Donor who claims deep pockets raises doubts

Joseph Bilby’s Trafalgar home is listed for sheriff’s sale.

He’s filed for bankruptcy protection twice since 1991, and in 2010 he pleaded guilty to three counts of check fraud.

Yet leaders of several Indianapolis cultural institutions believed, at least at first, that he was good for multi-million-dollar gifts. The Eiteljorg Museum of Native American and Western Art even announced a $17.1 million pledge on Nov. 10.

Now Bilby is delaying payment, and behind the scenes, not-for-profits are writing off weeks that they spent with a potential donor whose story appears to be bogus.

People who are familiar with Bilby and his story say he made overtures to some major Indianapolis institutions–museums, universities, even a hospital–and that the amounts promised were staggering.

A distinguished-sounding 69-year-old, Bilby seemed to appear out of nowhere last fall. Though he wasn't known in philanthropy circles, he aligned himself with the influential estate lawyer Dan Yates at Bose, McKinney & Evans. Yates sits on the board of trustees at the Indianapolis Zoo and has served on boards at the Eiteljorg, Indianapolis Symphony Orchestra, Children's Museum of Indianapolis and St. Vincent Hospital Foundation.

Yates wouldn't talk about Bilby, other than to say that he no longer represents him. As for the unfulfilled pledges, Yates said, "It would be, I'm sure, too bad for the organizations and a disappointment."

Bilby had planned to go public with his gifts during a Jan. 26 meeting at Meridian Hills Country Club, but he cancelled late in the afternoon of the prior day. Tom Hirschauer, president of Publicis Indianapolis, sent an e-mail to the invited parties on Bilby's behalf. The message, which was obtained by IBJ, said "the donor" had been advised to remain anonymous, and that the money would be distributed through a donor-advised fund, which is a type of charitable-giving vehicle. (Central Indiana Community Foundation, for example, manages several donor-advised funds set up by families or organizations.)

Hirschauer's e-mail didn't name the donor-advised fund or the entity that would manage it. "The timing of the funding will be communicated at a date to be determined," he wrote.

Eiteljorg CEO John Vanausdall confirmed that the lunch meeting was related to the major gift he announced in November. Vanausdall declined to talk about the donor, whom he’d agreed to keep anonymous.

“We're very hopeful this gift gets fulfilled,” Vanausdall said. “Everything that's happened causes us to be hopeful. We're still hopeful.”

Hirschauer would not confirm that the donor in question was Bilby, saying only that he had a client who wished to remain anonymous. However, he and Yates were copied on a Jan. 4 e-mail that Bilby sent to his chosen beneficiaries to explain why they hadn't yet been paid.  

"Dear Recipient," Bilby wrote. "You have been patient, kind and supportive. I suspect that you are also anticipatory, nervous and puzzled."

Bilby blamed that delay on his New York financial advisers changing their minds about "how best to fund you, including what payer source and taxable year to use."

Bilby signed at least three pledge agreements at the Eiteljorg museum, symphony and zoo, according to people who are familiar with the agreements. One person who volunteers with multiple organizations said she knew of six that had signed agreements with Bilby, though she declined to name them. 

Asked whether the money was likely to be forthcoming, she said, firmly, “No.”

Bilby declined to talk about his pledges. "I don't think that would be appropriate for me to do," he said when reached on his cell phone. "I just prefer not to talk public about this."

Not-for-profits can sue to enforce pledge agreements, but it rarely happens.

In any case, Bilby and his wife, Patricia Jefferson-Bilby, don’t appear to be wealthy people.

Their home at 2832 South 475 in rural Trafalgar is listed for sale on Feb. 16 by the Johnson County Sheriff. Peoples Home Equity is hoping to collect on a judgment of $434,548.54.

The Bilbys managed to keep their home after a 2002 bankruptcy case. During that case, Bilby faced a lawsuit from Physicians Homecare, an in-home care company in Lafayette that Bilby had tried to purchase.

Co-owner Michael Drayer said he and his wife went so far as to tell employees they were selling the business, but Bilby never showed up for the closing. The Drayers received a judgment of $421,926. Drayer remembered receiving a few thousand dollars.

Drayer said he never learned much about Bilby or his source of income, but he seemed reputable. He had been referred by an accounting firm in Indianapolis, and his wife is dean of the School for Adult Learning at the University of Indianapolis. A UIndy spokesman said Jefferson-Bilby still holds that title, but she is on a two-month leave of absence for personal reasons.

Drayer takes the blame for not digging below the surface. “He’s a believable guy,” he said. “He sees himself as very important. I think he lacks a touch of reality.”

Bilby faced three counts of check fraud in February 2008 after trying to pass more than $60,000 in bad checks to two local contractors who were building barns for the horses he keeps on his Trafalgar property.

"He claimed all along when we started that he had a huge amount of money, $700,000, coming from a fund," said A.G. Bryant of Edinburgh, who framed out two large barns before stopping work. "He kept telling us it was going to be in the next week or so."

Bryant also got along well with Bilby. "He's a real nice guy," he said. "He just lies to you like a dog."

Bilby pleaded guilty to the check-fraud charges on Oct. 7, 2010, but his sentencing has been delayed to Feb. 16. He has also made restitution to Bryant and the other contractor, Coy Commercial Metal Roofing of Trafalgar. 

It’s rare for major donors to appear out of nowhere, said Ernie Vargo at the Eskenazi Health Foundation, which he said is not one of the places where Bilby pledged money.

“We know who most of the major funders are,” Vargo said.

Organizations try to vet potential donors, Vargo said, but he added, “We’re in the business of trusting people. How far do you go without ruining the relationship?”

Two different stories about Bilby’s source of wealth have circulated in fundraising circles. One is that he sold a health-care-related business in the early 2000s and retired. Another is that he’s the beneficiary of a trust that was set up in the 1940s, but that was unknown to him until recently.

One fundraising professional who heard the latter tale said it raised a number of questions in her mind. For one, wouldn’t an unclaimed trust have been turned over to the state after several years?

“That’s why it all sounds kind of odd to me.”