Government Settlement Agreements and Actions Against Charities
The BBB Standards for Charity Accountability are used by BBB Wise Giving Alliance in completing evaluative reports on charities. These standards are voluntary and go beyond what is required by government regulators. From time to time, however, charities are the subject of government action by state government agencies, federal agencies, or both. If the identified charity has been the subject of a report produced by BBB Wise Giving Alliance, it will review the circumstances and timing of the issues in the case to determine if it impacts the accountability evaluation of that charity.
The information in this section is intended to provide summaries of final actions on charity cases undertaken by these authorities. This is not intended to provide information on all actions that have recently taken place but a representative sample that highlights the nature of issues that emerge in such instances. The cases noted below were based on information from the National Association of State Charities Officials (NASCO) which is an association of state offices (attorneys general, secretaries of state and other offices) charged with the regulation and oversight of soliciting charitable organizations in the United States. In addition, other final actions involving charities that come to the attention of BBB Wise Giving Alliance are also included in these summaries.
Alleged Deceptive Solicitation
CA In January 2019, a settlement was reached with Giving Children Hope and its principals to resolve claims that the charity misled the public by falsely claiming that 99% of contributions went to provide direct aid, when in fact that percentage relied on the use of inflated valuation of gift-in-kind donations of pharmaceuticals. As part of the settlement, the charity, directors, officers and accountant paid $410,000 to be used for state charity enforcement, will stop providing misleading reports, and the charity agreed to end its pharmaceutical gift-in-kind program. https://oag.ca.gov/news/press-releases/attorneygeneral-becerra-announces-410000-settlement-giving-children-hope-after
IL In March 2019, Veterans Christian Network (VCN), and its founders, Todd and Priscilla Olshefski, were sued for multiple violations of Illinois charity laws including failing to account and using charitable assets for their own personal benefit rather than for the benefit of veterans. The Olshefskis came to Illinois from out-of-state, and managed to quickly set up operations (i.e., obtaining 501(c)(3) status using Form 1023EZ, getting a local business to rent them office space, and getting a printing company to print letterhead for them as a donation) to give an outward appearance to local residents that they were legitimate. In August 2019, orders were entered in a civil case shutting VCN down and permanently enjoining Todd and Priscilla Olshefski from fundraising and from acting as charitable fiduciaries in Illinois. The defendants are also subject to a $28K judgment (equal to the amount of charitable contributions shown that they deposited into VCN bank accounts but for which they could never account). A separate criminal case was brought against each of the Olshefskis for felony theft of charitable monies. Todd Olshefski was sentenced to three years in prison and Priscilla Olshefski was sentenced to 180 days in jail and one year of conditional discharge.
MD An Assurance of Discontinuance (AOD) was obtained on March 11, 2019, resolving allegations against Stephen D. Everhart, Lion Fundraising, Police Journal and Fire Yearbook, and Lion Fraternal Order of Police Assistance Fund LLC . The AOD followed a 2018 cease and desist order issued after an investigation revealed that over $1 million in donations were solicited and received by Mr. Everhart since 2012 in violation of the Maryland Solicitations Act. Mr. Everhart allegedly posed as fake law enforcement charities to collect donations, and failed to register with the Secretary of State as either a charity or fundraiser before soliciting and collecting donations using a cash on delivery service. Donations were found to be used for personal living expenses and not for a charitable purpose. http://www.marylandattorneygeneral.gov/Press/2018/092818.pdf
MD A Consent Order was entered in April 2019 against CopStress, Inc. and Richard Willard. The action was against the charity and its founder for allegedly misleading the public by claiming to operate programs for police officers such as police academy training, rapid response teams to mass casualty events, and licensed counseling for police suffering from post-traumatic stress disorder. The founder and operator ignored a restraining order and continued to solicit donations. The order required CopStress, Inc. and Willard to cease all charitable soliciting and turn over remaining donations to an organization whose mission matches charitable solicitations at issue in the case.
