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Attorney General Brnovich Warns of Hurricane Ida Charity Scams

 Attorney General Mark Brnovich is warning Arizonans to watch out for Hurricane Ida charity scams. There are already reports of fake organizations popping up asking people for money to help victims in Louisiana.

“It’s disgusting how fraudsters waste no time after a natural disaster to capitalize on people’s goodwill,” said Attorney General Mark Brnovich. “Arizonans are very generous, and I want to make sure they are donating to a legitimate charity that has experience helping victims quickly.”

Hurricane Ida hit Louisiana on Sunday and has caused widespread catastrophic damage. While many are eager to help those in need, Attorney General Brnovich wants consumers to do their homework before donating.

Attorney General Mark Brnovich offers the following tips to avoid scams:

  • Never give on impulse. Don’t give in to high-pressure requests for contributions or donations. Legitimate charities will not pressure you for an immediate donation and are happy to provide information about their charity for you to review.
  • Do your research about the organization and ask questions. For example, how will the funds reach those in need?
  • Obtain written information (including annual reports) about a charity before you donate. Always know how much of your donation will actually go to the charity itself versus administrative costs. You can find out more about a charity through Charity Navigator‘s website or the Better Business Bureau’s www.give.org.
  • Do not give donations in cash or by wire transfer.
  • Make contributions directly to known organizations rather than relying on a third-party.
  • Watch out for charities with names that sound similar to well-known organizations. Oftentimes, these sound-alike names are scams.
  • Be cautious of individuals representing themselves as surviving victims of a disaster or as government officials asking for donations.
  • Do not give unsolicited callers your credit card number or bank account information over the phone, even if the call appears to be legitimate. 
  • Do not click on links in unsolicited emails and text messages asking you to donate. Even if a message seems legitimate, it could be a phishing attempt. If you want to donate, contact the charity at a website or phone number you know to be valid.
  • Be cautious when donating to a GoFundMe fundraiser. It is common for scammers to set up GoFundMe fundraisers after highly publicized events and then disappear with the money.
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California State Senate Advances AG-Sponsored Bill to Provide Oversight and Protection of Online Charitable Donations

The California State Senate today approved Assembly Bill 488 (AB 488), a bill authored by Assemblymember Jacqui Irwin and sponsored by Attorney General Rob Bonta. AB 488 will ensure critical oversight by the California Department of Justice over charitable fundraising that occurs on internet platforms. Over the years, charitable giving through internet platforms has increased exponentially, requiring an update to California’s charitable giving laws. AB 488 will protect both donors and charities from deceptive or misleading solicitations by creating a framework that specifically defines online platform entities and requires them to register and report to the Attorney General’s Registry of Charitable Trusts.

“On top of a national pandemic, our state has been greatly impacted by this year’s wave of devastating wildfires. As Californians rise up to the occasion to help those in need, many will choose to make charitable donations through internet platforms,” said Attorney General Bonta. “To ensure my office’s continued ability to protect the public, we need to be in a stronger position to oversee online charitable fundraising practices. AB 488 will grant my office the ability to properly supervise third-party internet platforms and ensure that donations made online go towards their intended purposes, which is especially important during this difficult time.”

“I am pleased the State Senate voted overwhelmingly to approve AB 488,” said Assemblymember Jacqui Irwin. “After years of discussions and development with stakeholders, California is one step closer to securing the important oversight of the Attorney General that can provide every donor with the confidence that their donations are reaching charities and having an impact in their communities. In recent years donation trends have shifted, with hundreds of millions of dollars flowing through these online charitable fundraising platforms every year. With this new paradigm California must update its laws to provide the same level of oversight as traditional methods of fundraising.”

The California Department of Justice is responsible for regulatory supervision of charities, trustees, commercial fundraisers, and other legal entities that hold or solicit donations for charitable purposes. In recent years, charitable fundraising on internet platforms has grown exponentially, altering the landscape of charitable giving beyond what current law contemplated. Internet companies have developed methods for individuals to donate to charities through websites and phone applications that serve as “charitable fundraising platforms.” As currently written, California’s solicitation laws do not specifically reach these online platforms, resulting in instances of deceit and mistreatment of charitable donations that the Attorney General’s Office is not able to address through enforcement of existing charity oversight laws.

If signed into law, AB 488 will:

  • Create a level playing field for all charitable giving platforms, regardless of business model, by defining two new groups of entities, “charitable fundraising platforms” and “platform charities” that are subject to the Attorney General’s supervision;
  • Require covered entities to provide meaningful and transparent disclosures on their internet platforms, promptly distribute donations, and prohibit solicitations for charities not in good standing with the Attorney General’s Registry of Charitable Trusts; 
  • Permit some instances of soliciting for a charity without prior consent if certain criteria that safeguard against harm to charities and the public are met; and
  • Authorize the Attorney General’s Office to implement regulations to require donor notification and reporting requirements, and to encourage transparency and accountability.

The text of AB 488 is available here.

