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NEW YORK - Time Magazine named two women who uncovered massive accounting fraud at Enron Corp. and WorldCom Inc. and a third who detailed FBI failures after the Sept. 11 attacks as its 2002 "Persons of the Year" on Sunday.

The magazine praised Sherron Watkins, a vice president at Enron, and Cynthia Cooper of WorldCom, as well as Coleen Rowley, an agent for the Federal Bureau of Investigation, for exposing malfeasance that eroded public confidence in their institutions.

"It came down to did we want to recognize a phenomenon that helped correct some of the problems we've had over the last year and celebrate three ordinary people that did extraordinary things," Time managing editor Jim Kelly said.

(11/19/02) - Some United Way organizations, trying to appear more successful and more efficient with their donors' money, are counting contributions in ways that make the numbers look more robust — and expenses look smaller.

In a number of cases, including two of the largest United Ways — those in Washington and Chicago — different organizations counted some of the same contributions, thus inflating not only their own numbers but the system's totals, according to United Way executives.

Moreover, the United Way of America's reporting guidelines direct its 1,400 members to count as their own contributions money that was actually handled by or raised for competing organizations in shared campaigns, the executives said. The guidelines also tell members to count as contributions the value of volunteers' time, a practice many other charities frown on, although it is permissible in limited circumstances.

And while local United Ways publicly report the percentage of their total contributions used for administrative purposes, they do not tell donors that different amounts are applied from different types of contributions to cover costs, a review of their practices shows.

United Way of America's president said that while some of the practices conformed with generally accepted accounting principles, they might no longer pass muster after recent corporate scandals demonstrated that even approved practices can be used deceptively.

"What happened at Enron and WorldCom has raised the bar for both for-profit and not-for-profit businesses," said Brian A. Gallagher, president of the United Way of America. "We have to respond."

United Way is by far the largest organization raising money in American workplaces. It channels money to thousands of small local charities that would otherwise struggle to find donors and increasingly creates its own programs to address community needs.

No one disputes its good intent. But its accounting practices raise questions for potential donors who want to know precisely how much of their contributions go to people in need rather than the organization helping them. In effect, these practices, by artificially inflating reported contributions, make it seem as if expenses consume a smaller portion of donor dollars. That makes United Way look better against competing charities at a time when more and more donors are relying on services that rate charities.

"Because they miscount the totals, they start off with a faulty number," said Rick Cohen, president of the National Committee for Responsive Philanthropy, a watchdog group in Washington. "That's their fundamental flaw."

Each time a case of double counting has arisen, United Way of America executives have said it is limited to a particular United Way. They defend the other practices that have been called into question.

But executives at some local United Ways are less certain. After reading in newspapers about questionable accounting and financial management at the United Way of the National Capital Area in Washington last January, "I felt chilled because I had seen some similar things in other United Ways," said Brian T. Hassett, who served as president of the United Way in Chicago until recently.

Les White, a former county manager in San Jose, Calif., said he saw some of the same things when he was brought in to resuscitate the United Way Silicon Valley. "Some of what I read about in Washington, D.C., sounded so familiar," he said. "It's myopic to insist that these problems are only in one place."

The practices have developed as the United Way has struggled to recover from recent scandals. Contributions began falling in 1992 when William V. Aramony, the United Way's national leader, was accused of fraud, embezzlement and other charges, and a string of local scandals like the one in Washington this year have not helped. Contributions are now lower, after adjusting for inflation, than they were a decade ago, even as charitable giving has doubled over all.

One of the most serious accounting issues the organization faces is known as double counting, which occurs when each of two or more United Ways counts the same contribution as its own.

The problem has come to light this year in the Chicago area and in Washington. Here's how it happens. The United Way of Suburban Chicago, an umbrella organization for 52 United Way organizations in the Chicago area, planned to count as its own some $350,000 raised at Baxter International — the same money counted by an unaffiliated United Way, that of Lake County.

Each organization insists that it managed the campaign and wants to include the money in its total, as each has in the past. The United Way of America is now conducting a review.

In 2000, The Arizona Star reported that the United Way of Tucson counted almost $1 million raised in California for charities there. And the United Way of the National Capital Area counted as its own the $1.2 million raised from Giant Food's employees, who assigned some of that money to the United Way of Baltimore.

Each time an instance of double counting surfaced, the United Way of America insisted that the practice was exclusive to the United Way in question. But in 1999, Mr. Gallagher headed a task force to address double counting, which suggests that the United Way had concerns about how widespread the practice might be.

The task force prescribed how such contributions were to be booked. But its explanation was confusing — and it undercut its own recommendations. "The task force realized early on that it would be impossible to create standards that all United Ways `must' adhere to, and demanding strict adherence is arguably not part of our culture right now," the task force report said.