MD In August 2019, a Cease and Desist Order was issued against the Animal Welfare Society of Howard County which was supposed to raise money to take care of animals in need but was failing to do so, falsely represented that it was a no-kill shelter, and filed false registration statements with the Secretary of State.
MD In February 2020, a Cease and Desist Order was issued against Trinity Syndicates Impact (TSI) and its sole operator, Christopher Tate aka Christopher Jefferson who pretended to be a police officer and customs enforcement to solicit donations; used contributions for personal use instead of a charitable purpose; and filed false registration paperwork with their registration to the Secretary of State.
MN In December 2019, Minnesota Attorney General Keith Ellison announced court approval of two settlement agreements that permanently banned American Federation of Police and Concerned Citizens, Inc. (AFPCC), and related charity National Association of Chiefs of Police, Inc. (NACOP), from soliciting charitable contributions in Minnesota. AFPCC was also required to pay restitution in the amount of $298,637 — constituting every dollar that Minnesotans donated to it in the last six years. AFPCC and NACOP’s primary officers and directors also agreed to permanently refrain from doing business in Minnesota. In October 2018, the AGO sued AFPCC for deceiving Minnesotans in multiple ways, including by misrepresenting that donations would only be used to help families of police officers killed in the line of duty. However, the majority of AFPCC’s charitable program spending — 83% — went to paying its fundraisers and other for-profit agents to send mailers with claimed “public education” content, not providing aid to police families. The AGO also alleged that AFPCC misrepresented to donors that their money would be set aside for families in the donor’s local city or county by advertising an “Area Appeal” or “special campaign” for the families in a donor’s local area. In reality, donations were used for all of AFPCC’s expenses nationwide, and were not set aside for any specific city or state. Although NACOP was not a party to the AGO’s lawsuit, an investigation revealed that NACOP, which has a similar mission and which is run by the same leaders as AFPCC, used similar deceptive tactics. https://www.nasconet.org/2019/12/minnesota-attorney-general-ellison-permanently-banstwo-charities-that-deceived-minnesotans-about-supporting-families-of-fallen-police-officers/
WA In May 2019, a stipulated judgment was obtained against Roy Haueter, members of the Haueter family, their commercial fundraiser, and their four charities, which were most recently named Children’s Hunger Relief Aid, Children’s Safety Society, Emergency Relief Network, and Search and Rescue Charities. The defendants agreed to settle following an adverse summary judgment ruling in which the Court found the charities violated state law and existed merely to benefit the Haueter family. The stipulated judgment resulted in a payment of nearly $300,000, suspended penalties, dissolution of the nonprofits, and a lifetime ban on activity in the charity/nonprofit sector. https://www.atg.wa.gov/news/news-releases/ag-lawsuit-leads-lifetime-ban-family-who-used-charitiesdeceive-washingtonians
FTC In March 2019, the FTC announced a settlement with Veterans of America (VOA). Filed as part of the Operation Donate with Honor sweep, the complaint alleged that the principal, Travis Deloy Peterson, made millions of unlawful robocall soliciting donations of cars, boats and other valuable items, ostensibly to benefit veterans. The scheme used several names, including Veterans of America, Vehicles for Veterans LLC, Saving Our Soldiers, Donate Your Car, Donate That Car LLC, Act of Valor, and Medal of Honor. The robocalls allegedly advised consumers that donations would support veterans causes and were tax deductible. The order settling these allegations banned Peterson from charitable solicitations and robocalling, and included a suspended judgment of $541,032. https://www.ftc.gov/enforcement/cases-proceedings/182-3049/veterans-america
