A federal judge in Arkansas sentenced the founder of a Malawi orphan charity to 192 months in prison on October 14, which is 16 years, and gave his wife 36 months. The court found that Jason Carney diverted more than $2 million from 2nd Milk, the Springdale nonprofit that told donors every dollar went to children. Both received the maximum sentence allowed for their counts of conviction.
Where the donations went
Prosecutors said that for more than four years Carney presented 2nd Milk to donors as fully transparent. He told them sponsorship money went entirely to the children, that 82 cents of each dollar went to babies while the rest covered overhead, and that he took no salary, according to IRS Criminal Investigation. “All of the funds go directly to the children,” the U.S. Attorney’s Office for the Western District of Arkansas quotes him as saying.
Bank records told a different story. They showed transfers from the charity that paid for cosmetic surgery, massages, tanning, pet expenses, a cruise, personal mortgage payments, car and boat loans and luxury vacations. The transfers were frequent enough to raise donor suspicion.
Both Carneys also used 2nd Milk money to travel to Rome, Chile, Peru, Japan, Barcelona, Cancun and Vietnam. The charity had been created to help orphaned children in Malawi, and the couple had once run an orphanage there.
Talk Business & Politics, which covered the sentencing, reported that the Carneys moved to Malawi in 2013 to run that orphanage, which by early 2015 supported 80 children and 70 widows. They then returned to the United States and started 2nd Milk to provide baby formula. The IRS granted the group tax-exempt status on November 10, 2016.
For anyone who gives to a small charity that promises every dollar reaches children, the case shows how the promise itself can be the sales pitch. A donor who is told there is no salary has no obvious reason to look for a mortgage payment or a boat loan coming out of the same account.
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One husband, one wife, two different crimes
Jason Carney pleaded guilty on the sixth day of his jury trial, while prosecutors were still presenting their case. He admitted four counts: conspiracy to commit wire fraud, two counts of filing a false return, and one count of structuring cash transactions to evade reporting requirements.
The two false returns were his personal tax return and the Form 990 that 2nd Milk filed. A Form 990 is the annual return a tax-exempt group sends the IRS, and prosecutors said Carney used false returns to conceal the diversions. According to Talk Business & Politics, the indictments said the group’s Form 990s overstated spending on formula and supplies and understated what was paid to the Carneys.
Lacey Carney pleaded guilty to one count of misprision. That means she knew about her husband’s wire fraud scheme and did not report it, as the law requires. Talk Business & Politics reported that she was listed as chief financial officer and treasurer, but that the indictment described her work as clerical and event planning. She received 36 months in prison and one year of supervised release.
Jason Carney’s 192 months will be followed by three years of supervised release. Chief U.S. District Judge Timothy L. Brooks called his conduct “profoundly disgusting” and “egregious, repulsive, and violative.”
A case that took 21 months to reach sentencing
The case is numbered 5:25-CR-50005 in the Western District of Arkansas. Talk Business & Politics reported that the original indictment came on January 8, 2025, and that a May 21, 2025 indictment added false-return counts for tax years 2018 through 2022, covering both the Carneys’ personal returns and 2nd Milk’s. Further indictments followed on December 10, 2025, and February 3, 2026.
The jury trial began June 5, and both defendants pleaded guilty on June 12, according to the same account. The alleged scheme ran from at least November 2015 to at least March 2024, it said.
The money side was settled at sentencing. The couple agreed to forfeit their Springdale home, because wire fraud proceeds were used to pay the mortgage. The federal release does not give a restitution figure, but Talk Business & Politics reported orders of $1.32 million for Jason Carney and $514,098 for Lacey Carney. Jason Carney was taken into custody and is held at the Washington County Detention Center, the outlet reported. Lacey Carney remains on bond and must surrender by 1 p.m. on November 18.
What federal officials said
Kevin R. Holmes, the U.S. Attorney for the Western District of Arkansas, said the sentences show that people who misuse charitable platforms for personal gain will face significant consequences.
Donald “Trey” Eakins, the special agent in charge of the IRS Criminal Investigation Charlotte Field Office, said the defendant diverted nonprofit funds for personal expenses and that agents will keep following the money. Nicholas Collura, who directs the Diplomatic Security Service, said people who exploit charitable causes betray donors and the people they claimed to serve. The Diplomatic Security Service investigated the case with IRS Criminal Investigation.
The case was part of a nationwide enforcement action led by the Justice Department’s National Fraud Enforcement Division, the IRS and IRS Criminal Investigation. The Western District of Arkansas was a key participant. Assistant U.S. Attorney Benjamin Wulff and Justice Department trial attorney Michael L. Jones prosecuted it.
Checking a charity before the next gift
The IRS runs a free Tax Exempt Organization Search. It shows whether a group can receive tax-deductible contributions, whether its exempt status has been granted or revoked, and its Form 990 filings. Those filings are the returns Jason Carney falsified for 2nd Milk.
The tool has limits. The IRS notes that paper-submitted 990 returns received in 2021 and later are still being processed, so a recent filing can be missing or late. A clean lookup shows a charity’s paperwork, not how it spent a given donation.
Nothing in the sentencing announcement describes stolen donor identities, so a credit freeze is a separate precaution. The FTC says a credit freeze is free and stops anyone from opening a new credit account in a person’s name, including that person, until it is lifted. A freeze is placed with Equifax, Experian and TransUnion.
Could a donor spot a charity like 2nd Milk in time?
A charity that sounds transparent can still be paying for a cruise, and the first sign for a donor is often a suspicion with no next step. This case turned on bank records and false tax returns, evidence that a donor rarely sees until a prosecutor does.
The Senior Fraud Defense & First-Hour Recovery Kit is built for that gap. It includes the free credit-freeze steps, a first-hour recovery plan for when money has already moved, and a fraud evidence and report log for keeping the paper trail. This case is about a charity rather than an active scam wave, but the question is the same one: what is the first move when a request for money turns out to be false?
Get the first-hour fraud recovery kit and credit-freeze steps →
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This article was produced with AI assistance and edited for accuracy against the sources linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
