Operation False Charity
Three Lawsuits Filed Against Local Charity
For decades, BBBs have been issuing warnings to prospective donors about charities that spend little on actual program services. At the end of May, the California Attorney General’s office filed eight lawsuits against 53 individuals, 17 telemarketers and 12 charities that exploited donors’ desire to help police, firefighters and veterans associations.
The goal is to stop the charities’ deceptive practices and acquire the repayment of all funds raised under false pretenses. The Attorney General is seeking involuntary dissolution of eight of the charities.
One of these charities is located in our own back yard; California Police Youth Charities located in Sacramento. Since January 1, 2009 the Better Business Bureau has received over 118 inquiries from potential donors about this charity. The BBB has attempted on four separate occasions to contact this company in order to provide potential donors with information regarding their fundraising practices and programs, and to date, has received no response. Our report on this organization has alerted prospective donors to the organization’s unwillingness to disclose the financial information donors need to make wise giving decisions.
“It’s terribly unfortunate that in these economic circumstances, shameless sound-alike charities are prospering due to the goodwill of decent citizens trying to help,” said Barry Goggin, president of the BBB serving northeast California. “The fact is that in most cases, 85%-90% of donations are used to pay aggressive telemarketers, and hardly any part of the donation actually goes toward the cause.”
The Attorney General filed these suits in conjunction with the Federal Trade Commission and 48 other states, including California, as part of a nationwide sweep called "Operation False Charity."
It is estimated that since 2005, hundreds of thousands of Californians have been deceived by the solicitation campaigns these charities and their fundraisers have conducted.
From the Attorney General’s Notice of Action:
People v. California Police Youth Charities, et al.
the California State Attorney General’s office today sued Sacramento-based California Police Youth Charities, its executive director and its for-profit fundraisers -- National Consultants, Inc. and Public Appeals, Inc. -- for falsely promising contributors that 100 percent of donations would go to support the charity's programs to help at-risk youth. In reality, less than 20 percent of the $9 million raised in 2006 and 2007 was spent on charitable programs.
The charity also filed false documents with the IRS and the Attorney General's Office. In 2006, the charity reported that it made almost $1 million in grants, when it actually made grants totaling only $110,000.
The Attorney General’s suit against the charity, its executive director and its for-profit fundraisers contends that they:
- Conspired to defraud donors.
- Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
- Engaged in reporting violations in violation of Government Code sections 12586 and 12599.
- Engaged in unfair business practices in violation of Business and Professions Code section 17200.
- Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
- Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
- Knowingly filed false public documents in violation of Corporations Code section 6215.
Brown seeks a permanent injunction to end these deceptive solicitation practices. He also seeks to recover misappropriated charitable funds and civil penalties in excess of $100,000 from the charity and its for-profit fundraisers.
The Attorney General's Office offers the following tips to potential donors to help them avoid being the victims of charity fraud:
- If you receive an unsolicited call asking for a donation, it is most likely from a paid telemarketer who may keep a substantial part of your donation as payment of fundraising fees.
- Recognize that the words 'veterans' or 'military families' in an organization's name don't necessarily mean that veterans or the families of active-duty personnel will benefit from your donation.
- Donate to charities with a track record and a history. Charities that spring up overnight may disappear just as quickly.
- If you have any doubt about whether you have made a pledge or a contribution, check your records. If you don’t remember making the donation or pledge, resist the pressure to give.
- Check out an organization before donating at www.bbb.org. Some phony charities use names, seals and logos that look or sound like those of respected, well-established organizations.
- Ask the soliciting charity or the paid fundraiser what percentage of your donation will go towards fundraising expenses and what percentage will go towards the charity's charitable purpose.
- Do not send or give cash donations. For security and tax record purposes, it is best to pay by check made payable to the charity.
- Ask for a receipt showing the amount of your contribution.
- Be wary of promises of guaranteed sweepstakes winnings in exchange for a contribution. You never have to give a donation to be eligible to win a sweepstakes.
To view the full account visit http://ag.ca.gov/newsalerts/release.php?id=1746