One of the country's largest parades, held in the largest city in the country, is in the middle of a growing scandal that's shaking up its top leadership and possibly having an impact on its future success.
Just four months before New York City's Puerto Rican Day Parade is scheduled to close down the city's famed Fifth Avenue, more than half of its board of directors is gone following an investigation by the New York Attorney General into more than $1 million in mismanaged donations.
Details of the findings, first reported by the New York Daily News, represent a major shake up of the non-profit group responsible for one of the country’s best known ethnic parades which annually attracts more than a million spectators.
Attorney General Eric Schneiderman’s eight-month investigation has found that the parade’s private fund-raiser, Carlos Velasquez and his GALOS Corporation pocketed more than $1.4 million in corporate donations since 2008, thanks in large part to poor oversight by the parade’s board.
Under a legal agreement he signed with the attorney general, Velasquez will repay $100,000 to the parade committee and cancel nearly $1 million he claims is owed to him in marketing commission by the Puerto Rican Day Parade Inc.
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As a result of the investigation, the eight-member board has been completely shaken up, with its president, treasurer, general coordinator and two other honorary members axed.
Schneiderman’s office, which interviewed more than 100 sponsors and people for the investigation, will put 10 new directors in place. They have a daunting task ahead of them, challenged with keeping the parade going and not let matters fall further apart.
The investigation found Velasquez "repeatedly" misused more than $275,000 in flight vouchers for personal use and reported giving out $41,000 in scholarships but there was only proof that $9,500 was actually given out, according to documents obtained by the Daily News. In 2012, $68,000 was donated to the parade by an academic institution, yet Velazquez and GALOS only reported $15,000 to the committee.
The findings come after New York State Sen. Ruben Diaz Sr. said the Attorney General's investigation will "destroy the parade and destroy the community."
"Last year after the parade he could have taken the whole board into receivership and allowed a new board to coordinate the parade," Diaz said. "Now months before the parade he wants to remove the president?"
The controversy over the parade began in May 2013 when Schniederman's office launched an investigation into the organizing committee, questioning their sponsorship deal with MillerCoors, the makers of Coors Light.
The beer company faced major backlash after they distributed a can in time for the June 9 parade that some called disrespectful because it included a depiction of the Puerto Rican flag for advertising purposes.
MillerCoors defended itself by saying it funded a long-running scholarship on behalf of the parade.
The company's defense sparked the Attorney General's office to demand an explanation as to how Coors is helping further the non-profit National Puerto Rican Day Parade, Inc's charitable mission. The Attorney General's office also expressed its concern over whether or not money donated by Coors had been used to pay for marketing of other alcoholic beverages.