Charges prompt AG review of charity

Denmark calls group a 'front'

Boston Globe/September 17, 2002
By Farah Stockman

The state attorney general's office has said that it is reviewing the case of a Massachusetts-based charity run by a group that is accused in Denmark of setting up charities as ''front organizations'' for commercial businesses.

The charity, Planet Aid, says its two area stores, which sell used clothing to benefit the homeless, don't take a profit and continue to raise substantial sums for the poor.

Planet Aid, with stores in Harvard Square and on Newbury Street in Boston, is run by members of the Teachers Group, an informal network of activists that Danish prosecutors say set up a rain forest conservation project that turned out to be a commercial sawmill and funneled millions of dollars for their leaders' personal use.

Ester Neltrup, a general manager at Planet Aid, said she and Planet Aid's board of directors are members of the Teachers Group, but said the charges in Denmark against eight Teachers Group leaders have nothing to do with the used-clothing charity. She also said the Danish government unfairly scrutinized the liberal group for political reasons.

''The Danish government holds the activities of people in the Teachers Group to a higher standard than people who are not in the Teachers Group,'' she said.

Neltrup called the accusations against her fellow Teachers Group members ''odd'' and ''explosive.''

The Teachers Group is a network of a few hundred activists who make a lifecommitment to the group and donate their salaries to a common pool. Started in Denmark in 1970 by a man named Mogens Amdi Pedersen, Teachers Group members have founded schools and development projects around the world under the banner Humana People to People Movement. In recent years questions about their finances have prompted authorities in England and Belgium to take action against charities run by members of the group. French authorities have classified them as a nonreligious cult.

Teachers Group members have run nonprofit organizations in the United States for more than a decade, with Massachusetts as the headquarters of both Planet Aid and the Williamstown-based International Institute for Cooperation and Development. Planet Aid collects used clothing across the country and resells it, donating the profits to charity. The International Institute sends volunteers overseas. Teachers Group members also run US'Again, a profit used-clothing business based in Atlanta, and Garson & Shaw, the wholesale used-clothing broker that buys and resells most of Planet Aid's clothes.

The Teachers Group did not stir controversy in the United States until last February, when the FBI arrested Pedersen on an Interpol warrant from Denmark. Seven other Teachers Group members, including one who worked for the International Institute, have been charged in Denmark with tax fraud and embezzlement. In a separate case, Belgian authorities have accused Teachers Group members of money-laundering.

According to documents filed by assistant US attorney Mathew E. Sloan, the charities that one Teachers Group fund donated to were ''little more than front organizations to funnel back money to the Teachers Group and the defendants for their own personal gain.''

Planet Aid officials say the Teachers Group is a personal choice, not a formal organization, and have distanced themselves from Pedersen.

''He has nothing to do with Planet Aid,'' said Neltrup, ''and his situation has no consequences for Planet Aid.''

Yet three of Planet Aid's five board members, including Neltrup, submitted affidavits in support of Pedersen during his extradition proceedings, attesting to the fact that they had ''knowingly, intentionally, and voluntarily entered into a eleven-year obligation to donate money directly'' from their salaries to the fund that Pedersen is accused of mismanaging. About 140 Teachers Group members submitted similar affidavits from all over the world.

Neltrup said she gave money to the fund only for a short time, as a personal choice, and that the funds, as far as she knew, were used for humanitarian purposes.

Mikael Norling, Planet Aid's president who is also a founder of the International Institute, appeared on Pedersen's witness list as someone who would testify that one of the Teacher Group's alleged ''front'' companies was, in fact, a humanitarian project. Norling could not be reached for comment.

Doug Bailey, who works for Rasky/Baerlein Group, a Boston public relations firm that Planet Aid hired after Pedersen's arrest, said Pedersen was simply ''a friend'' of Planet Aid officials.

Poul Gode, a deputy prosecutor in Denmark's Division of Serious Economic Crimes, said he had no evidence that Teachers Group members had done anything illegal in Massachusetts.

Sarah Nathan, a spokeswoman for the attorney general's office, said she could neither confirm nor deny an investigation, but acknowledged that her office is ''reviewing the situation.''