UPDATE -- A clerical error by state officials caused a Raleigh shoe donation nonprofit to have an expired state license, a spokesman for the N.C. Secretary of State's office said today.
The office today renewed the state license to Share our Shoes, a two-year-old nonprofit that is now facing controversy over its financial operations.
George Jeter, a spokesman for the secretary of state's office, said an employee in the office's Charitable Solicitation Licensing Division misplaced the nonprofit's paperwork identifying it as a tax exempt organization, which was required for the license renewed. As a result, the division sent a letter to the nonprofit on Sept. 19, saying its renewal would be rescinded.
Today, the division sent a letter to Share our Shoes saying the paperwork had been found, and the state license would be backdated so that there would be no question the nonprofit was compliant during the interim.
Jennifer Pierce, Share our Shoes' founder and director, had said in interviews she did not know about the problems with the state license. The attorney that had handled the nonprofit's paperwork could not be reached.
The division is conducting an inquiry regarding the nonprofit's finances. The inquiry is in response to news reports regarding donations of shoes and cash made by Hope Community Church of Raleigh that are intended for Haiti, as well as questions regarding the practice of reselling donated shoes to cover operating expenses. Pierce said unexpected delays caused the church's donations to sit idle. She said the nonprofit resells some shoes to help cover operating expenses, as do others in the shoe and clothing charity business.
Stop in a fitness club, shoe store or church around the Triangle and you're likely to see the purple-and-white "SOS" boxes that collect used shoes for the needy.
Over two years, Share our Shoes collected hundreds of thousands of pairs of shoes and provided them to disaster victims here and abroad, local low-income school children and the homeless.
Jennifer Pierce of Raleigh saw her nonprofit take off when a devastating earthquake hit Haiti in January 2010. She notified the media that she was putting together a shoe drive for the impoverished country, and the response helped generate more than 400,000 pairs of donated shoes.
But the media attention now has brought something else - a spotlight on Pierce.
She's a convicted felon and recovering drug addict who once ran three highly profitable mortgage services companies that she admits she abandoned after a state official told her they were on shaky legal ground.
Today, the nonprofit is in danger of closing as Pierce's past becomes more widely known and new issues with its operation surface.
Two TV reports this week questioned the nonprofit's finances and its practice of selling some of its inventory to pay organizational expenses.
Pierce said this week the board of directors recently resigned after she acknowledged receiving a $4,000 loan from a businessman who bought some of the donated shoes. Sponsors such as IBM want to be removed from the nonprofit's website because of the controversy.
And the N.C. secretary of state opened an inquiry after taking questions from reporters and realizing the charity let its state license expire.
"We are in a sort of moment of re-examination with that entity," said George Jeter, a spokesman for the secretary of state's office. He said his office had received no complaints about the nonprofit.
Pierce, a 33-year-old twice-divorced mother of two, said she understands the scrutiny. But she denies running the nonprofit in an improper way. If anything, she said, Share our Shoes has helped keep her straight after years of lying, stealing and drug abuse.
"I've kind of built my own rehab here," she said this week.
Reselling some shoes
The facts on the nonprofit and Pierce's background are murky.
She has collected and distributed shoes to the needy. A nonprofit in Florida that operates mercy flights to the Caribbean confirms the nonprofit delivered three truckloads of shoes to deliver to Haiti. He said Pierce drove the first truckload, with her young daughter riding along.
"She gets a lot done," said Roger Sands, a volunteer coordinator with Missionary Flights International. "It seems like she has a heart."
But not all the shoes donated to the nonprofit are given away, and cash donations are often used for operational expenses.
A WNCN news report Monday said one church was troubled to hear a $5,000 donation would not go to Haiti, and Pierce confirmed a WTVD report on Wednesday that the nonprofit sold 100,000 pounds of shoes for $174,000. The buyer then resold those shoes in Africa.
Pierce said such reselling is common among nonprofits in the used shoe business; they would go out of business, she said, if they didn't resell some inventory to cover expenses.
She said her nonprofit's expenses are roughly $17,000 a month and she is the sole paid official, with a $1,200 weekly salary.
"What am I doing wrong?" Pierce asked.
The organization's website does not prominently mention the shoe reselling. It can be found at a "legal disclaimer" link at the bottom of the website's main page.
Records with the N.C. secretary of state dating to last year also show that was part of Share our Shoes' business plan.
Brian Pearl, the nonprofit's new treasurer, provided a copy of the nonprofit's most recent federal tax return, known as a Form 990. That report, a public record, shows how much money and assets a nonprofit has received and spent annually, as well as the salaries of top officials.
The report showed the nonprofit had $864,338 in revenues and expenses of $817,602 for 2010. Pearl and Pierce said those figures appear to be largely based on the value of shoes donated and later given away.
The report showed Pierce was paid roughly $22,000 and it lists $196,000 in revenues from the reselling of shoes.
The preparer, Christopher Tikvart of Durham, declined to comment about his work on the return. The former board treasurer involved in pulling together the report, Michael Richard of Durham, could not be reached.
Secretary of state documents list Pierce initially as the nonprofit's president and treasurer, but she stepped away from the treasurer's job a year later. Pearl is a marketer who was paid under contract to put together the nonprofit's website.
He said he is trying to get up to speed on the organization's finances.
Overcoming her past
It is also not easy to find Pierce's back story on the website, though in one posted video, Pierce talks about her troubled past, when she acquired the nickname "Tornado." She also has told some sponsors about her background.
In interviews this week and in documents she sent to media last year, Pierce said she ran away from an abusive home at age 13, got hooked on drugs three years later and racked up 16 felony convictions by the time she turned 21.
She said she spent two years in TROSA, an intensive drug treatment program based in Durham, and stayed clean while running the mortgage businesses.
She said she relapsed in 2008 and lost all the money she made; on the video, she said she had made millions. She said she entered herself into another rehabilitation program in Butner for 29 days and has not used drugs since.
Her criminal record shows convictions for larceny, forgery, assault, drug possession and driving while impaired.
She has not stayed out of trouble since her second rehab stint. In January, Pierce was pulled over for driving while intoxicated, and she admits she got caught behind the wheel after having several drinks in a Raleigh bar. That case is still pending.
Pierce said she is willing to step down as president and have someone else perform the day-to-day operations.
She didn't want a good program to die, she said, because of her past mistakes.
Database manager David Raynor contributed to this report.