By:LARRY MAIER
Richard Carbonaro of Stanton Avenue in Baldwin was convicted last week in Dallas on eight counts of mail fraud and six counts of money laundering.
Federal prosecutors said that Carbonaro, 62, and longtime friend Michael Manzer, formerly of Baldwin, were involved in a scheme with an Arkansas-based telemarketing firm to set up and run a phony charity that solicited people throughout the United States and asked for donations to grant wishes to dying children.
Between May 1998 and September 1999, the charity, Kidwish USA, raised $1.7 million, and more than 95 percent of that was paid to the telemarketing company, Non-Profit Telemedia. Manzer, who was the charity's president, received $6,000, and Carbonaro, the charity's executive director, was paid $25,000 out of the donation money for their work with Kidwish.
None of the money raised by the charity was ever used to grant wishes to dying children, prosecutors said.
The conviction came March 27 after an almost three-week trial in federal court and three days of jury deliberation. Both Carbonaro and Manzer, who now lives in Garden City, face a maximum punishment of 70 years imprisonment and a substantial fine. They are scheduled to be sentenced on June 15.
In an interview last week, Carbonaro professed his and Manzer's innocence.
Carbonaro said that he and Manzer were duped by crooked telemarketers who drew them into a previously existing charity scam, that Kidwish USA gave thousands of dollars to children's hospitals, and that he and Manzer had every intention of using donations to grant wishes to terminally ill and permanently disabled children as soon as the charity took in enough money to do so.
According to Carbonaro, Non-Profit Telemedia asked Manzer, who had worked with the telemarketing firm before representing other charities, if he would be interested in operating a charity to help grant wishes to children. Carbonaro said he got involved with Kidwish because he was out of work and the position of executive director position paid a small salary.
Carbonaro said he and Manzer registered the charity with the IRS and entered into a legal telemarketing contract with Non-Profit Telemedia in June 1998.
By September, Carbonaro said that he and Manzer realized that not enough money was coming into the charity to be able to grant the individual wishes of children. Therefore, they instructed Non-Profit Telemedia orally and through letters to change the mission of the charity and the telemarketing scripts to reflect that solicited money would be donated to children's hospitals and qualified institutions, not to grant wishes.
Assistant U.S. Attorney Michael Snipes, who prosecuted the case, said that although some modifications to the scripts were made, they were still misleading.
"All the donors who testified at the trial said they believed they were giving money to help grant the wishes of dying children," Snipes said.
But Carbonaro said he and Manzer were unaware that the scripts had not been changed.
"We had no reason to believe that Non-Profit Telemedia was not following our instructions. We had no intention, no anything, to defraud anyone," Carbonaro said. "We realized that the wishes of individual children could not be granted in the beginning. So to get the most exposure for the dollar donated, we enlisted children's hospitals and facilities. Basically, you're servicing more children by giving to hospitals."
In December 1998, Kidwish USA presented a $1,000 check to Schneider Children's Hospital in New Hyde Park. It was the first of 71 such checks to be given to children's hospitals and institutions across the United States over the next 15 months.
But Snipes said that the $71,000 was given to hospitals merely to give the charity the appearance of legitimacy.
Furthermore, he said that the fraud began when Carbonaro and Manzer registered Kidwish and gave false statements to the IRS in their application for tax-deductible charitable status, including the amount of money they would pay the telemarketing firm and the compensation they would receive from the charity.
"From the get-go, it was a fraudulent acquisition of tax-deductible status," Snipes said.
But Carbonaro said there was an explanation and reference to telemarketer's fees in the charity's tax-status application and that no salaries were included because he and Manzer did not know how much the charity would make.
To this day, Carbonaro said, he has not been questioned about that application by the IRS.
The FBI started looking into Kidwish USA because of a previous investigation it conducted of another charity operated by Non-Profit Telemedia, Kidwish Foundation, which preceded Kidwish USA and also claimed to be soliciting money to grant wishes to terminally ill children.
Carbonaro said that Non-Profit Telemedia's executives, Kerry D'Amato and Dennis McCormack, never told him or Manzer that the FBI had investigated Kidwish Foundation and that the two never would have gotten involved with Kidwish USA if they had any suspicions of D'Amato, McCormack or their company.
Snipes said that the two should have known better, as they had done business with the telemarketers before.
D'Amato and McCormack pleaded guilty to conspiracy to commit mail fraud and money laundering before the start of Carbonaro's and Manzer's trial.
The FBI offered a plea bargain to D'Amato and McCormack in December 2000 to implicate Carbonaro and Manzer in the conspiracy, but neither one took it at that time.
It wasn't until the day before the trial that D'Amato accepted a plea bargain and testified against Carbonaro and Manzer.
Despite D'Amato's testimony, Carbonaro and Manzer were not convicted on the primary charge of conspiracy.
"The main charge of conspiracy resulted in an acquittal and the sub charges should have followed the same direction," Carbonaro said.
"All the money they received was above board," said Carbonaro's attorney, Lawrence Hochheiser.
Hochheiser believes that his client and Manzer were convicted on the fraud and money laundering charges in part because the judge did not give the jury clear instructions as to whether giving the money to children's hospitals instead of granting wishes constituted a crime. The way the indictment was worded gave the jury no choice but to convict, Hochheiser said.
Snipes disagreed. "The jury totally followed the settled legal precedent," he said. "Carbonaro and Manzer were convicted because the jury felt they were tricking donors."
Hochheiser said his client would appeal the verdict.
Carbonaro said he is optimistic about the outcome of an appeal. "But," he added, "we were optimistic about the trial."
