WASHINGTON -- A Lutheran charitable foundation lost roughly a third of its endowment in a Caribbean investment scheme gone wrong, the group's most recent tax documents reveal.
The Marvin M. Schwan Foundation's endowment comes from the fortune made by its namesake in the frozen food business. The Schwan Food Company delivers fish sticks, chicken nuggets and other foods to homes and grocery stores across the U.S.; its trucks are a staple of some rural communities. Meanwhile, the Schwan Foundation seeks to spread its founder's Lutheran message.
But now a busted investment has left a gaping hole in the charity's coffers, reducing its assets from well over $700 million to less than $500 million. (Tax-exempt organizations must make certain tax forms available to the public.)
The foundation lost $250 million from loans that went not to the construction of a new school, say, or the purchase of clean-energy stoves in a less-developed country, but a far less charitable cause: the construction of a Ritz-Carlton hotel and residences in the Cayman Islands.
That comes on top of a previous loss of more than $100 million for the once nearly billion-dollar charity. And the group still lists $213 million in assets tied up in "hotel and real estate activities" in "Central America and the Caribbean."
HuffPost was tipped off to the collapse by the Miami-based newsletter OffShoreAlert, which investigates tax strategies in the Caribbean. OffShoreAlert also wrote about the foundation's troubles on Monday.
A woman who answered the phone at the foundation Friday stated that the organization would not comment on any matter, including its recent losses. "We don't give out any information, OK. Thank you," she said before hanging up. In a subsequent phone call, when HuffPost asked to speak to charity head Keith Boheim, the woman said that he travels a lot. "I don't know his schedule," she said.
Another representative of the foundation also refused to comment. "We do not discuss any of the foundation's business," this person said.
OffShoreAlert, however, had more of the story on Monday. "The loans became worthless after The Ritz-Carlton, Grand Cayman was forced into Receivership on March 12, 2012 by its other major lender, Connecticut-based investment firm Five Mile Capital Partners, which bought the development at auction six months later for $177 million -- $57 million less than it was owed," editor David Marchant wrote.
A parade of B-list celebrities attended the hotel's 2006 grand opening party, led by actors William Baldwin and Adrian Grenier, weatherman Al Roker, and Christopher Meloni of "Law & Order: SVU" and, of course, "Wet Hot American Summer." Boheim snapped a photo with Roker at the shindig.
Marchant wrote that he had tried to reach out to the foundation several years ago to warn that the Ritz-Carlton investment was likely to go belly up, but the charity refused to hear from him.
"The Marvin M. Schwan Charitable Foundation's tax returns indicate that approximately $175 million of the amount lost was loaned to firms controlled by developer Michael Ryan in 2005 and 2006 -- long after OffshoreAlert began raising red flags about the project, prompting Ryan to file a libel complaint against OffshoreAlert at the Grand Court of the Cayman Islands in February, 2004," Marchant wrote.
A call to Ryan's development firm was not returned.
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