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Hurricane Scams: AG Jeff Landry Warns Citizens Of Potential Charity Fraud

 In the wake of Hurricane Ida, Attorney General Jeff Landry is warning citizens not to fall prey to those looking to exploit their charitable giving.

“While natural disasters can bring out the best in most people, they unfortunately can bring out the worst in others as well,” said Attorney General Landry. “So many of our neighbors need help; and with that in mind, I encourage all Louisianans to make sure their donations are actually going to those in need.”

Attorney General Landry offers the following quick tips before making a charitable donation:

  • Be wary of charities that arise immediately after a natural disaster. Learn more about a charity’s trustworthiness at the Better Business Bureau’s Wise Giving Alliance.
  • Avoid cash donations if possible. Pay by credit card or write a check directly to the charity.
  • Before clicking on a link to donate online, make sure you know who is receiving your donation. Visit the FTC’s Donating Through Crowdfunding, Social Media, and Fundraising Platforms for more information.
  • Trust your gut. If you see any red flags, or if you’re not sure about how a charity will use your donation, consider giving to a different one.
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Attorney General Ellison restructures charity and replaces its leadership following more than $2 million in self-dealing transactions

Minnesota Attorney General Keith Ellison announced today that his Office has replaced the leadership and overhauled the governance of the Minnesota nonprofit BFW Institute of Education & Research (“BFW”), also known as Pain Free Patriots, in a settlement agreement filed in Ramsey County District Court. BFW allegedly violated Minnesota law when its leadership directed that its charitable grantees seek pain relief only at insider-owned businesses, made grants of more than $2 million to those insider-owned entities over a period of four years, and turned a blind eye to hundreds of thousands of dollars in debt that BFW’s founder, Douglas V. Huseby, directed BFW to take from and make payable to him and his affiliated entities. 

“Nonprofits that serve our military servicemembers are entrusted with not only charitable dollars but the public’s trust and commitment to do the right thing.  Any nonprofit’s money should be used exclusively to further its charitable mission, and not to line the pockets of its insiders while doing so,” Attorney General Ellison said.  “Under its prior leadership, BFW breached its duties and that public trust by letting conflicts of interest run rampant, and its board of directors failed to recognize and prevent these abuses from occurring.  I am optimistic about BFW’s future under its new leadership, however, and thank them for working with our Office to put controls in place to protect the organization and its charitable mission going forward.” 

BFW issues grants for pain-relief care to veterans, first responders, law enforcement personnel, and their family members. The court order that the Attorney General’s Office filed today alleges that, under prior leadership, BFW approved only its related pain-relief provider, Ultimate Wellness Center (“UWC”) for grantees to seek care.  BFW’s relationship with UWC — which is wholly owned by BFW’s founder — had never been competitively evaluated, appropriately documented, or negotiated at arm’s length.  

BFW’s structural issues also contributed to unchecked conflicted decision-making. These conflicts took several forms, including:  

  • Four of BFW’s five directors had a financial interest in or were otherwise affiliated with UWC or in the two entities subcontracted to provide patient care at the clinic. 
  • None of BFW’s “approved provider” relationships, financial transactions, or other conflicted director arrangements were disclosed to or discussed by the Board of Directors when it entered into transactions, renewed agreements, or elected directors to the Board. 
  • Save for one, none of BFW’s board members signed required annual statements disclosing potential conflicts. 
  • BFW gave its founder and its Treasurer the authority to borrow money on behalf of the corporation and did not require the Board to approve loans—even those taken from BFW’s founder. 

As a result, BFW became heavily indebted to its founder and his related entities. BFW started borrowing money from its founder and his businesses as far back as FYE 2012, when it owed $88k. As of FYE 2020, BFW owed $712k to its founder individually and $1k to one of his businesses. The loans were not board-approved, had no written agreement, and some were not disclosed on BFW’s tax returns as insider loans. The loans were ostensibly taken out to fund veteran care, but grantee checks were to be redeemed only at insiders’ for-profit care providers. From 2016 through 2019, BFW made $2,020,607 in grants for care that were to be redeemed at those insider-owned providers. 

In this court order filed today, BFW agrees to secure the wholesale replacement of its board of directors and officers, including permanent separation from the organization of BFW’s founder, Douglas V. Huseby. The new BFW board will undertake formal reviews of the debts owed to its founder and determine all claims and remedies BFW may have arising out of the Attorney General’s allegations. BFW will also implement a series of governance reviews and changes, including adopting a written policy requiring competitive arm’s-length bidding for services, and take other steps to prevent these same types of abuses from happening again. 

A copy of the settlement is available on the Attorney General’s website. 

