Former leader of children’s charity indicted

Chronicle Media

Carol Babbitt (Twitter photo)

The former president of a national not-for-profit organization that was based in McLean County has been indicted on charges that she took more than $400,000 from the charity.

A grand jury indicted Carol Babbitt, former leader of Project Linus, on Jan. 22. The indictment remained sealed until Babbitt, 60, of Asheville, N.C., was arrested Feb. 6 in Asheville.

She made her initial appearance in a North Carolina federal court Feb. 7 and was released from custody.

The U.S. Clerk of Court has set Thursday (Feb. 13) for Babbitt to appear for arraignment in federal court in Peoria.

According to the indictment, Babbitt began her involvement as a chapter coordinator with Project Linus, a not-for-profit organization that provides handmade blankets for children who are seriously ill, traumatized and otherwise in need, in 1998.

Babbitt served as national president of the organization from 2000-16. During that time, Babbitt lived in McLean County and the organization was also headquartered in McLean.

The indictment alleges that beginning in 2010 and continuing until 2016, Babbitt defrauded the Project Linus organization, its volunteers and contributors, and the state of Illinois of $400,000. As president, Babbitt controlled the organization’s operations, including its bank accounts. Babbitt allegedly used Project Linus credit cards to pay for personal expenses, including clothing, electronics, pet grooming, furniture, tickets for sporting events and personal travel.

Babbitt allegedly used funds from the organization’s operating account to make credit-card payments, and falsely classified the personal expenditure in the business ledger to hide her personal use of the funds.

At various times, Babbitt allegedly represented that Project Linus was in extremely poor financial condition, and that because of the poor financial condition, others could not be reimbursed for their expenses. Because of the alleged poor financial situation, Babbitt falsely represented to the organization’s board that she would take a pay cut or not take a salary at all, according to federal officials.

When questioned by the board of directors, Babbitt allegedly falsely stated that she was repaying Project Linus for her credit-card purchases through payroll deductions. Babbitt did not disclose that she made the payments after taking more money than her salary from the organization, resulting in the organization repaying itself, federal investigators said.

The indictment also claims that Babbitt filed false and fraudulent personal tax returns with the state of Illinois in which she failed to report the funds she allegedly stole from Project Linus.

The Internal Revenue Service’s Criminal Investigation Division, U.S. Postal Inspection Service, Illinois Department of Revenue and Bloomington Police Department investigated the case.

If convicted, the statutory penalty for mail fraud, wire fraud, and money laundering is a maximum 20 years in prison and fines of up to $500,000. The defendant may also be ordered to pay restitution.