prohibited from participating in the operation of CHS in the future.

Prior to submitting the proposed orders, the Attorney General's Office and Carthage city government officials worked to identify community members with financial expertise who could serve to strengthen CHS governance. In response, local CPA Brian Schmidt agreed to serve on the Board of Directors.

In addition to changing the make-up of the board, the proposed orders require CHS to take the following action:

• Make its best effort to ensure two-thirds majority of its governing board and officers are independent individuals who are not compensated by, or receive material financial benefits from, the organization;
• Provide a new set of bylaws to the Attorney General's Office for review and approval within 90 days;
• Accept and adopt all provisions of state law pertaining to becoming a standard non-profit within 60 days;
• Create standardized financial statements, such as monthly reports, revenue statements, expense statements and balance sheets, within 60 days and maintain such documentation for a period of three years;
• Establish internal controls ensuring that all cash, receipts and revenue are adequately accounted for;
• Create annual budgets for the year 2008 and thereafter;
• Ensure board review and approval of all expenditures over $100;
• Create annual reports beginning with the year 2007 and every year thereafter, including all financial information about the organization;
• Ensure that all CHS property and assets benefit the organization instead of any person;
• Make all compensation paid to any employees, officer or director subject to two-thirds vote by the board;
• Maintain records for all fundraising and charitable events;
• Create and maintain detailed asset records;
• Provide the most humane care and treatment possible for all animals that come into its possession.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to the Press Secretary.

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