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TJ Martell Foundation Files Civil Suits After Former Exec’s Embezzlement Charges

In addition to claims against Melissa Ann Goodwin, the suits allege breach of contract against the organization's auction house partners and outside accounting firms.

The TJ Martell Foundation has filed two civil suits in Tennessee state court after federal criminal charges were filed Tuesday (Jan. 18) against the music industry-supported cancer research charity’s former executive vp/general manager for alleged wire fraud and embezzling nearly $4 million.

Those federal charging documents allege that Melissa Ann Goodwin abused her position of total control over the foundation’s financial operations from July 2018 to April 2020 to make a large number of fraudulent charges on a company credit card, then concealed her actions through bookkeeping trickery. If convicted, Goodwin faces up to 20 years in prison, a forfeiture of $3.7 million, and a fine of up to $250,000. She has up to 14 days to surrender, according to court documents.

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As part of her scheme, Goodwin allegedly used a company credit card to secretly buy Lady Gaga, Celine Dion, Grammy and Super Bowl tickets, rare alcohols and more. The tickets were then often sold by auction, ostensibly to raise funds for TJ Martell, but instead, the suits allege, Goodwin and an associate kept the money or the items.

TJ Martell’s first civil lawsuit was filed against Goodwin and Darran Brown, whose Executive Sports Group (ESG) and Go Charity auction companies were allegedly complicit in the fraud. (Brown is identified as Individual One in the federal suit.) After TJ Martell began working with ESG and Go Charity, the lawsuit claims that Brown “knew, or consciously avoided the knowledge of [Goodwin’s] wrongdoing.” In doing so, Goodwin was able to allegedly misappropriate more than $4.2 million of foundation funds, allowing Brown, Go Charity and ESG to profit off the resale of the purchased items to third parties or to use the items for themselves.

“Goodwin, in order to improperly benefit herself, Darran Brown, Executive Sports Group and Go Charity, orchestrated a multi-year, multi-million-dollar fraud whereby Goodwin and Brown caused the Foundation to purchase millions of dollars’ worth of tickets, merchandise, and other experiences under the guise of barter or consignment arrangements,” the lawsuit claims. “In reality, Goodwin, in agreement with Brown and with his knowledge, used the Foundation’s funds to purchase tickets, allowing Brown, Go Charity and Executive Sports Group to profit off their resale to third parties.”

Goodwin and Brown also allegedly used foundation funds to purchase items for auction from Go Charity and ESG instead of the standard consignment process whereby TJ Martell would only pay for items provided from GoCharity or ESG that had sold above the consignment price at auction. “During the course of this scheme, items were often housed at Goodwin’s personal address in a garage which Brown referred to as ‘Go Charity South,’” the suit alleges.

In 2020, the foundation discovered Goodwin had filed fake expense reports, falsified financial records and used a foundation credit card issued in her name, according to the federal filing. The discovery came after she had grown so delinquent in filing financial statements and expense reports that TJ Martell’s then-CEO Laura Heatherly asked that the organization’s accountants copy her on all correspondence with Goodwin — a move, the suit alleges, Goodwin resisted.

Goodwin, Brown and the auction companies are all accused of fraud, conspiracy and conversion. Goodwin is also accused of breach of contract and breach of fiduciary duty.

A representative for Brown sent a statement to Billboard on Jan. 24: “Go Charity and its founder Darran Brown have been auction partners to some of the country’s most prestigious charities for the last twenty years and helped them raise over one hundred million dollars. Go Charity is the victim of what appears to be a pervasive fraud orchestrated by one of TJ Martell’s senior executives. Indeed, the United States Attorney’s Office and the FBI conducted a lengthy investigation — with which Mr. Brown and Go Charity fully cooperated — and both were cleared of any wrongdoing.”  (A representative for the U.S. Attorney’s office confirmed that neither Mr. Brown nor his company have been charged in this matter).

The statement from Brown’s representative continues, “It seems that TJ Martell’s lack of internal controls and mismanagement enabled this fraud to take place. It is unfortunate that TJ Martell is attempting to shift blame for this onto Go Charity despite TJ Martell’s own obvious shortcomings. Go Charity and Mr. Brown intend to vigorously defend against these baseless claims and will likely pursue counterclaims against TJ Martell and possibly others for millions of dollars of losses resulting from the Foundation’s failure to be responsible with donor funds.”

While acting as a consultant to TJ Martell, Lynn-Anne Huck began conducting a review that unearthed Goodwin’s improprieties. Huck has been acting CEO of the organization since late 2020 after  Heatherly’s contract was not renewed after expiring in October 2020.

TJ Martell’s attorneys have also filed a $5 million civil lawsuit against accounting firms Kraft CPAs and Dorfman Abrams Music for breach of contract and professional negligence. The accounting firms’ negligence “created and allowed a situation whereby the culpable employee was able to carry out a multi-year, multi-million dollar embezzlement scheme that has significantly and almost fatally harmed the Foundation,” the suit alleges.

With so much of Goodwin’s emphasis on fundraising, the suit states that TJ Martell hired Nashville-based Kraft to become its outside accountants in 2011 to maintain its books and records and prepare financial statements. The foundation also hired New Jersey-based Dorfman Abrams as independent auditors “to give additional protection to an assurances regarding the accurate reporting of the Foundation’s financial condition.” But both firms failed to perform the kind of routine checks and balances that should have flagged them to Goodwin’s misuse of funds, the lawsuit alleges, and they ought to have alerted the foundation that the organization had concentrated “excess control” in the hands of Goodwin.

Despite knowing that she alone was the point of contact with accountants and responsible for elevating any financial issues, Kraft and Dorfman Abrams “did nothing to advise the Foundation that Goodwin’s level of control could allow her to embezzle funds,”  the suit alleges, and “failed to properly advise the Foundation regarding the need to have adequate internal controls and oversight to segregate the Foundation’s internal financial controls to others at the Foundation.” Kraft and Dorfman also failed to identify Goodwin’s falsifications or warned the foundation about the financial irregularities surrounding the corporate credit card “so that the losses uncovered by the investigation could be avoided … their failures allowed these losses to occur,” according to the lawsuit.

TJ Martell is asking for a jury trial in both civil suits. In a statement, Huck said, “We also undertook a comprehensive review of our policies and procedures and implemented a series of stringent financial controls to prevent anything like this from occurring in the future. This included revisions to the organization’s policies, procedures, committee charters, and bylaws, as recommended by a legal team specializing in non-profits.” She estimates the total stolen funds to be nearly $5 million and also includes airline tickets and hotel stays. “It is utterly disgraceful that anyone, especially a trusted employee, would victimize a non-profit organization that provides vital funds to the fight against cancer.”

The TJ Martell Foundation for Cancer Research was formed by record executive Tony Martell in 1975, following the death of his son, T.J., from leukemia. Supported primarily by the music industry, TJ Martell holds multiple annual charitable events, auctions and campaigns with the music community in Los Angeles, New York and Nashville and Miami and has raised more than $280 million in support of medical research grants at leading U.S. institutions and helped secure more than $1 billion in additional research funding.

Kraft CPAs  does not comment on pending litigation, according to the firm. Goodwin’s representatives declined to comment.  Dorfman Abrams Music did not respond to a request for comment.

Assistance on this story provided by Bill Donahue