When the report was released, fewer than 13 percent of United Ways, or roughly 178 of the 1,400 organizations, had written guidelines for reporting and spending, and as the task force recognized, the national organization has little ability to compel compliance.

"There's so much variance among United Ways in things like accounting, finances and systems," said Arnold Henning, the interim president of the United Way in Chicago. "The independence to vary from city to city is our strength when it comes to services because it means we know the needs of our communities. But it's also our weakness because people don't understand that the practices of one United Way are not the practices of all United Ways."

Double counting is not the only way that reported contributions are overstated. An increasing number of companies like Sears, Hewlett-Packard and Verizon are using newer organizations like the JK Group to administer employee-giving campaigns and allowing other fund-raising groups like the Black United Fund or the Public Interest Fund of Illinois to take part.

Yet United Ways count this money as their contributions. Indeed, the United Way of America instructs members to count the entire amount raised in those campaigns, not just the amount of money designated for United Way.

At least $2.4 million counted as contributions by the United Way in Washington was handled by its competitors, officials said, and $7.5 million was counted in New York City, according to its annual report.

United Way says this is legitimate because even when it does not actually collect or receive the contributions, its marketing and publicity efforts are responsible for them. "The question is, Did the United Way incur a cost during the campaign?" Mr. Gallagher said. "If it did, then it's reasonable to include all the revenues raised in the campaign and calculate operating budgets and expenses against them."

But others disagree. "The guidelines say we can count this money, but frankly, it made me uncomfortable," Mr. Hassett said.

Nan Langen Steketee, consultant and co-founder of the National Alliance for Choice in Giving, noted that there are many other organizations managing fund-raising for governments and businesses. "They do not count the money raised for other charities in their yearly totals," she said.

Mr. Hassett and others argue that counting such money creates "phantom revenues," and expenses cannot be deducted from money that is not received. "If the money doesn't flow into your coffers, you can't deduct from it," said Anthony DiCristofaro, a longtime United Way marketing executive.

The solution, Mr. DiCristofaro and other United Way executives say, is simple: Charge companies and governments a fee for United Way services to help offset the loss of phantom revenue.

There are other forms of phantom revenues. The United Way of America tells members to place a value on donated goods and include the amount in their tally of donations. This is acceptable accounting practiced by some other charities, but United Way critics question how the values are calculated.

More controversial is placing a value on volunteers' time and including it in contribution totals. The United Way directs its members to value their volunteer time at $14.83 an hour, although many local organizations refuse to go that far. For the most recent campaign, the United Way valued in-kind donations, including volunteer time, at $267 million.

The Financial Accounting Standards Board, the rule-making body for the accounting business, allows organizations to place a value on contributed time but with strict limits: Volunteers must either create or significantly enhance a nonfinancial asset or provide special skills that would otherwise have to be purchased. The Internal Revenue Service does not allow valuation of volunteer time at all for tax reporting purposes.

"With the United Ways, it is often quite a reach for them to try and use this volunteer time in their accounting," said Trent Stamp, executive director of Charity Navigator, an online charity rating service. "I get the feeling they might be putting a dollar value on people licking envelopes, which is not what was intended."

The United Way of America reports that on average administrative costs amount to 12.7 percent of total contributions. But because total contributions are inflated by the inclusion of noncash gifts like free computers or the gift of children's coats, expenses are understated.

Mr. Gallagher disagreed that contributions were inflated, saying the United Way's practices conform to accepted accounting principles.

Further, donors making "unrestricted gifts" — those that allow the United Way discretion in spending their donations — often pay a higher percentage of their contributions. The Washington United Way boasted that its administrative costs ate up only a dime of every dollar donated, but this masks the fact that 62 cents of every unrestricted dollar was going to cover overhead.

That was an extreme example but indicative of an overall problem, which also surfaced in Tucson two years ago. "The sad thing is that the donors that are the most valuable to the United Way are the ones who are paying most," Mr. Hassett said.

The annual report of the United Way of New York City, perhaps the most candid of the United Ways about accounting, stated that it raised $132.4 million in total contributions last year. Almost 14 percent, or $18.3 million, was used to cover administrative expenses, it said.

But only $91 million of that total was in cash, it said, meaning that on average almost 18 cents of every actual dollar it handled was eaten up by expenses.

The organization deducted an average of 6.9 cents of every dollar for administrative purposes, it said, from $14 million collected from donors who earmarked their gifts for specific charities, a program the United Way calls Donor's Choice.

That means on average roughly 20 cents of every unrestricted dollar went to cover expenses, which falls within the Better Business Bureau's guidelines for expenses but is higher than the annual report would lead a donor to believe.

