The Foundation for Positively Kids, a Las Vegas-based nonprofit dedicated to serving medically fragile and developmentally disabled children, has come under scrutiny following allegations of financial mismanagement and irregularities.
An internal whistleblower flagged a series of concerns in January 2023, including bounced payroll checks, payments for work that were never initiated or completed, poor staff retention, and disconnected office phones. These red flags prompted a thorough investigation by state authorities.
The Foundation, which counts a state lawmaker among its employees and another on its board, had been entrusted with federal funds as part of a state-managed grant program. The investigation uncovered fraud, dubious expenses, inaccurate financial reporting, inadequate documentation, and improper payroll management.
Of particular concern was the allocation of nearly $1.5 million through a state-managed $30 million grant program establishing a “Social Skills Program.” The initiative for enhancing access to early intervention services for children in Clark County facing developmental delays.
Despite these significant funds, the Foundation reportedly faced financial troubles, with its most recent tax report revealing a substantial deficit attributed to a drop in donations during the COVID-19 pandemic.
Internal correspondence obtained through public records requests revealed the extent of the investigation.
Among the discoveries was the absence of proper record retention policies for financial and grant documents, routine bounced checks to vendors and the startling revelation that the organization had only served ten children in the six months since the grant-funded program’s inception. This figure was far from the projected average of thirty children every six weeks.
Perhaps most alarmingly, investigators found that the organization had submitted three identical invoices to the state, with only the year altered to “2022” from “2020”. Such deliberate actions suggested an intentional attempt to defraud the state.
Fred Schultz, the CEO and President of Positively Kids, refuted the allegations, asserting that the organization had never faced issues with audits or grants in its 25-year history. He attributed the financial challenges to the broader difficulties facing for-profit and nonprofit entities.
As a consequence of the investigation, the state terminated the grant and demanded the return of over $50,000 in already allocated funds. The Foundation complied, leading to the removal of its grantee status on the state’s website.
The matter has prompted the resignation of two board members, including Assemblywoman Michelle Gorelow, who had previously served as Vice President of Business Development. In August, Gorelow said she would not seek reelection following the discovery she failed to disclose her connection to The Arc of Nevada while voting to appropriate $250 thousand to the nonprofit weeks before the same organization hired her as its executive director.
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