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Archive for Friday, February 18, 1994

BILLIONAIRE GIVEAWAY

February 18, 1994

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A nonprofit organization that claims it has billions of dollars to give away has attracted the attention of law enforcement agencies.

A Lawrence man says he's been chosen to give away a billionaire's wealth and is taking applications from people who want a share.

Thomas Morgan, 30, says people who've applied at his office at 729 1/2 Mass. already stand to receive a total of $15 million in grants for everything from mortgage payoffs to medical bills. The first funds will be distributed next month, Morgan says. Among the applicants, he said, are four businesses that have been approved for grants totaling $4.5 million.

``The sum of money we've been asked to give away is $3 billion,'' says Morgan, who set up a not-for-profit corporation called Jodoni Registry Inc. as a channel for the money.

He says the average grant is about $50,000, but adds: ``I've got a couple that have been approved for upwards of $3.5 million.'' Morgan also says he's applied for a $1.2 million grant himself to buy a downtown block where he intends to establish transitional housing for the homeless.

Behind the concept, Morgan says, is an 80-year-old philanthropist who inherited vast wealth and wants it redistributed to people in need, including middle-class homeowners. The man has pooled his wealth with that of six other philanthropists looking for a cost-efficient way to give away money.

But the man, who Morgan says he met as a child growing up in St. Petersburg, Fla., insists on anonymity.

``He's covered his tracks,'' Morgan says, declining to say where the man now lives.

@briefhed:Authorities probe claims

@sc: Law enforcement agencies say they're trying to check out Morgan's claims.

``We're making inquiries,'' said Theresa Nuckolls, the deputy attorney general in charge of consumer protection for the state.

The Kansas Bureau of Investigation and Lawrence Police Department also have sent officers to interview Morgan.

And the Better Business Bureau of Northeast Kansas has started a file on the Jodoni Registry in response to inquiries from people wondering if it's legitimate.

Representatives of all those agencies say they have been unable so far to verify or disprove that Jodoni Registry is on the level. Law enforcement agents say their concern stems in part from the fact that Morgan charges an application fee up front and clients are told they must wait at least 90 days before seeing any money.

Morgan says applicants are asked to pay a fee equal to 2.5 percent of the grant amount, although the fee can be waived for people who can't pay it. He says the fee is refunded with interest if the grant isn't fully paid in 360 days.

Morgan says he's assuming all liability for the operation and acknowledges that he hasn't seen any documentation to support the claim that a $3 billion seed fund exists.

``I've accepted responsibility for this based on my trust,'' he said.

@briefhed:Distributing the wealth

@sc: Here's Morgan's description of the operation:

Morgan, who says he's a U.S. Air Force veteran, was working as a personal care attendant for two infirm people in November when his philanthropist friend contacted him to say that he was dying of cancer and wanted to set up a system for distributing his wealth.

Morgan, who said he had always known his friend to live a modest lifestyle and was unaware how the man's fortunes had improved, says he understands why people are suspicious.

``I didn't believe him either because I know his house, I know his car. But then he started sending me checks, and then I started believing him,'' Morgan says.

Specifically, Morgan says the man sent him $30,000 to set up an office and begin hiring agents in December to take applications and give out money. So far, Morgan says he has three agents working in Lawrence, one in Olathe and one in St. Louis.

Within a year, Morgan predicts he'll have 450 agents working nationwide, 10 or so in Lawrence.

He likens the arrangement to Amway International's tiered sales force and says the agents are independent contractors who recruit other agents. Their income is derived from the application fees people pay. Of the 2.5 percent fee, 75 percent of those revenues are retained by the philanthropist's organization to cover administrative costs, with the balance going to Morgan's office and the local agents.

Morgan says one of his agents earned $12,000 in January alone.

People who want money can apply for grants in 35 categories of need. Some are related to credit card and other debt payment, others to such things as transportation costs, medical and education expenses, and home repairs. Agents submit the applications to fund representatives, who make a funding decision.

Morgan says he believes the administrative operation is in Chicago, although he thinks he's dealing with people in other cities, too. Much of the communication is by fax.

``It's like a bunch of guys at home with computers,'' Morgan said. ``I get weekly communiques with addresses to use and numbers to call.''

Currently, the phone numbers, which keep changing, are in the Chicago and Denver areas and south Florida, he said.

Morgan says people who've received money from the philanthropists in the past, whose names are in a computer database, are first asked to contribute to the specific need. If the grant isn't funded that way by the end of 240 days, money is drawn from the philanthropic seed fund.

Money is wired to a bank account owned jointly by the agent and the applicant. The agent is supposed to make sure the money is being used for the intended purpose. Grant recipients sign a non-disclosure statement before receiving their funds.

Morgan said he was planning to open the first 16 local accounts this morning, although the money would not be distributed to the applicants until next month, 90 days after applications were made.

@briefhed:Plugging home ownership

@sc: Mortgage payoffs figure prominently in the program, Morgan says, because his wealthy friend believes that home ownership is the key to economic self-sufficiency.

The idea, Morgan said, is to bring people who've received money into the circle of benefactors for the registry. By helping people get out of debt, they'll be able to distribute their income to others, Morgan says.

``If you receive a gift that helps you to become self-sufficient, then when you find yourself with a surplus, you can help others to become self-sufficient,'' he said.

``It's kind of like an economic chain letter,'' he said.

Morgan concedes that the concept may sound too good to be true and said a few people have stopped payment on their checks. But others want to be part of the income redistribution network.

``Most people, when they understand, will pay their professional service fees up front,'' he said.

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