Feed the Children tries to push forward amid dispute with founder, lawsuits and a state probe

Larry Jones, a traveling preacher from Oklahoma, gave 20 cents to a hungry child on the streets in Haiti in 1979 and felt more could be done to help starving children.

Over the next 30 years, Jones and his family embraced that ideal. They created Feed the Children, one of the world's largest charities, and it became known for Jones' heart-wrenching televised pleas for donations as a hungry child with sad eyes sat by his side.

But now Jones has been fired from his own charity and is in a legal fight to get his job back from the $1 billion organization that's striving to push forward amid lawsuits, a state attorney general's investigation and watchdog groups warning people not to give it money. All of this comes as competition among nonprofits is fierce for dwindling donations in a tough economy.

Jones said he's heartbroken to see the charity he built moving along without him, especially when so many people are in need of Feed the Children's assistance.

"America is in a mess right now. It's a tough time for just about everybody. This is a time we should really be reaching out to people," he said.

The charity fired Jones in November 2009 after learning he secretly had "bugging" devices installed in executives' offices. Its board claims he also accepted tens of thousands of dollars in kickbacks from charity vendors, operated the organization with little or no oversight and misspent charity funds, including giving him and his wife secret raises.

Jones, who earned about $235,000 as president, has acknowledged placing listening devices in agency offices. But he contends he didn't do anything wrong and that he was fired out of "personal malice and spite" by a board of directors eager to expand their power.

"All of a sudden, somebody thought they could run it better than my wife and I," Jones said. "They have accused me of doing everything. It blows my mind. It's a nightmare."

The allegations against Jones that emerged in court filings prompted the state attorney general's office to launch a massive investigation into Feed the Children that could result in criminal charges, said Assistant Attorney General Julie Bays.

"This is a charity that, no matter what the personalities are, has always done good work," said Bays. "Whether or not they did it efficiently or not, or whether there was some wrongdoing, that's still up in the air."

State investigators could recommend the charity replace its board, be placed into receivership, or reach an agreement with the state to fix its problems. Bays said it's also possible no action will be taken against the charity.

For its part, the charity is moving on without Jones.

Board Chairman Rick England said board members removed Jones because they thought it was the best for the organization and are searching for a new leader. Meanwhile, the nonprofit plans to continue its mission of helping underprivileged children.

"We're going to be able to feed more kids and more families than what we have ever done before," he said, "because every penny is being utilized more effectively."

Jones wife, Frances, still works for the organization, but Jones says he worries she too will be fired. The couple's daughter, Larri Sue, was fired as the nonprofit's general counsel in July and the charity has refused to disclose why she was let go. She had sided with the board in its dispute with her father, but now has also sued the group.

Feed the Children has filed a federal lawsuit against the Jones' son, Allen Jones, alleging he and others stripped a charity-owned warehouse of equipment and materials. Allen Jones has denied any wrongdoing.

Meanwhile, the board has hired a New York-based charities expert, attorney Seth Perlman, to help it move forward without its charismatic leader, something he said is not uncommon in the philanthropy community.

The founders of Mothers Against Drunk Driving and Habitat for Humanity each had tense departures from the agencies they founded, but Perlman said the split between Jones and Feed the Children is the most acrimonious he's seen in his 25 years of work in philanthropy litigation.

"It's not that Feed the Children lost its way, but it became too founder-focused," Perlman said. "And the founder, once you've been running an organization for decades, you begin to think you own it and can do what you want with it."

Perlman said the charity has since adopted reforms that require the board to approve all the organization's operations. There's also new conflict-of-interest procedures and policies and a system to protect whistleblowers who report wrongdoing.

Ken Berger, president and CEO of Charity Navigator, which evaluates charities, said the nonprofit remains financially healthy.

But the conflict between the charity and its founder is leading to a perception problem for Feed the Children. Charity Navigator and the Better Business Bureau both have issued warnings to potential donors about problems at the charity.

Berger said that while the group's financial statements show it is in good shape, the pending lawsuits and well-publicized battle with Jones can easily hurt the nonprofit.

"The most precious thing that a charity has is public trust," Berger said. "And when that goes, so goes the charity."

Feed the Children officials predict a slight decline in revenue this year and that it's largely because of the harsh economy.

An analysis of the charity's reports to the IRS show contributions have steadily increased over the last three years, reaching nearly $1.2 billion in fiscal year 2009, the most recent for which data is available.

Meanwhile, the American Institute of Philanthropy, another charity watchdog, this year gave Feed the Children its "Most Outrageous Charity Award," and President Daniel Borochoff said the charity has a long way to go to ease the concerns of potential donors.

"I don't think any other charity of their size has had this much outrageous behavior," Borochoff said, citing the lawsuits, firings and allegations against Jones. "If there wasn't so much money involved and all the resources that are being wasted, it's a comedy. It could be a soap opera."