Lawrence Mandell, executive vice president of the New York United Way, defended the practice of charging different donors different amounts, stressing that donors who make unrestricted gifts to the United Way receive services that other donors do not.

"We have a strict volunteer review process that vets agencies on their behalf, we give those agencies management assistance, help develop their boards, and we find really highly competent agencies that donors might not otherwise know about," he said. "Donors Choice donors don't get any of that."

That said, Mr. Mandell acknowledged the need to give donors a clearer picture of how costs are allocated to them.

Recently, the United Way's National Professional Council approved standards being championed by Mr. Gallagher that would require United Ways to provide fuller disclosure to the national organization. Not complying would mean a loss of membership.

But the new standards do not address much of the reporting that makes contributions seem larger and expenses smaller. The council, for instance, left open whether or not to include donations raised by a third party.

The new standards face a vote at the United Way's annual meeting in April, but Mr. Gallagher said the council's endorsement gave him the power to carry them out earlier. "I would be surprised and disappointed if they don't pass," he said.

Some United Way executives, however, worry that their colleagues will see the new standards, with the scrutiny from a committee that includes outside experts on ethics and finance, as another effort by the national organization to increase its power.

United Way Grand Jury Investigation

MOSSY GROVE, Tenn., Nov. 12 — Stunned and weary, survivors of the tornadoes that tore a 1,000-mile swath of the country sifted through the shards of 36 lost lives and hundreds of homes today.

Quentin Woody, 11, who was sucked from the shower in his mobile home and blown 300 yards away stark naked, tiptoed through a mud-soaked field here that was smeared with his family's belongings as his mother lay in a hospital with a broken back. He found his 13-year-old sister Sarah's camera. She had broken her arm. His father was in the hospital, too, with badly injured shoulders. But Quentin, somehow, only needed a few stitches, which he was only too eager to show the television photographers who kept asking…

WASHINGTON, Oct. 1 — Even as he denied personal wrongdoing in the demise of Global Crossing, the chairman, Gary Winnick, told a Congressional committee today that he would write a check for $25 million to cover part of the retirement money several thousand employees lost when the stock collapsed.

Mr. Winnick, who made $734 million from the company's stock before the shares became worthless, also challenged other telecommunications executives to follow his example.

Tens of thousands of employees have lost jobs and savings during the industry downturn in which many companies have gone bankrupt or come under investigation — or, as with Global Crossing, have done both.

"I call on other chairmen and C.E.O.'s of other companies to step up and write a check," Mr. Winnick said. "The only legacy I'm going to leave this planet with is my name."

The announcement, during a House Energy and Commerce Committee hearing on Global Crossing and Qwest Communications International, caught lawmakers and other executives at telecommunications companies by surprise. But some of the committee members were quick with skeptical comebacks.

The committee's chairman, Billy Tauzin, Republican of Louisiana, said: "I wonder who has the billions for the investors who lost big in the telecommunications crisis? I'm not sure there's enough money anywhere except in the federal Treasury, and using that money could bankrupt us all."

Lawmakers have been investigating Mr. Winnick's day-to-day involvement at Global Crossing and his sales of the company's shares before its collapse last year, which resulted in Global Crossing's filing for bankruptcy protection this year.

Several documents released this week by the committee showed that Mr. Winnick knew of transactions involving the swapping of communications capacity with other companies, a widespread practice in 2000 and 2001 now under investigation by the Securities and Exchange Commission and Justice Department.

Investigators are trying to determine whether there was a valid business reason for many of those swaps, some of them between Global Crossing and Qwest, or if the deals were conducted primarily as a way for the companies to book revenue to improve the appearance of their financial statements — which had the effect of misleading investors.

Mr. Winnick and other executives from Global Crossing who testified today defended the swaps, saying these transactions were based on strong business cases.

Meanwhile, Joseph P. Nacchio, the former chief executive of Qwest, defended Qwest's swaps, telling the committee that to his knowledge "every purchase of capacity by Qwest was with the intent of furthering the company's business plan."

On Monday, Mr. Nacchio was one of five telecommunications executives named in a suit filed by the New York State attorney general, Elliot Spitzer, who is seeking to seize the executives' stock profits as a way to compensate investors.

Mr. Nacchio, who sold $230 million in Qwest stock before the collapse of the shares — which have lost about 96 percent of their value since reaching a peak of $64.50 in March 2000 — defended his stock sales. He told the committee today that most of his shares had come from stock options granted in 1997 that carried a maturity of five and a half years, leaving him with the choice of exercising the options or losing them. "I sold shares based upon the advice of my financial advisers in order to diversify my holdings," he said.

