Will Board of Puerto Rican Day Parade Get Booted by New York State Attorney General?

Ten months after sponsorship decisions by the board of the National Puerto Rican Day Parade (NPRDP) led to a major backlash by New York City’s Puerto Rican community as well as calls for an investigation by New York State Attorney General Eric Schneiderman, the New York Post is reporting today that Schneiderman is ready to remove NPRDP’s entire board as a result of the AG’s findings.

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The Post article said that news of Schneiderman’s decision will happen soon, after The Post reported that the AG’s office focused on the controversial Coors Light sponsorship deal and “allegations of conflicts of interest.”

Specifically, The Post included the following about the NPRDP board:

The group also came under fire when board member Luis Rivera, who is married to Lugo, worked as a paid consultant for GALOS Corp., which acts as a for-profit marketing firm for the parade. The nonprofit paid GALOS $103,108, according to 2012 tax filings.

The parade is funded solely by sponsorships and donations. In 2012 it had revenues of $461,363 but spent $620,546.

Carlos Velasquez, its business and marketing agent, may also lose his job, sources told The Post. He heads negotiations with sponsors. He also owns a marketing firm that handles the Dominican and Hispanic day parades.

“Carlos has already begun to steer business away from the parade and into other events he peddles,” said a source close to Velasquez.

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Last summer, Latino Rebels published a lengthy interview with Madelyn Lugo, chairperson of the NPRDP organization. In that interview, Lugo was asked about the organization’s relationship with GALOS and NPRDP’s finances. Lugo said that all the controversy was an effort to discredit the organization and she also said that her group would cooperate fully with the AG. Here is what she said to our founder, Julio Ricardo Varela, about the GALOS relationship:

JRV: I was able to look into the financials describing the GALOS and the relationship it has with…

LUGO: GALOS relationship is our marketing agent. He [Carlos Velasquez] has a professional services contract that was approved by the board of directors and also submitted to the attorney general’s office for approval. We cannot do business with any professional company in the state of New York until the attorney general approves the contract. We went through the entire process as required by the attorney general, and that is why we are doing business with GALOS. He is our marketing agent.

JRV: According to your financials which we published yesterday, the current setup is 33% commission, correct?

LUGO: Right now, GALOS Corporation, according to the contract, he should be getting 33%, but he is not getting 33%. He is billing us 27%, as per previous years.

JRV: So the information with the attorney general where it states 33%…

LUGO: He can get up to 33%, that is correct. He is not getting 33% but he can get up to 33%.

JRV: So voluntarily he’s lowered his commission from 33% to 27%?

LUGO: Yes.

JRV: Looking at the financials, where do I find the actual revenue generated from sponsors? It was really hard to find on the IRS form, because when I do the math, I am not getting the revenue if I use 27% of what GALOS is making.

LUGO: Remember that GALOS Corporation only gets 27% of whatever money that comes into the parade.

JRV: I understand that, but where is the total gross revenue of the sponsorship?

LUGO: It appears in the activities section but it doesn’t only show GALOS Corporation. It shows all money that was raised by the parade.

JRV: Right, I’m just basically asking, if GALOS gets 27%, which is around the $89,000 that was reported in the financials in 2011, is there a line item that says, the revenue coming in from sponsorship is say, $350,000? It doesn’t seem like the math is adding up? I was trying to make sure that I was looking at the right line item?

LUGO: You are not going to get the math off the financials from the 990 form because there you have the global money that comes from all activities that the parade has. GALOS is not bringing in all the income into the parade, it is also income that we raise on our own. The GALOS Corporation sends his report to the AG’s office, that’s a public document. You can go to the AG office and look at the report there. You can see how much GALOS Corporation brings into the parade.

JRV: Ok, I can find that publicly via the AG and GALOS. That’s fine.

LUGO: You can find that under GALOS Corporation because by law he has to file a financial report showing whatever activities he has with the National Puerto Rican Day Parade.

JRV: I just have a couple of more questions. Can you talk about where the sponsorship money goes then?

LUGO: The sponsorship money goes into all of the parade activities. It’s not just the parade on 5th Avenue. People believe that that the National Puerto Rican Day Parade, they only focus on 5th Avenue. That is not the only thing the National Puerto Rican Day Parade does. We do a festival that is free to the community, we have two stages with musical bands that we are paying for the full activities, and not charging anything to the community. We also do a fiesta for our seniors that is a parade activity paid in full by the parade. We have to raise money for that. We have the scholarship program. We have the Juegos Boricuas and the Torneo de Dominó the Saturday before the parade. This is free of charge for all our community. We have different activities that we raise money for to give something back to the community because if we don’t have the funds, we can’t host those activities. Besides that, we have to pay insurance after 9/11, we have to pay a huge insurance to the City of New York to maintain the parade on 5th Avenue. We have to put toilets on 5th Avenue. It is not free of charge. We have to pay the city for the places where people are sitting. It’s a lot of expense involved in terms of the parade and parade-related activities.

