Arnold Foundation sues former board member, accuses Denis Calabrese of exploiting trust to steal millions
(excerpt from SE Texas Record - Oct 8 2019)
Seeking exemplary damages, the Arnold Foundation filed the 18-page complaint on Oct. 4 in Harris County, alleging fraud, breach of contract and breach of fiduciary duty.
According to the petition, from 2010 through 2017 Calabrese “exploited” the Arnold Foundation’s “trust” in order to steal millions “to the determinant of the charitable organizations its serves.”
The “first hint of Calabrese’s betrayal” came in 2017 after federal authorities served the Arnold Foundation with a non-party subpoena in connection with a criminal investigation into Calabrese’s financial activities, which prompted LJAF’s own investigation, leading to a series of “staggering discoveries.”
“As director and President of LJAF, Calabrese covertly collected over $2 million in kickbacks from LJAF contractors in a web of offshore and domestic accounts,” the suit states. “Despite annually attesting in writing to LJAF that he had no material financial interest in any entity with which LJAF did business, Calabrese fragrantly abused his authority by causing the retention of two contractors with which he had undisclosed financial arrangements.”
As the Arnold Foundation paid contractors for work, the contractors would pay Calabrese kickbacks of around 20 percent.
“Every dollar Calabrese recieved as part of his scheme was a dollar not spent in service of LJAF’s charitable mission,” the suit states. “Calabrese concealed his kickback scheme not only from LJAF, but also the IRS.
Calabrese funneled the kickbacks to offshore accounts to conceal the money from the IRS, the suit states.