Mr. Winnick was not named in the New York attorney general's lawsuit but today he found himself trying to defend his sale of $123 million in stock in May 2001, a month before the company disclosed that it would not meet analysts' revenue forecasts.

Mr. Winnick, committee investigators contend, had warnings long before the investing public did that the company was in trouble.

On Monday, the committee released Global Crossing memorandums indicating that Mr. Winnick was warned on multiple occasions, beginning as early as mid-2000 by a former chief executive, Leo Hindrey Jr., that the company was headed for a collapse and that the only way to avoid that outcome was to find a buyer for the company.

Mr. Winnick told the committee today that the memorandums by Mr. Hindrey, who left the company in October 2000, were documents Mr. Hindrey prepared to defend his own actions in talking to an investment bank in early 2000 about selling Global Crossing, without the board's authorization.

Mr. Hindrey, reached today at his office in New York, where he is chief executive of the YES Network, the cable sports channel for the New York Yankees, declined to comment.

Mr. Winnick's surprise announcement of his plan to donate $25 million to the employee retirement fund quickly drew scrutiny from lawyers proceeding with class-action lawsuits on behalf of shareholders against Global Crossing and its senior management. Some lawyers said Mr. Winnick's offer to partly compensate employees might be used as evidence of his culpability.

"This opens up a lot of questions," said Jules Brody of Stull, Stull & Brody, one law firm with a class-action lawsuit against Global Crossing. But Mr. Brody said the full implications would be unclear until more details of Mr. Winnick's plan became known. "It's kind of hard to analyze because Winnick is using his own measurement of employee losses," Mr. Brody said. "Who's to say he'll be able to do this if his assets are frozen for some reason?"

Mr. Winnick said his plan was to provide $25 million to the administrator of Global Crossing's retirement plan, an amount corresponding to money that current and former employees had invested in the plan and lost since the company's acquisition of the Frontier Corporation in Rochester was announced in October 1999.

Terry Christensen, a lawyer for Mr. Winnick, said he had not expected the announcement to be made today and that the plan's details had not yet been nailed down. Mr. Winnick said at the hearing that he had planned to announce the gift at another time but did so after hearing testimony from an employee, Lenette Crumpler, who lost her retirement savings.

"How was I or any of us to know that no longer were there men of integrity at the helm of our 100-year-old phone company?," Ms. Crumpler, a 31-year employee of Frontier, told the committee.

LOS ANGELES, Sept. 23 — Gov. Gray Davis signed a bill today to establish paid family leave to care for a new child or an ailing relative, giving California workers the most expansive family benefit in the nation…

SAN FRANCISCO (AP) -- Failed online credit card issuer NextCard Inc. disclosed Friday that federal securities regulators are investigating the company's downfall, which could cost a taxpayer-backed insurance fund as much as $400 million.

The San Francisco-based company also revealed that its chief executive, John Hashman, resigned earlier this week. Hashman oversaw NextCard's rise and fall as the Internet's biggest credit card issuer.

After distributing more than 1 million credit cards, NextCard last year sank in a morass of bad loans that prompted banking regulators to seize control of the operations.

The Federal Deposit Insurance Corp. has estimated the failure of NextCard's credit card business will result in a loss ranging from $300 million to $400 million.

In a government filing Friday, NextCard didn't provide any specifics about the Securities and Exchange Commission's probe. The SEC's San Francisco office declined to comment.

Federal banking regulators opened investigations into NextCard's failure seven months ago. In May, the FDIC notified NextCard that it might take legal action against several unnamed company executives and directors.

A shareholder suit filed in Delaware alleges NextCard insiders illegally sold stock to lock in profits before the company's credit card portfolio imploded.

Like many other Internet companies, NextCard stock once was a hot commodity on Wall Street. The company's shares peaked at $53.12 in late 1999. The Nasdaq Stock Market delisted the shares six months ago.

Before the company's shares crashed, NextCard's five highest-paid executives made $29.2 million by cashing in a combined 1.47 million stock options during 1999 and 2000, according to SEC filings.

Timothy J. Coltrell, formerly NextCard's chief operating officer, collected the biggest windfall by selling 715,499 options for $14.5 million in 1999 and 2000.

Hashman pocketed $3.6 million by selling 305,000 stock options in 1999 and 2000.

NextCard helped its executives pay for their tax and stock brokerage expenses by giving them loans at an 8 percent interest rate, according to SEC records. As of June 2002, the company said all the insider loans had been repaid except $120,000 owed by Hashman.

The company's demise has hurt its employees and customers. More than 800 NextCard workers have lost their jobs in the meltdown. About 800,000 NextCard customers abruptly lost their credit cards in July after federal regulators could not find a buyer for the accounts.

NextCard continues to run a skeletal operation as its remaining management team contemplates a bankruptcy filing. The company's chief counsel didn't immediately return phone messages left Friday.

