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Tuesday, December 10, 2002
Attorneys for Richard Burrow said they'll prove he believed the pledges were genuine.
By JAY CONLEY
Meanwhile, the foundation's volunteer board of directors was kept largely in the dark about the foundation's dire financial straits. The board didn't learn how badly the memorial was in debt until three members asked the foundation's accountants to open its books. That occurred after the June 6, 2001, dedication and just before then-foundation president Richard Burrow suddenly resigned. A donor, a potential donor and a current board member gave eye-opening testimony on the first day of Burrow's jury trial in a Lynchburg federal court. Burrow, 55, of Roanoke is charged with wire fraud, mail fraud, bank fraud and loan application fraud related to what prosecutors portrayed Monday as desperate and illegal fund-raising activities hatched to keep work proceeding on the cash-strapped memorial. Burrow has pleaded not guilty to all the charges. Assistant U.S. Attorney Morgan Scott said in opening arguments that Burrow crafted a complex financial shell game to fool banks, private donors and state taxpayers so the nonprofit D-Day foundation could obtain more than $7.5 million in loans, donations and taxpayer-funded state grants to build the $25 million memorial. Scott said that Burrow's scheme ultimately led to the foundation's declaring Chapter 11 bankruptcy last month. Burrow is charged with abusing the state's matching funds program, in which nonprofit organizations are given a dollar of state funds for every dollar raised through private donations. But Scott said Burrow acquired $3.3 million in state funds in August 2000 not by normal fund-raising efforts, but by borrowing the money from a California bank on a short-term basis and deceiving the state to make it appear as if the foundation had raised the money legitimately. Burrow even used the state funds as collateral for the loan, Scott said. When the bank questioned the legitimacy of the transaction, Scott said Burrow then deceived the foundation's attorney and former state delegate Richard Cranwell into lobbying the bank to approve the loan. Burrow also is accused of using a donor list that falsely overstated the foundation's pledges by at least $2.7 million to acquire a $1.2 million loan from the Bank of the James in June 2001. In his opening statement, Burrow's attorney, John Lichtenstein, said he would prove that nothing Burrow did was illegal regarding the financial transactions and that he believed in the legitimacy of the pledges. Lichtenstein said Burrow is guilty of nothing less than working his fingers to the bone to ready the memorial for its dedication on June 6, 2001, as a tribute to World War II veterans. Perhaps the most startling testimony came from E.C. Robins, a Richmond philanthropist who discovered that he was listed on foundation records as having pledged $2 million. He testified he never formally pledged anything. Robins said that in March 2001, at a dinner in Richmond attended by some of the richest people in Virginia, he made a challenge that he would match any other donations up to a total of $2 million until June 1. But no donations were received by the deadline, U.S. Attorney John Brownlee said. Robins ended up donating more than $800,000 to the foundation that year, but testified it was only because he was a good friend of current foundation president William McIntosh's father. A spokesman for the Veterans of Foreign Wars national office in Kansas City also testified that the VFW was shocked to learn last year that it was listed on D-Day foundation records as owing $700,000 in pledges. Ronald Browning said he had talked briefly with Jim Johnson, the foundation's fund-raising director, in March 2001 about setting up a matching-funds program that could potentially raise that sum of money. But he said the VFW never seriously considered the proposal after the Sept. 11 terrorist attacks. Browning said the VFW wasn't even aware of the supposed pledge until McIntosh contacted them in August 2001 as part of an audit of the foundation's finances after Burrow's departure. That October, McIntosh announced the foundation was $5 million in debt. On cross examination, Browning said he had never met Burrow and was never told how the erroneous pledge had made it into the foundation's records. Buck Bradley, a Lynchburg businessman who joined the foundation's board of directors in the spring of 2000, said he was told by Burrow in August of that year that the foundation was debt free. But in the spring of 2001 Bradley began to get hints that the foundation was having financial problems. In late April, Randy Pennington, the chief financial officer for the Charles M. Schulz Foundation, testified that he received a desperate letter from Burrow requesting a $700,000 grant in the next seven days because Coleman-Adams had threatened to walk off the project. Though " Peanuts" cartoonist Schulz had donated more than $3 million to the foundation prior to his death in February 2000, his heirs declined Burrow's request. That ultimately led Burrow to use Bradley's relationship as a stockholder with the Bank of the James to set up a $1.2 million loan to pay a portion of the money owed to Coleman-Adams to keep them working on the project. But even then, Bradley said he and the board didn't know the severity of the problem until shortly before Burrow resigned. That's when Bradley and fellow board members Skip Tharp and Cathy Benson did a spot investigation of the foundation's financial books and found a "whole page of bills that we owed. That disturbed us an awful lot," Bradley said.
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