JRV: So how much do you need to raise a year right now?

LUGO: In order to cover our activities, we have to raise over $500,000 in order to cover our activities and all the activities related to the parade. We have a breakfast, we have a big breakfast before the parade on Sunday. We don’t charge anyone money for that. Everyone in the community goes to the breakfast free of charge.

JRV: Talk about the scholarship money. How much scholarship money is given out every year?

LUGO: Every year it depends how much we get from our sponsors. It depends how much the sponsor can offer. That’s the amount that we are giving out.

JRV: So how much is that? Can you share?

LUGO: It’s between $10,000 to $20,000.

JRV: Total?

LUGO: In total, $10,000 to $20,000.

JRV: A year. Ok. I just have a couple more questions. So GALOS is not a Puerto Rican-owned agency, is that correct?

LUGO: GALOS? If you know the history of Carlos Velasquez, he is half Puerto Rican and half Colombian. He has half Puerto Rican cultural heritage, so saying that he is just Colombian is wrong.

JRV: Have you ever gone and considering that 33% commission is a pretty high number…

LUGO: That number is below that what the industry is offering.

JRV: For non-profits?

LUGO: For non-profits, yes.

JRV: Are you sure?

LUGO: Whatever he is charging right now is below market.

JRV: For a private company working with non-profits?

LUGO: Right, for a private company working with non-profits.

JRV: So do you guys go through a competitive process to find other agencies?

LUGO: We did in prior years with different agencies, and there were offering us over 50% commission. That is unacceptable for us. I don’t know if you know the history of Carlos Velasquez. Carlos Velasquez has been working with this parade for over 40 years, he was at one time, he was a board member of the whole organization.

JRV: And you don’t see that as being too close to home? Do you believe that GALOS has the best interests of the parade in mind?

LUGO: I believe that since he is the marketing agent, he has to have the best interests of the organization in mind in terms of providing the organization the opportunity of providing the parade to our community.

JRV: Even with the recent controversies, you still believe that they have the best interests of the community in mind? I’m not trying to have bring their intentions in question, I’m just trying to get a better sense of the last three years with Coors, you’ve had some high-profile incidents…

LUGO: You know something, mistakes happen. Every board has a learning process, and I don’t think that everyone or people who create controversy with this, they make their own mistakes, too. So I think this is a learning process that everybody has a responsibility for and has to take care of it, and has to take care of policies in the future.

JRV: Will you be setting up new policies after the parade?

LUGO: We’re working to draft new policies after this parade. We will start drafting new policies about operations and new policies in terms of marketing the parade. There will be new guidelines that we will put in place.

JRV: So when you release your responses to the state attorney general, after your release, will that be shared with the press?

LUGO: After we release the package for the attorney general packet, I think it is a public document. We would not have any objections in sharing documents because the attorney general’s office will already have it. It will be public by the time he already gets it, so by law he is going to have to make it public.

JRV: After your share it and submit it, can you let me know so I can read it?

LUGO: That’s no problem. As soon as we have the green light to send it, we will provide all documents at that that time. As soon as my attorney says “go ahead,” we will release the packet to whoever is interested. Everybody can have the packet.

Latino Rebels has yet to receive the guidelines that Lugo promised to send, and it has asked the AG to share its final investigation when available. In addition, a June 2013 LR article also explored GALOS’ relationship with NPRDP. In that piece, public records confirm that GALOS was indeed making 33% commission on NPRDP sponsorships.

…Latino Rebels downloaded NPRDP’s public IRS filings and financial statements from 2011, available at the Charities Search site for New York. The full document can beviewed here.

These documents also include a financial audit for 2010 and 2011 where it lists specific details about GALOS and the commission it earns. According to the filings, GALOS was earning 27% in commissions up to December 31, 2011 and currently earns 33% of the “total funds collected on behalf of the Organization thereafter through the end of the contract term.” The document does not state when the contract term expires.

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Finally, the National Institute for Latino Policy (NiLP) issued a release this morning, saying that questions about the NPRDP board were raised as early as 1994:

 As we documented back in 1994, the problems facing the Parade are longstanding ones, making the Attorney General’s actions in response to complaints from the Puerto Rican community a significant reform of this much-criticized institution. With a newly-constituted Board of Directors and the continued monitoring by the Attorney General’s office, the hope is that the Parade can return to its original mission of representing the best of the culture and people of the Puerto Rican community.

—Angelo Falcón

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