NEW YORK - While some news organizations have tried to sneak material through airport screeners, ABC News thought bigger: the television network smuggled depleted uranium into New York.

ABC conducted its operation to test how authorities are guarding against the possibility of a nuclear "dirty bomb" attack. Correspondent Brian Ross' investigation will air as part of ABC's Sept. 11 anniversary coverage next week.

Federal authorities are angry that they've had to spend time on ABC's experiment.

"The U.S. Customs Service is engaged in a deadly serious business," said its spokesman, Dean Boyd. "The American public wants us to focus on real threats, not fake ones."

The story comes amidst controversy over stories in the New York Daily News and on CBS this week about how journalists tried to test airport security by trying to pass items that should have set off alarms.

ABC said it borrowed 15 pounds (7 kilograms) of depleted uranium from an environmental group, the Natural Resources Defense Council, to send on its journey. The network said it consulted with experts to make sure it was safe; the Customs Service said such material has less radiation than a typical chest X-ray.

Ross carried it by train from Austria to Istanbul, Turkey. The contents clearly marked, it was packed in a container with wooden horse carts and terra cotta vases and shipped overseas to New York. Through it all, the uranium went undetected.

"Seven countries, 25 days and 15 pounds of uranium," Ross said, "and not a single question."

The network was careful to obey all laws, federal and international, he said. The route and manner of transport followed a path outlined in court documents by an Osama bin Laden associate, who was investigated for his role in a plot to smuggle nuclear material, he said.

"One of our big concerns going into this was that we didn't want to teach terrorists something they didn't already know," he said.

ABC sent the container from Istanbul, a known smuggler's hotbed, to an address that had never received overseas shipping before because, in both cases, that should have made authorities suspicious, he said.

ABC and Customs differ on how authorities responded to a potential threat.

Of 1,139 containers on the vessel, the ABC package was one of fewer than a dozen identified for closer inspection before the ship even reached port, Boyd said. It was inspected by X-ray equipment and a separate device that tests for radiation and was found to pose no threat, he said.

Ross said, however, that the suitcase of depleted uranium would emit about the same radiation as live uranium would if it had been shielded in a lead-lined case. The container should have been opened and checked, he said.

"They missed it," he said. "They could say that it was no danger, which is true because we made sure there was no danger. But I think that misses the point."

Boyd insisted inspectors have ways to determine without opening the container whether the uranium was live or not.

"It was a fake threat that we were forced to divert resources and manpower to address," he said.

Responded Paul Friedman, executive vice president of ABC News: "When did they divert any resources? They didn't catch a thing."

Friedman said the press plays an important role in testing how well government is protecting its citizens.

NEW YORK - It makes an eye-opening story: knives, razors and pepper spray easily passing through supposedly beefed-up airport security. But it also raises troubling ethical questions: In particular, are journalists justified in breaking a law to expose weaknesses in enforcing it?

The New York Daily News, in an investigation published this week, revealed that its reporters had taken prohibited items through airport security 14 times at 11 different airports. Not one of them was caught.

The potential weapons were concealed in carry-on bags. Contraband was slipped past security at all four of the airports where terrorists boarded planes last Sept. 11, the News revealed.

A "CBS Evening News" story this week exposed similar weaknesses. The television network CBS didn't smuggle prohibited items, but tried to pass lead-lined film bags that block X-rays through security. In 70 percent of the cases, scanners didn't notice or check the bags.

The stories, and the prospect of more of them, infuriate federal officials — not just, they say, because the results are embarrassing.

"It's bad for the country," said Department of Transportation spokesman Chet Lunner. "That these stories are helping the bad guys seems to be completely obfuscated by the rush to get attention or notoriety for your newspaper or broadcast."

The Air Transport Association, the airline industry's largest trade group, said reporters who try to test security this way should be prosecuted. Federal law prohibits both passing banned items through security and taking them on airplanes.

The Daily News story followed a similar investigation done last October, said Edward Kosner, the paper's editor in chief.

Given the crucial part security lapses played Sept. 11 and the increased spending on improving the system, the Daily News believed it was important to check how the system is working.

"No one breaks any law lightly," Kosner said. "In a way, I guess you could look at it as civil disobedience. We were willing to take the consequences."

It would be different if reporters created a hazard by, for example, testing airline security by rushing a cockpit, he said.

CBS thought it could probe the system without smuggling prohibited items. If security didn't see a large black blob that indicated their X-rays couldn't get through, they wouldn't see a concealed knife, said correspondent Vince Gonzales.

CBS would never break the law to get the story, he said.

"We didn't believe it would be a good idea to try that," he said, "especially when you had the National Guard standing with guns at a lot of those checkpoints."