MO, FTC Disable Police & Sheriffs Foundation (DPSF) (also doing business as The American Police and Sheriffs Association, and Police Officers Safety Association), and its founder and Executive Director David Kenik, were banned from soliciting charitable contributions under a settlement reached in early 2019 with the FTC and the state of Missouri, for falsely claiming that consumers’ donations would be used to help police officers and families of slain officers, provide life-saving equipment to law enforcement agencies, and provide advanced, specialized training for law enforcement officers and departments. DPSF was dissolved, and a court-ordered settlement imposed a judgement of $9.9 million. https://www.ftc.gov/news-events/press-releases/2019/03/ftc-states-continue-fight-against-shamcharities-shut-down
AR, CA, KS, KY, MN, OH, NY, TN In August 2019, eight states announced resolution of a multistate enforcement action against the New Hope Foundation, a national hospice charity located in Nashville, TN. The states alleged that in 2016, New Hope raised more than $4 million but provided little if any program services. Revenue went to executive compensation and the organization’s for-profit fundraisers. As a result of the settlement, the organization will be dissolved, two of its officers are banned from charity and fundraising activity, and the organization paid $160,000 in damages. https://www.tn.gov/attorneygeneral/news/2019/8/1/pr19-28.html
AK, CO, CT, DC, ID, IA, IL, KS, KY, LA, MS, MN, NE, NV, NH, NY, NC, OH, OK, OR, PA, TX, WI In January 2020, 22 states and the District of Columbia, announced a multistate settlement with PayPal Charitable Giving fund, a 501(c)(3) nonprofit corporation and the charitable arm of PayPal, Inc. The Assurance of Voluntary Compliance (AVC) was reached after a 2-year investigation concerning the adequacy of PPGF, which is a third party fundraising platform, disclosures to potential donors, including disclosures on the intended charity recipient, relationship between PPGF with enrolled vs. un-enrolled charities listed on its platform, PPGF's vetting process, the timing of donations, and PPGF's exercise and notice of its variance power to donors. The AVC required PPGF make unavoidable and prominent disclosures to donors regarding the identified concerns (e.g. donations/contributions are made to PPGF, not the chosen charity; notification to donors when donations are re-directed to one not selected by the donor) and it included a $200,000 donation by PPGF to the National Association of Attorneys General for deposit into the NAAG Charities Enforcement and Training Fund. https://www.nasconet.org/2020/01/attorney-general-leads-multistate-settlement-with-paypalcharitable-giving-fund/
NY, VA In March 2020, New York and Virginia announced a settlement to shut down three nonprofit entities for misleading donors after investigating the Center for American Homeless Veterans, Inc. (CAHV) and Brian Hampton, the charity’s president and founder. The investigation revealed that Hampton, CAHV and its affiliated organizations, Circle of Friends for American Veterans, Inc. and Put Vets First!, reneged on fulfilling the promises of the charity and exploited the public’s goodwill for supporting veterans. As a result of the settlement, CAHV and its two affiliated organizations have shut down, and CAHV and Circle agreed to pay $100,000, which will be directed to three legitimate organizations that assist veterans and homeless individuals. Hampton was also permanently banned from working on access to charitable assets or permitting him to be a decision-maker in any charitable organization. In New York, the matter is part of its ongoing Operation Bottomfeeder, an ongoing initiative that targets fraud networks of charities, for-profit fundraisers and other professionals that exploit popular causes and misrepresent how donations will be spent. https://www.oag.state.va.us/media-center/news-releases/1647-march-5-2020-herring-shuts-downdeceptive-homeless-veterans-charity https://www.scribd.com/document/450493540/Center-for-American-Homeless-Veterans-ConsentJudgment#download&from_embed
Alleged Governance Issues and/or Breach of Fiduciary Duties
CT Connecticut Landmarks (CTL) is a nonprofit organization that owns and shows historic house museums across Connecticut. The AG received allegations of neglect regarding two of the properties that CTL owns, and learned that CTL was considering income from a restricted endowment as unrestricted. The AG investigated CTL's handling of the two properties to determine whether CTL had breached its fiduciary duty of care and reviewed all of CTL's charitable gift funds to make sure that CTL was interpreting all of its charitable funds correctly. In January 2019, the AG issued a report on its findings and conclusions, which required CTL to alter some of its corporate practices and to adhere to the AG’s interpretation of donor intent on two specific charitable gift funds. https://portal.ct.gov/-/media/AG/Charities/Connecticut_Landmarks_Final_Report.pdf?la=en
