As part of a nationwide crackdown on fraudulent charities, Attorney General Edmund G. Brown Jr. is filing today eight lawsuits against 53 individuals, 17 telemarketers and 12 charities that "shamelessly exploited" people's generosity and squandered millions of dollars of donations intended to help police, firefighters and veterans.
Brown's suits are intended to permanently stop the charities' deceptive practices and require the repayment of all funds raised under false pretenses. Brown is seeking involuntary dissolution of eight of the charities.
"These individuals shamelessly exploited the goodwill of decent citizens trying to help police, firefighters and veterans," Brown said. "In point of fact, a shockingly small portion of donations went to those in need, while millions went to pay for aggressive telemarketing and bloated overhead — and in one case — to purchase a 30-foot sailboat."
Brown filed these suits in conjunction with the Federal Trade Commission and 48 other states as part of a nationwide sweep called "Operation False Charity."
In California, just as in the other participating states, the so-called charities raised millions of dollars based on false claims that donors' contributions would benefit police, firefighters and veterans organizations. But in reality, these charities rarely benefit public safety personnel. And, in most cases, 85 percent to 90 percent of donations are used to pay the fees of for-profit telemarketing firms.
Last year, Brown launched an investigation into 12 of the worst offenders, resulting in the eight cases filed today in Los Angeles, Orange, San Bernardino, and San Mateo counties. 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.
Law Enforcement Apprenticeship Program
Brown today sued Los Angeles-based Law Enforcement Apprenticeship Program, its directors and its for-profit fundraiser, Rambret, Inc., for falsely promising contributors that their donations would be used to operate an apprenticeship program for at-risk youth. The program was never operated and no students were ever enrolled in it.
Instead, donations were used to pay for fundraising expenses, the personal expenses of the charity's directors and the purchase of a 30-foot sailboat.
In 2003, Law Enforcement Apprenticeship Program raised $529,863, but only $31,501 — just 6 percent — was spent on its program services. In 2004, the charity raised $372,623, but spent only $5,615 — 1.5 percent — on program services.
Brown seeks to dissolve the charity, to prevent the directors from operating a charity in California again, and to prevent the fundraiser from soliciting funds for a charity in California until it complies with state law.
Brown also seeks a court order requiring the charity to file a report of its receipts and expenses, to recover the funds misappropriated by the directors and civil penalties in excess of $150,000.
California Police Youth Charities
Brown 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.
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.
American Association of Police Officers, Police Protective Fund, and Junior Police Academy
Brown today sued Los Angeles-based American Association of Police Officers, Police Protective Fund, and Junior Police Academy, their officers David Dierks and Philip LeConte, and their for-profit fundraisers for misleading donors into thinking that their solicitors were volunteer police officers and that contributions would benefit donors' local police departments.
The for-profit fundraisers include: West Coast Advertising (known as Professional Communications Network) and Mark Christiansen (doing business as Charitable Fundraising Services).
Additionally, the charities violated both state and federal law when they filed reports with the IRS and the Attorney General's Office that under-reported fundraising and administrative expenses and over-reported the amount spent on charitable programs.
In 2007, for example, Police Protective Fund raised $6.8 million and claimed in its tax returns that it spent $1.7 million on its charitable program. However, that $1.7 million improperly included fundraising expenses, a $350,000 judgment paid to the State of Missouri and other administrative expenses.
Likewise, in 2007, American Association of Police Officers reported in its tax returns that it spent $493,798 on its charitable program. However, out of that amount, $425,000 was paid to the charities' officers and other administrative and fundraising personnel. David Dierks and Philip LeConte were each paid $168,000 in salary, and were also provided with vehicles such as a $45,000 Range Rover and a $25,000 Jeep Cherokee.
Brown seeks injunctive relief to prevent defendants from operating any charities in California and to stop future fraudulent solicitation and reporting practices. Brown also seeks to recover misappropriated funds and civil penalties in excess of $150,000.
Association for Firefighters and Paramedics
Brown filed suit today against Santa Ana-based Association for Firefighters and Paramedics, its president, Michael F. Gamboa and its for-profit fundraisers — Public Awareness, L.L.C., Community Support, Inc., and Courtesy Call, Inc — for falsely claiming that it used donations to assist local firefighters, paramedics, and burn victims.
Brown's office discovered that from 2005-2008, only 3 percent of approximately $10 million dollars was spent on assistance to burn victims. No funds were ever used to assist firefighters and paramedics.
The remainder — some $9.7 million — went to pay for the charity's fundraising expenses and overhead.
