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State is looking into O.C. charity

Attorney general is reviewing funds of Snowball Express, which works with families of fallen troops.

January 12, 2007|Roy Rivenburg | Times Staff Writer

The state attorney general's office has begun scrutinizing the financial records of an Orange County charity that sponsored an all-expenses-paid trip to Disneyland last month for the families of troops killed in Iraq and Afghanistan.

A spokeswoman for Atty. Gen. Jerry Brown described the action as routine when a charity fails to register with the state. The state also requested financial information from the Rotary Club foundation that co-sponsored the event.

"We want to make sure they collect and spend donations properly," spokeswoman Robin Deller said.

Michael and Jean Kerr of Laguna Niguel, founders of the controversy-plagued M. Scott Kerr Foundation, said they began turning over documents in late December. They said no money was misused and said they welcomed the review, which was first reported by National Public Radio.

The Kerrs created their foundation last fall to sponsor a program called Snowball Express, which brought 895 family members of fallen troops to Orange County for a mid-December weekend excursion to Disneyland, a hockey game, a shopping spree and other events.

The foundation raised about $132,000 in cash and an estimated $1 million in goods and services, the Kerrs said. An additional $106,000 was collected by the Rotary District 5320 Charitable Foundation, according to documents supplied by the Kerrs.

Military families praised the event. Jessica Lewis recalled the hundreds of flag-waving Orange County residents who lined the streets leading to one of the events.

"My daughter, who is 4 and doesn't even remember her father, looked up at me and said, 'My daddy was really important, huh?' " Lewis said.

But behind the scenes, some Snowball Express volunteers questioned the foundation's accounting and Michael Kerr's checkered background.

In an Oct. 4 e-mail, one Rotary Club official warned other top Rotarians about a "lack of checks and balances" for the Kerr Foundation's finances.

By late November, another Rotary member, Trisha Marshall, started directing Snowball donations to Rotary's charitable foundation instead of to the Kerrs' foundation.

More controversy surfaced in December, after an OC Weekly article revealed that Michael Kerr had an outstanding arrest warrant in Arizona for failing to pay nearly $50,000 in child support. Kerr had also been successfully sued for $78,000 by a former employer, Equis Corp., because he didn't repay salary advances from the company, a charge he didn't dispute, according to court records.

Kerr's supporters lambasted the media for focusing on his past mistakes instead of his current efforts at redemption, which include overcoming a drug addiction and organizing Snowball Express.

"I just hope and pray that the general public can see through all this negativity, because the bottom line is Snowball Express brought hundreds of families together and created relationships that will help us continue to heal," said Kassie Collins, a widow whose family attended the event.

Others aren't sure Michael Kerr's past is entirely behind him. They point to a biography that was posted online by his most recent employer, Saywitz Co., the Newport Beach real-estate brokerage where Kerr worked until November.

The biography falsely stated that Kerr graduated from UC Santa Barbara, was a licensed real-estate salesman in California and Arizona and possessed two NASD securities licenses. It also said he previously worked for Dean Witter for a decade and Equis for four years. In fact, he spent two years at Dean Witter and 13 months at Equis, according to the companies.

Saywitz President Barry Saywitz said the biographical information was "provided by Mr. Kerr." Kerr blamed the errors on Saywitz officials.

He also said his foundation, which incorporated in September as a nonprofit, applied for tax-exempt status with the IRS in late December, well within the two-year filing period for start-up charities. California law requires nonprofits to register within 30 days of the first donation, a deadline Kerr missed, prompting the state review.

"It's like winning NASCAR and realizing you forgot to put your driver's license in your back pocket," Jean Kerr said. "Everybody's focusing on the driver's license instead of the race."

On Wednesday, Kerr announced plans for another Snowball Express, tentatively scheduled for December.

Local Rotary Clubs haven't decided whether to join the effort, said Jim de Boom, administrator for Rotary District 5320.

But Rotarian Joe Krueger, who handled public relations for the first Snowball Express, said future involvement would be hard to resist.

"In my 27 years with Rotary, I've never done anything more important," Krueger said. Even the valets and bellhops at the hotels wouldn't accept tips from the military families, he said.

"Nobody in Rotary is going to castigate Michael Kerr," Krueger added. "As long as he works on getting his act together, he'll have a lot of support. Why would we waver as long as he's trying to do the right thing?"

Kerr said such sentiments help him weather criticism. So does a postcard he received from Capt. Tyler Duncan, stationed in Iraq, praising Kerr for helping the families of fallen soldiers.

"To all those who think we should have waited until we had every little piece of paperwork done and waited another five years until I paid all my child support back," Kerr said, "I suggest they contact Capt. Tyler and tell him that."

roy.rivenburg@latimes.com

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