A code of ethics published by the Society of Professional Journalists doesn't specifically address law-breaking. It advises that undercover or other surreptitious methods not be used unless there is no other way to get a story of compelling public interest.

"I don't condone breaking the law just for the sake of doing it, just to get great footage for sweeps week," said Jane Kirtley, a professor on media ethics at the University of Minnesota. "But the question always comes down to, how else are you going to test these things out?"

The federal government says these systems are checked by independent inspectors, with the results shared with Congress.

Reporting publicly on their weaknesses is like Pentagon reporters publishing news of troop movements, Lunner said. Potential terrorists could learn which airports have the weakest security and the best way to conceal weapons, he said.

MIAMI (Reuters) - Federal authorities arrested 28 people on Friday on charges of lying about their backgrounds in order to get jobs in restricted areas at three south Florida airports, prosecutors said.

There was no indication any of the suspects planned terrorist acts or other crimes, FBI spokesman Mike Fabregas said.

"They lied to get their employment," he said.

The workers gave false names or Social Security numbers, used phony immigration documents or falsely claimed they had not been convicted on drug charges when they applied for jobs at the international airports in Miami, Fort Lauderdale and Palm Beach, prosecutors said.

Based on the false information, they obtained access badges that allowed them to enter secure areas of the airports without escorts, prosecutors said. The workers held a variety of jobs, including custodial work, baggage handling and food service, investigators said.

The arrests stemmed from an ongoing joint task force investigation of airport workers begun after last year's Sept. 11 hijacked plane attacks that killed about 3,000 people in New York, at the Pentagon outside Washington and in Pennsylvania.

"The integrity and the security of our airports involves not just those who fly our planes or screen our passengers, but includes all those who work in or have access to secured areas of the airport," U.S. Attorney Marcos Jimenez said.

The suspects were charged with submitting fraudulent applications for work at federally supervised airports, which carries a maximum sentence of five years in prison, or with using fraudulent immigration documents, punishable by up to 10 years in prison.

(9/3/02) - Contrary to his public denials, the chief executive of the scandal-ridden United Way in the Washington area was aware of improper financial practices, was involved in them and disregarded those who tried to stop them, one of the charity's top executives has written in a memorandum.

Norman O. Taylor, the beleaguered chief executive of the United Way of the National Capital Area, has repeatedly said he was unaware that expense accounts had been abused, that donations had been inflated to make the agency appear more efficient and that only 52 percent of the gifts from some donors had been passed on to social services charities.

Mr. Taylor has also repeatedly denied knowing about a $6,000 a month consulting contract for his predecessor, Oral Suer. The senior executive wrote, however, that Mr. Taylor had arranged that contract.

The accusations were made by Kenneth Unzicker, the director of corporate fund-raising campaigns for United Way in the Washington area, in a four-page memorandum to an ethics committee formed to deal with the charity's crisis.

Mr. Unzicker, who has worked at the agency for 28 years, wrote of his "grievous concerns about existing policies, practices and conditions" at the charity. "In the past 19 months," he wrote, "my attempts to air my concerns have been rebuffed or ignored by Norman Taylor and others in control of the organization."

The memorandum was dated Aug. 27. A copy was provided to The New York Times by a third party after Mr. Unzicker sent it. The ethics committee, composed of volunteers, will meet today to review the information from Mr. Unzicker and others.

The committee chairman, Prof. Samuel Dash of Georgetown University Law School, sought such information in a meeting last month with United Way staff members at which he promised that they would not face retaliation. In an interview, Professor Dash, who was counsel to the Senate Watergate Committee in 1974, restated his determination to protect whistle-blowers.

Calls to Mr. Taylor's home and cellphone yesterday were answered by his wife. He did not call back. Mr. Suer did not respond to messages left on his home telephone.

Mr. Unzicker wrote that he had attended more than a half-dozen meetings at which Mr. Suer had orchestrated Mr. Taylor's appointment as chief executive. "The strong implication" of these talks, Mr. Unzicker wrote, "was that the approval of Mr. Suer's consulting contract was a condition of Mr. Taylor's selection as C.E.O."

The memorandum says Mr. Suer "maintained complete control over the selection process" for his successor. "Mr. Suer never disclosed to the selection committee the circumstances of Mr. Taylor's departure from the United Way of Baltimore," Mr. Unzicker wrote.

Mr. Taylor was ousted as head of the Baltimore United Way in 1995 for what its board members have called sustained unsatisfactory performance. He was paid a six-figure settlement — the amount was not disclosed — which was never listed on that charity's Form 990 tax returns, although such disclosure was required by federal law.