IL In March 2020, the Illinois Attorney General announced a settlement with the Puerto Rican Parade Committee (PRPC). The PRPC was an Illinois charity that ran an annual Puerto Rican Day Parade and Humboldt Park festival in Chicago. In July 2018, the Attorney General’s office opened an investigation into the PRPC and its former president, Angel Medina, after receiving complaints about alleged financial misconduct, including hundreds of thousands of dollars in questionable spending. The PRPC filed for bankruptcy in 2017 saying it would need to sell its Humboldt Park property in order to resolve more than $900,000 in debt. The bankruptcy court ordered that the property be sold with all net sale proceeds – totaling $623,000 – to be held in escrow until all claims were resolved. The largest claim against the PRPC was filed by Martinez who claimed more than $500,000 in mortgages on the property and sought more than PRPC’s remaining assets. The Attorney General’s office intervened, challenging Martinez’s claims and alleged that Martinez violated state law governing charitable trusts in Illinois. As part of the settlement, Martinez agreed to withdraw portions of her claim and to cap her total recovery. She also agreed to cooperate with the PRPC in providing information about the committee’s assets. Martinez was also prohibited from acting as a charity fiduciary in Illinois or serving as a trustee or board member for any nonprofit entity. Also under the settlement, once the PRPC’s remaining assets are liquidated, the remainder of approximately $30,000 from the sale of the Humboldt Park property must be paid to the Attorney General’s Office for distribution to the Puerto Rican Cultural Center. The funds will be used by the Daniel Ramos Puerto Rican Festival Committee in order to continue the annual Puerto Rican Day Parade and Festival. https://illinoisattorneygeneral.gov/pressroom/2020_03/20200305.html
OH In February 2019, an Ohio Attorney General investigation found that Wings of Love Crusaders, Inc. had accumulated questionable expenses that could not be properly accounted for and/or justified. Under an Assurance of Discontinuance, Wings of Love Crusaders, Inc. agreed to maintain a board of five members, attend board governance training, pay a civil penalty of $1,000 for its misuse of funds, and implement policies and procedures to prevent future misuse of funds. https://www.ohioattorneygeneral.gov/Media/Newsletters/Nonprofit-news/May2019/Enforcement-Actions-Help-Protect-Charitable-Sector
OH In February 2019, the Ohio Attorney General entered into Assurances of Discontinuance with Kelly Youth Services, Joe Kelly, and Tiffany Kelly. An investigation found that Mr. and Mrs. Kelly failed to comply with the requirements of Ohio Revised Code (ORC) Chapter 1716. Further findings indicated that Mr. and Mrs. Kelly breached their fiduciary duties of care to properly manage accounts, to comply with the law, and to act in the best interest of the charity. Kelly Youth Services failed to act to safeguard its charitable assets. The Assurances of Discontinuance agreed upon by Kelly Youth Services, Joe Kelly, and Tiffany Kelly required the organization to adopt proper internal controls to better safeguard its charitable assets. https://www.ohioattorneygeneral.gov/Media/Newsletters/Nonprofit-news/May-2019/EnforcementActions-Help-Protect-Charitable-Sector
WA In mid-2019, the AG settled with a children’s nonprofit known as Holiday Treasure Chest Charity Foundation. In November 2018, the AG had filed suit against the charity and its executive director, Mark Bergeson (a.k.a. Mark Jensen), alleging that the charity made misrepresentations to potential donors and that Bergeson used the organization’s checking account for thousands of dollars of personal expenses. The lawsuit also alleged Bergeson gathered toys and other donations under the guise of distributing them to children in need but, instead, sold the valuable items on Internet auction sites and hoarded the rest in storage units throughout the Seattle area. A consent decree was obtained in which the corporation dissolved and gave its assets to reputable area charities. Hundreds of children received toys and other holiday gifts as a result of the State’s actions. https://www.atg.wa.gov/news/news-releases/ag-ferguson-files-lawsuitagainst-holiday-treasure-chest-founder