In addition, the charity sent fraudulent invoices to people who had not made a pledge and sent letters to donors who had never given, asking them to mail in their "usual" annual donation.
Brown is seeking to dissolve the charity. He also seeks a permanent injunction against the charity's president to prohibit him from any future involvement with a California charity, and civil penalties in excess of $150,000.
Association for Police and Sheriffs, Inc.
Brown today sued Fullerton-based Association for Police and Sheriffs, Inc., its directors and its for-profit fundraisers, Public Awareness, LLC, and Courtesy Call, Inc., for falsely claiming that the majority of donations would be used to help the victims of domestic violence.
Brown's investigation revealed that of the $2.6 million raised in 2005 and 2006, 90 percent of the donations went to pay the for-profit fundraisers. Most of the remaining donations were used to pay salary and other personal benefits for its president, Lloyd Jones, and others.
In violation of federal law, the fundraisers blocked donors' Caller ID. Once on the phone, the fundraisers engaged in aggressive and abusive conduct.
The investigation also found that the charity and its for-profit fundraisers sent pledge confirmation cards to people who never agreed to donate and that some of the charity's fundraisers represented that they were police officers, when they were not.
Brown seeks to dissolve the charity, recover improperly diverted funds, recover civil penalties in excess of $150,000, and to obtain a permanent injunction preventing all defendants from any involvement with a California charity until they comply with California law.
Coalition of Police and Sheriffs, Disabled Firefighters Fund, American Veterans Relief Foundation, et al.
Brown today filed a lawsuit against Santa Ana-based Coalition of Police and Sheriffs, Disabled Firefighters Fund, and American Veterans Relief Foundation, their directors and for-profit fundraisers for falsely claiming that donations would be used for programs to help injured police and firefighters, and homeless veterans.
The for-profit fundraisers include Campaign Center, Inc., KWS Productions, Inc., Tel-Mar Productions, Inc, Community Publications, Inc., and Roman Promotions, Inc. Through 2005, the charities raised $17 million, but only $351,000 — approximately 2 percent — was spent on programs for cops, firefighters, and veterans. The vast majority of donations went to paid telemarketers.
The President, Jeffrey Duncan, used charitable funds for his personal expenses, including trips to Hawaii and to Las Vegas, and for meals, including one for $1,200 at Medieval Times.
Joseph Shambaugh, who founded all three of these charities, was indicted by federal authorities on charges of mail fraud and money laundering. He is currently at large.
Brown seeks to dissolve the charity, to prevent the directors from operating a charity or being involved in charitable fundraising in the future, and to prevent the fundraisers from soliciting on behalf of a charity in California until they comply with state law.
He also seeks to recover misappropriated charitable funds and civil penalties in excess of $100,000 from the charities, their directors and for-profit fundraisers.
Homeless and Disabled Veterans
Brown today sued Washington, D.C.-based Homeless and Disabled Veterans, and its for- profit fundraiser, Atmost, Inc. for falsely representing to donors that their charitable contributions would be used to assist homeless and disabled veterans in California with food, shelter, and self-help programs. Yet no donations were used for these purposes.
Instead, the vast majority of the donations — over 70 percent — were used for fundraising expenses, and the rest went for administrative expenses at its headquarters in Washington, D.C.
Brown seeks to dissolve the charity, to prevent the directors from operating a charity in California again, and to prevent the fundraiser from soliciting on behalf of a charity in California until it complies with state law.
He also seeks to recover misappropriated charitable funds and civil penalties in excess of $150,000 from the charity, its directors and its for-profit fundraiser.
Organization of Police and Sheriffs
Brown today sued San Bernardino-based California Organization of Police and Sheriffs, its directors, officers and its for-profit fundraisers — Civic Development Group, LLC and Rambret, Inc. — for falsely representing that donations would be used to benefit law enforcement officers and that 100 percent of each donation would be received by the charity.
Donors were told that their contributions would be used to purchase bullet-proof vests, make grants to families of officers killed or injured in the line of duty, provide veterinary treatment for service animals injured in the line of duty and mentoring of at-risk youths.
Out of the $30 million raised from 2005 to 2007, over $25 million was spent on fundraising.
No money was spent on bullet-proof vests, no grants were made to families of officers, $6,600 was spent on veterinary treatment for service animals, and $16,500 was spent on mentoring.
Brown seeks to dissolve the charity, to prevent the directors from operating a charity in California again, and to prevent the fundraisers from soliciting on behalf of a charity in California until they comply with state law.
He also seeks to recover misappropriated charitable funds and civil penalties in excess of $150,000 from the charity, its directors 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. 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.