"Mr. Taylor flatly denied any knowledge of these contracts" with Mr. Suer and a second person, Brian Ferguson, at a United Way board meeting and at a briefing last month for agencies that depend on United Way money, Mr. Unzicker wrote. Mr. Ferguson, a videographer, was the organization's publicist under Mr. Suer. Mr. Unzicker wrote that after hearing Mr. Taylor's denials, "I confronted him with this lie, to which he had no response."

Mr. Unzicker wrote that in 2000 he grew concerned about expense account abuses by Mr. Suer and others, whom he did not name. He delayed raising the issue, he wrote, until Mr. Taylor took office in February 2001. Mr. Unzicker and his staff felt relieved after the change in executives, he wrote, saying that they expected changes by Mr. Taylor.

"My relief was short-lived," Mr. Unzicker wrote. "The first time I was asked to sign a check written to Mr. Taylor for expense reimbursement turned out to be the last time I was able to sign a check payable to him. I questioned Mr. Taylor about his request for reimbursement of several thousand dollars. I was told that he was paying for Internet service" for the United Way office that solicits contributions from federal workers, known as the Combined Federal Campaign.

Mr. Unzicker wrote that Mr. Taylor said "he would provide a more detailed explanation later."

"I did sign that check," Mr. Unzicker added, "but I was never again asked to sign another check for Mr. Taylor."

Mr. Unzicker wrote that he and a member of his staff, Dulcy Hooper, had warned Mr. Taylor in February 2001 about "funny money," which was the staff term for inflating donations to make the charity appear to spend a reduced share of its revenue on overhead. Mr. Taylor responded by having Ms. Hooper fired and by shutting Mr. Unzicker out of executive decisions.

LONDON, Aug. 31 — Swedish authorities said today that a man arrested at a Swedish airport with a gun in his carry-on luggage as he tried to board a London-bound flight had studied at an aviation school in the United States and had a criminal record.

However, almost two days after the man, identified as Kerim Chatty, 29, was arrested, a senior Swedish official denied reports attributed to Swedish intelligence and police circles that he had planned to seize the plane and attack an American embassy in Europe in a conspiracy with four other men. There was no word either on whether the man was suspected of being linked to Al Qaeda.

The reports nonetheless deepened apprehension among European security officials that, days before the commemoration of the Sept. 11 attacks on New York and Washington, anti-Western militants might be planning copycat attacks on this side of the Atlantic.

Margaretha Linderoth, Sweden's security police director, denied that Mr. Chatty was part of such a conspiracy. "It's false information," she said. "We are not looking for four more men." Earlier, Reuters had quoted an unidentified military intelligence source as saying, "We know for sure that the plan was to crash the plane into a U.S. embassy in Europe."

Mr. Chatty underwent training at the North American Institute of Aviation in Conway, S.C., near Myrtle Beach. He was dismissed from the school's pilot program for poor performance, a top school official said tonight.

The flight school specializes in training foreign pilots, particularly students from Scandinavia, who arrive with special visas allowing them to attend school and later work in the United States. School officials go to Scandinavia every year to test and recruit potential students, according to the school's Web site.

Mr. Chatty was arrested late Thursday as he tried to board a flight operated by Ryanair, a low-cost carrier, out of a small airport in Vaesteraas, 60 miles northeast of Stockholm.

He was identified as belonging to a group of about 20 Muslims on board the plane that was heading for a conference in Birmingham, England, arranged by a Muslim sect known as Salafists. The sect describes itself as a purist strand of the Islamic faith. Its spokesman in Birmingham, Abu Khadeejah, said the conference organizers did not know Mr. Chatty. He also said the Salafists reject terrorism and had condemned both Osama bin Laden and the attacks last Sept. 11.

The Swedish police said they might hold Mr. Chatty until midday Monday before seeking court action against him. He is being held on suspicion of attempted hijacking and illegal possession of a firearm.

Nils Uggla, his defense lawyer, said that Mr. Chatty, a Swedish citizen of Tunisian descent, could explain the presence of a handgun found in his luggage. "He denies that this has anything at all to do with terrorism or airplane hijacking," Mr. Uggla said.

Several passengers already aboard the aircraft were evacuated while police officers searched the cabin and luggage compartment.

The flight school in South Carolina opened in 1972 and has trained about 3,500 pilots over the past three decades, according to its Web site.

The school offers a six-month course that trains students to fly and work as flight instructors, the first step to obtaining a commercial pilot's license. At about $35,000 including housing, the course is considered a bargain compared to comparable European programs.

Beginning in 1997, the school was 1 of 21 in an experimental program in the southeastern states that used the Internet to report foreign students who did not show up for classes to the Immigration and Naturalization Service.