In Minnesota, boards of directors and executives owe fiduciary duties to act in the best interests of the charities that they serve, including putting the interests of the nonprofit above any personal financial interests. The Attorney General’s Office has additional information about these fiduciary duties, as well as other resources to help nonprofit leaders properly serve their organizations, on its web site at www.ag.state.mn.us/Charity/InfoNonProfits.asp. To review this information — or to file a complaint about a nonprofit — contact the Attorney General’s Office by calling 800-657-3787 (Greater Minnesota) or (651) 296-3353 (Metro area) or submitting an online complaint through the Attorney General’s website at www.ag.state.mn.us/Office/Complaint.asp.

Tips before donating to charities claiming to help veterans: 

  • Do your homework first.  Investigate how a charity actually uses donations that it receives. People can research this information using the “Search for Charities” tab of Attorney General’s website, www.ag.state.mn.us, or by calling the Attorney General’s Office at (651) 296-3353 or (800) 657-3787. 
  • Be wary of high-pressure tactics. Don’t feel pressured to donate on the spot just because a charity claims to have an urgent need. This should be especially true if the person asking for money contacts you through unrequested telemarketing calls or mail solicitations. Reputable charities will happily accept your donation when you are ready to give. 
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Attorney General Moody and Governor DeSantis Secure $5 Million Following Action Against FCADV and Former CEO Tiffany Carr

Attorney General Ashley Moody and Governor Ron DeSantis today announced a global settlement agreement requiring the Florida Coalition Against Domestic Violence and former FCADV CEO Tiffany Carr to repay the state and domestic violence centers millions of dollars. The settlement follows legal action taken by Attorney General Moody and by the Florida Department of Children and Families in March 2020 to preserve FCADV assets and recover misused state grant funds paid to Carr as excessive compensation. The agreement, which remains subject to court approval, resolves multiple pending civil actions but has no bearing on the ability of law enforcement to bring criminal charges associated with the misuse of taxpayer and charitable funds. Additionally, under the settlement agreement, all parties agree to a judicial dissolution of FCADV—establishing a process to liquidate and dissolve the organization.

Attorney General Ashley Moody said, “For several years, FCADV and Tiffany Carr concocted to pay herself an excessive compensation scheme, millions of dollars meant to benefit domestic violence victims. When uncovered, this scheme threatened to disrupt funding to domestic violence centers. I am pleased that through these actions, we succeeded in getting rid of the bad management, dismantling the organization, implementing a new system to serve victims of domestic violence and recouping millions of misappropriated funds.

“Nonprofit officers and directors who administer taxpayer funds take note: you have a heightened responsibility to use that money prudently. Today is a positive step towards restoring faith in the system and returning funds to the rightful recipients—ensuring domestic violence survivors receive the services and help they need to heal in a safe and secure environment.”

Governor Ron DeSantis said, “Today’s settlement is a win in our fight to recover money that was intended to help families rebuild after facing domestic violence. This organization acted in greed, abusing state dollars meant to serve families during their most vulnerable times. I am thankful this injustice was righted today with the return of this money.”

DCF Secretary Shevaun Harris said, “Florida taxpayers deserve full accountability and transparency. The FCADV was deceptive with state funds, and I thank Governor DeSantis and the Florida Legislature for the justice served today. We will continue working to ensure survivors receive the care and support they need while remaining transparent with the Legislature and taxpayers.”

Following a series of news reports and a Florida House investigation that uncovered millions of dollars in grossly excessive compensation paid to Carr, Attorney General Moody took legal action against FCADV and Carr for the misappropriation of public funds and private donations. In response to Attorney General Moody’s motion, the court appointed a receiver over FCADV and its foundation to control their assets and property. DCF and the court-appointed receiver also filed actions against FCADV’s officers and directors. The settlement resolves five pending lawsuits brought by the Florida Attorney General’s Office, DCF, the court appointed receiver, Mark Healy, and Hanover, one of FCADV insurers.

Through the settlement, former FCADV officers and directors will pay more than $3.9 million to DCF and the receiver—including a more than $2 million payment by Carr. Per the settlement agreement, former FCADV officers Patricia Duarte and Sandra Barnett will pay a total of $60,000. FCADV insurers will pay the remaining funds from the $3.9 million payment, totaling more than $1.7 million. Additionally, more than $1 million currently in accounts of FCADV’s foundation will go directly to domestic violence centers across the state.

The dissolution of FCADV will include a claims process for creditors, overseen by the receiver and court. The process will establish a claims priority, giving DCF priority as a creditor with an allowed claim of more than $2.8 million. There is a possibility of additional recovery by DCF through the liquidation of FCADV’s assets and the sale of property and will be applied to the judgment balance.

Additionally, FCADV will stipulate to a judgment for more than $6 million, with the $3.9 million settlement funds to be applied to the judgment balance.

Under the settlement agreement, eight non-party state agencies agreed to provide releases to the directors and officers to facilitate the agreement. In addition to the Florida Office of the Attorney General and DCF, the Florida Department of Agriculture and Consumer Services, Florida Department of Economic Opportunity, Florida Department of Education, Florida Department of Elder Affairs, Florida Department of Emergency Management, Florida Department of Financial Services, Florida Department of Health and Florida Department of Revenue each provided releases.