The U.S. Attorney’s Office for the Central District of Illinois announced the indictment of the former president of an Illinois-based non-profit organization for allegedly stealing more than $400,000 from the charity.
Carol Babbitt, 60, was charged with mail fraud, wire fraud, and money laundering. She was released from custody on February 7 after her initial appearance in federal court. The press did not name an attorney for her.
According to the indictment, Babbitt is the former president of Project Linus, a charity organization that gives blankets to children who are sick or in need. She began her involvement with the organization in 1998 as a chapter coordinator and served as the organization’s national president from 2000 until 2016.
The indictment alleges that Babbitt defrauded Project Linus, its volunteers and contributors, and the state of Illinois of approximately $400,000 from 2010 until 2016, when she resigned as president.
“Carol resigned from Project Linus in August 2016 when she was confronted by the board of directors due to suspicion of mishandling organization funds,” said Patty Gregory, the current president and CEO of the organization.
As national president, Babbitt purportedly controlled all of the organization’s operations, including its bank accounts. She allegedly used the charity’s credit cards to pay for personal expenses, including electronics, furniture, pet grooming, tickets for sporting events, and personal travel.
She falsely classified her personal expenses in the business ledger to cover up the alleged fraud and used funds from the organization’s operating account to make credit card payments, according to the indictment.
Babbit also allegedly lied to the organization’s board about the charity’s financial condition. She told the board that the charity was in poor financial condition, and she would take a pay cut or no salary to make up for the losses. When questioned by members of the board about that decision, she falsely stated that she was repaying the organization for her purchases using payroll deductions. She didn’t disclose that she made the payments after taking more money than her salary, resulting in the charity repaying itself.
“The board immediately took the concerns to law enforcement for review,” Gregory said. “Discrepancies were found and federal agencies launched an investigation with the full cooperation and transparency of Project Linus.”
The indictment also accuses Babbitt of filing false personal tax returns by failing to disclose the funds she allegedly stole from the organization.
Babbitt was indicted by a grand jury on January 22. The charges are the result of an investigation by the U.S. Postal Inspection Service; the Internal Revenue Service (IRCS), Criminal Investigation Division; the Illinois Department of Revenue; and the Bloomington Police Department.
The indictment remained sealed until Babbitt’s arrest on February 6 in Asheville, North Carolina. If convicted, she faces a maximum prison sentence of 20 years in prison and fines of up to $500,000. She may also be ordered to pay restitution.
South Florida Fraud Attorney