All schools are required to report students who do not show up for classes, but reporting was spotty before Sept. 11. One of the hijackers came into the United States on a student visa but never reported to the California school that he was supposed to attend.

Federal Bureau of Investigation agents visited the school twice after Sept. 11 during sweeps of flight schools across the country, The Sun News of Myrtle Beach reported last year. Robert Sunday, the school's chief operations officer, told The Sun News at the time that his school took extra care in admitting its students. Typically students are required to have J-1 visas, a special educational visa that requires tougher screening than a typical student visa. Mr. Sunday also said the school immediately reports students who do not show up for class.

In May, a fire destroyed the administrative offices of the school. James Lamb, an instructor at the school, said he could not be sure whether Mr. Chatty was a student because student records were destroyed in the fire.

Morgan Martin, a former state legislator from Conway who serves on the state Transportation Commission, said the school had a good reputation.

"As far as I know it is a well-respected and well-run operation," he said.

Swedish newspaper reports depicted Mr. Chatty as a recent convert to Islam. He had been convicted of theft and assault charges, relating to a brawl with American marines at a gym in Stockholm and an earlier scuffle at a bar, according Mr. Uggla, the defense lawyer.

(8/28/02) - NEW YORK (CBS.MW) -- A grand jury Wednesday indicted two former WorldCom executives accused of orchestrating an effort to hide more than $7 billion in expenses at the bankrupt phone carrier.

Scott Sullivan, the former chief financial officer, and Buford Yates Jr., onetime head of the company's accounting office, were indicted in New York on charges of securities fraud and making false filings to the Securities and Exchange Commission.

Another top executive implicated in the coverup, ex-controller David Myers, was not indicted. That's fueled speculation that Myers has agreed to plead guilty and cooperate with federal investigators, who are trying to determine whether former Chief Executive Bernard Ebbers was involved.

Two other executives who worked in WorldCom's accounting office were named unindicted co-conspirators.

Sullivan, who was arrested a month ago, could go on trial later this year. He's seen as the key architect of WorldCom's attempt to conceal billions of dollars in operating costs, a move that generated phantom profits and hid the company's deteriorating financial condition from investors.

Sullivan was fired June 25 after the ruse was discovered. Myers was forced to resign. So far, Ebbers has escaped prosecution. He quit under board pressure in April, but has strenuously denied any involvement.

Under Sullivan's direction, Myers shifted billions of dollars in so-called line costs to the company's capital-goods account -- in effect treating ordinary business expenses as long-term investments.

By hiding those costs, the No. 2 U.S. long-distance carrier was able to report profits instead of actual losses during all of 2001 and the first quarter of 2002.

Further investigation has revealed that the company started manipulating expenses as early as 1999.

On July 17, WorldCom filed the largest U.S. bankruptcy claim ever. It reported $41 billion in debt at the time of its filing vs. $107 billion in assets. Since then, the company has said it will probably write off $50 billion in assets whose value has shrunk.

The shocking revelation, the biggest in a series of Wall Street scandals, stunned investors and generated a public outcry. It also forced U.S. lawmakers to pass a major bill aimed at reforming the financial sector.

The White House, meanwhile, has pressured federal investigators to intensify their corporate investigations and to start making arrests.

PHILADELPHIA - An Ohio woman carrying a loaded handgun made it through U.S. airport security and may have completed at least one domestic flight before she was stopped, officials said on Monday.

Nancy Keller, a 37-year-old resident of Columbus, Ohio, faces a charge of attempting to board an aircraft with a concealed weapon, in what appears to be the latest in a series of airport security lapses despite tough measures adopted after the Sept. 11 attacks.

Keller was arrested at Philadelphia International Airport on Sunday after baggage screeners found a loaded HK .357 semiautomatic handgun in her bag.

Federal prosecutors in Philadelphia declined to comment on media reports that before her arrest Keller had flown from Atlanta to Philadelphia with the gun. Officials also declined to say where Keller was headed when authorities in Philadelphia found the weapon.

"We in the U.S. District Attorney's office are very concerned about airport security and hope to understand not only why she was carrying this gun, but how it made it through security," U.S. Attorney Mary Crawley said.

According to an affidavit filed at a federal court hearing on Monday, Keller told security personnel that both the bag and gun were her husband's and she did not know she was carrying the weapon.

At the hearing, U.S. Magistrate Judge Jacob Hart freed Keller on a $100 bond but ordered her to give up her passport as she awaits a probable cause hearing set for Sept. 9.

In addition to the handgun, Keller was found to be carrying a separate magazine containing 12 rounds of ammunition. Both the magazine in the pistol and the separate magazine were labeled "restricted-law enforcement use only," according to the affidavit.

The Bureau of Alcohol, Tobacco and Firearms is trying to determine ownership of the weapon.