After a South Shore Press investigation went online at SouthShorePress.com exposing years of missing nonprofit filings and alarming audit red flags, the focus of our investigation resigned.
Brian Pilarski, the longtime Executive Director of the Seneca-Babcock Community Association (SBCA) and a popular Democrat Councilman on the Cheektowaga Town Board, resigned from the Buffalo nonprofit late Monday, shortly after the story detailing the organization’s financial reporting failures was published.
Pilarski, however, has not resigned from his elected position as a Cheektowaga Town Board member and remains a sitting public official.
The resignation came after the South Shore Press reported that the SBCA appears to have failed for years to file required financial reports with the New York State Attorney General’s Charities Bureau, despite state law requiring large nonprofits to submit annual financial disclosures.
Public records reviewed by the South Shore Press show the nonprofit filed required financial reports with the Attorney General through 2004, but filings then appear to stop for more than a decade. The next filing did not occur until 2020, when the organization submitted a report for the 2017 tax year.
Under New York law, charitable organizations with more than $1 million in revenue must file annual audited financial statements with the Attorney General.
Pilarski issued a resignation statement acknowledging that he failed to submit required federal nonprofit filings, as first reported in the South Shore Press.
“As the individual responsible for ensuring our organization met its federal filing obligations, I failed to submit the required IRS Form 990 filings,” Pilarski wrote. “As a result, the organization’s nonprofit tax-exempt status was revoked due to this lapse in compliance.”
Pilarski claimed the issue was recently brought to the organization’s attention by a TikTok post from a whistleblower who alleged widespread fraud, waste, and abuse.
“I deeply regret the position this has placed the agency in and the concern it may cause for our community, partners, and supporters,” Pilarski wrote. “Because of this failure, I have submitted my letter of resignation to the Board of Directors.”
Pilarski also insisted that the compliance failure did not involve financial wrongdoing.
“I want to be absolutely clear about one thing: there has been no theft, misuse of funds, or personal gain involved,” he wrote.
The South Shore Press investigation also found that the nonprofit’s one recent financial disclosure raised massive red flags.
An audit attached to the organization’s 2017 filing, prepared by accounting firm Bonadio & Co. LLP, issued a rare “disclaimer of opinion.”
In the report, auditors stated that detailed accounting records had not been maintained and supporting financial documentation was unavailable, meaning they could not obtain sufficient evidence to verify the nonprofit’s financial statements.
Federal filings also show compliance issues.
IRS rules require nonprofits to submit Form 990 information returns annually. Failure to file for three consecutive years automatically results in the revocation of an organization’s tax-exempt status.
Pilarski acknowledged in his statement that he failed to submit the required filings and said the organization plans to correct the issue by filing the missing returns and submitting IRS Form 1023 to seek retroactive reinstatement of its tax-exempt status, a process he said could take six to eight months.
In an email sent to the organization’s funders, Pilarski again accepted responsibility and apologized for the situation.
“I failed to submit our required annual Form 990 filings to the IRS, which has resulted in the revocation of our tax-exempt status,” he wrote. “I want to be clear that this failure rests solely with me.”
Because multiple social service programs at the SBCA have received public funding, the financial reporting issues have sparked calls for investigation.
Erie County Legislator Frank Todaro has asked the offices of New York Attorney General Letitia James and State Comptroller Tom DiNapoli to review the nonprofit’s financial compliance and determine whether taxpayer funds were properly accounted for.
Despite the filing gaps and questions raised in the South Shore Press investigation, there has so far been no announced call for a forensic audit or formal investigation from Democrat Governor Kathy Hochul, Democrat Attorney General Letitia James, or Democrat State Comptroller Tom DiNapoli.
This is a developing story and will be updated as more information becomes available.