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Minnesota Sues to Shut Down Scam Charity

Organization solicited donations of used cars but what happened next is in dispute

August 27, 2007

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The state of Minnesota is suing ABC Humanitarian Trust and its sole officer and director, Sandra Belisle, charging they solicited contributions of used cars but provided little evidence that they conducted any charitable activities with the proceeds.

In her complaint, Attorney General Lori Swanson contends that from November 1, 2004, through May 31, 2007, more than $137,000 was deposited into ABC Humanitarian Trust’s bank accounts, but that virtually no charitable activities were performed with these funds. Instead, she says, large amounts of cash were withdrawn.

According to Swanson, Belisle and others operated a for-profit used car repair and sale business, and it appears that funds from this for-profit business were funneled through the charitable corporation, and ultimately withdrawn in cash.

The lawsuit also states that ABC Humanitarian Trust was operated largely on a cash basis. From November 1, 2004, through May 31, 2007, over $52,000 in cash was withdrawn from ABC Humanitarian’s bank accounts, without explanation or board approval. From January 1, 2007 through May 14, 2007, alone, 32 separate cash withdrawals were made totaling over $21,000.

As these funds were held by a charity, they must be used for charitable purposes. ABC Humanitarian Trust provided the State with no records showing a charitable use for these funds.

Belisle is further said to have induced a person to invest $50,000 in an auto parts business she claimed was associated with ABC Humanitarian Trust. She then put the money in ABC Humanitarian Trust’s bank account and shortly thereafter withdrew $35,000 to pay the mortgage obligations of the for-profit car repair and sale business.

In the 30 days following the “investment,” Belisle withdrew an additional $11,300 of the funds from ABC Humanitarian Trust’s bank account in cash.

Finally, ABC Humanitarian Trust is accused of violating the Minnesota Nonprofit Corporation Act. The organization does not have a board of directors and has no officers or directors other than Belisle. In addition, the organization has no board meetings and does not keep complete and accurate corporate records, including accounting records.

The failure to follow the legal requirements of nonprofit corporations, including having an active board of directors to supervise the organization, creates a situation that is ripe for abuse.

The suit seeks a court order to stop the organization from operating in light of the above abuse.

“Sham charities have no place in Minnesota,” said Swanson. “It is wrong for a charity to solicit and receive vehicles for its charitable programs when it cannot document that such programs exist and the charity is a shell to run a used-car business.”

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