HARLEM — New York State Attorney General Eric Schneiderman's office has launched an investigation into MillerCoors' sponsorship agreement with the organizers of the Puerto Rican Day Parade in the aftermath of a controversial marketing effort, DNAinfo New York has learned.
MillerCoors, the makers of Coors Light, announced Thursday it would halt production and distribution of a can of beer made in conjunction with the June 9 parade that, as DNAinfo first reported, critics called disrespectful because it included what they said was a depiction of the Puerto Rican flag.
After MillerCoors defended itself by citing a long-running scholarship fund they sponsored for the Puerto Rican Day Parade, the attorney general's office fired off a letter to the nonprofit parade board demanding a "list of scholarships" provided by the board, including the amounts and the portion of the scholarships that were funded by MillerCoors, according to letters obtained by DNAinfo New York.
"It is unclear from this statement the nature and scope of the 'partnership' between MillerCoors and your organization," Jason R. Lilien, head of the attorney general's charities bureau, wrote in a May 30 letter to Madelyn Lugo, the parade's chairwoman.
The AG's office also wrote a letter to MillerCoors May 29, asking for an explanation of "how the Coors arrangement furthers the charitable mission of the National Puerto Rican Day Parade, Inc."
In addition to its concerns about the scholarship funds, the AG's office is concerned that money Coors donated to the charity appears to have been used to pay for marketing of alcoholic beverages.
"MillerCoors' sponsorship of the 2013 Parade has raised concerns about how the charity is being used to market and sell alcoholic products, especially in light of the 2013 Parade's theme, 'Celebrating Your Health,'" Lilien wrote.
"The terms of this arrangement, and how the charity will benefit from it, are unclear."
In defending itself against concerns about the beer can design, Chicago-based MillerCoors said in a previous statement that the company contributed for the last seven years to the Puerto Rican Day Parade's "Diversity Scholarship Fund."
But the National Puerto Rican Day Parade, Inc.'s 2011 tax filings with the Internal Revenue Service — the most recent available — don't explicitly list any scholarships that were given out that year, only a $200 loss related to scholarship photos in a section detailing expenses.
In addition, the parade also answered "No" on a section of the 2011 form that asks if they've given out more than $5,000 in grants or assistance to individuals in the United States.
The 2011 tax filings also show the National Puerto Rican Day parade, Inc. had a deficit of more than $880,000 at the end of that year, despite having raised more than $2.4 million in support from 2007 through 2011.
In 2011 the group had revenue of $440,055 but expenses of $645,690. The group began 2011 with a $674,692 deficit.
A note attached to the group's 2011 financial statement said there was "substantial doubt" about whether the group could continue given its "recurring losses."
In 2010, the group listed that it had taken in $10,000 in revenue related to scholarships and had awarded $7,000 of that money.
There are no tax filings for 2012 or 2013 on the books, but according to a 2013 press release from Hostos Community College, school officials thanked "representatives from the National Puerto Rican Day Parade for their generous contributions" to the Ernesto Malave Scholarship Program from the Diversity Foundation.
According to its website, the Diversity Foundation, a group that "works in cooperation with CUNY and corporate America to secure over 1,000 scholarships," lists MillerCoors as a sponsor and is also represented in its marketing efforts by the Galos Corporation, the same company that represents the National Puerto Rican Day Parade, Inc.
MillerCoors spokeswoman Karina Diehl said the company does not comment regarding "legal investigations."
Representatives for the National Puerto Rican Day Parade, Inc. and the AG's office also declined comment.
It was not immediately clear how much money MillerCoors had given to the parade.
The tangled web of finances has long concerned some in the community.
"There seems to be something wrong," said Ramon Jimenez, attorney for Boricuas For A Positive Image, the East Harlem group that first raised concerns about the can design.
Five New York City politicians — Council members Melissa Mark-Viverito, Rosie Mendez and Fernando Cabrera and state Sens. Jose Serrano and Gustavo Rivera — have asked the parade's board to put guidelines in place to govern marketing sponsorships.
Mark-Viverito, who is Puerto Rican, has also called for the board of the parade to step down.
"Accountability and transparency is important for any nonprofit, especially a parade of this size and magnitude where sponsorship and revenue is generated," Mark-Viverito said.
Carlos Velasquez, president of the Galos Corporation, which was paid $85,919 for its fundraising activities for the group in 2011, according to tax documents, said the company has been working with the parade's board for 20 years. The fees his company charged the group depend on the size and scope of the event and the number of personnel needed to organize the function, he said.
In its 2011 tax documents, the National Puerto Rican Day Parade, Inc. wrote that it wanted the Galos Corporation to "focus efforts to raise more funding, to reduce the outstanding accounts payable, and decrease expenses."
Velasquez said his company plans to fully cooperate with the attorney general's office and that any marketing decisions were made at the direction of the parade board.
In 2011, MillerCoors also came under scrutiny for Coors Light advertisements relating to the Puerto Rican Day Parade.
The advertisements from that year featured the phrase "Emborícuate," or "Become Puerto Rican" in Spanish, beneath three beers. The word was taken by many to be a play on "Emborráchate," or to get drunk.
Following the latest controversy, Boricuas For A Positive Image and Melissa Mark-Viverito met with Coors executives Thursday night after a protest outside of Manhattan Beer Distributors on East 149th Street in the Bronx. Advocates said MillerCoors promised to take out full-page ads in some publications issuing a full apology, but the company has not confirmed that.
Critics said they were offended by the first response from MillerCoors and the National Puerto Rican Day Parade, Inc. board, which denied that the image was a flag and called on critics to "clear this misunderstanding, and stop misguidedly" telling people that the design was a flag.
Jimenez said there have been concerns about the parade's financial dealings for years and that the investigation is sorely needed.
"The attorney general has to look beyond Coors to all the sponsors and the internal finances of the parade and the board," he said.