Marketer Said to Have Ripped Off NYC Puerto Rican Day Parade

February 13, 2014 Updated: February 14, 2014

NEW YORK—A self-serving fundraiser bilked the nation’s foremost Puerto Rican heritage celebration of $1 million amid lax oversight from the city’s Puerto Rican Day Parade organizers, state Attorney General Eric Schneiderman said Thursday.

Fundraiser Carlos Velasquez underreported how much he collected from sponsors, put money that was supposed to go to scholarships toward parade floats and other purposes, and used donated airline vouchers for personal trips, Schneiderman said. He announced a settlement that will cost Velasquez more than $1 million and required half of the parade board’s members resign, including its president.

An investigation also found the nonprofit National Puerto Rican Day Parade Inc.’s board “failed to implement basic financial controls or exercise adequate supervision over” Velasquez, Schneiderman said in a statement.

Velasquez didn’t immediately return a cellphone message. Ousted board President Madelyn Lugo was meeting Thursday with the Rev. Ruben Diaz, who’s a state senator, and other clergy officials to discuss the issue.

The shake-up comes about four months before the next edition of the popular parade, which regularly draws big crowds and celebrities but has also endured prior controversies.

“With the reforms we are announcing, the new board can now take responsibility for putting the (parade organization) on firm footing, so that the parade can be a success both this year and well into the future,” Schneiderman said.

Velasquez has been the parade’s marketing agent and money-raiser for more than 30 years, authorized to keep 27 to 35 percent of the money he collected on the event’s behalf, Schneiderman said. Organizers gave Velasquez wide latitude, failing to adopt annual budgets, requiring only skeletal revenue reports with no detailed backup, giving him a 10-year contract renewal in 2010 without soliciting bids from anyone else, and eventually racking up a $1 million debt to him because of expenses he incurred, the attorney general said.

Under the settlement, he’ll forgive the $1 million debt and repay an additional $100,000, and he’s barred from ever working with the parade again. Lugo; her husband, who’s the board’s general coordinator; the treasurer; and two honorary directors have stepped down, and 10 new directors are being added. The parade organization also is required to strengthen financial controls.

Held annually since 1958, the event has grown to be one of the city’s largest parades.

It’s a major point of pride for New York City’s robust population of people of Puerto Rican descent—about 761,000, nearly twice as many people as live in the island’s capital, San Juan. Grand marshals have included actress Chita Rivera. Pop star Ricky Martin got the special title of parade king in 2007, and then-pop-power-couple Jennifer Lopez and Marc Anthony led the parade in 2006.

But the event has sometimes been marred by missteps and misdeeds, most notoriously when more than 50 women were doused with water, groped, and stripped by male spectators at the 2000 parade, in attacks caught on amateur videotape. Some 30 men were charged with sex abuse and other offenses; 18 pleaded guilty or were convicted, one was acquitted, and charges against 11 were dismissed.

Last year, some Puerto Ricans were appalled to see a parade-related logo that invoked the island’s flag on a Coors Light beer can. Beer maker MillerCoors said the image demonstrated its support of the parade, though organizers denied it was meant to represent the event’s logo or the Puerto Rican flag.