Federal/State Actions – Page 10 – National Association of State Charity Officials

May 2, 2018

NORTH DAKOTA – Attorney General Details Investigation of Unlicensed Business for Alleged Fraud – Tore Maras-Lindeman, dba “A MAGIC CITY CHRISTMAS”

BISMARCK, ND – Attorney General Wayne Stenehjem confirmed today that his office is investigating Minot resident Terpsichore “Tore” Maras-Lindeman, doing business as “A Magic City Christmas,” for alleged violations of the consumer fraud laws and charitable solicitation laws. The investigation was initiated in early December, 2017, after the consumer protection division received a media inquiry about claims made by Maras-Lindeman in fund-raising solicitations for a holiday concert supposedly to benefit charities in Minot. Maras-Lindeman is not registered as a charity or professional fundraiser.

“The charitable solicitation law and consumer fraud laws were enacted to protect members of the public. When anyone fails to comply with the reasonable requirements of these laws, it is my office’s duty to investigate and take any necessary action to protect consumers,” said Stenehjem.

When the consumer protection investigators made the initial contact in December last year, they informed Maras-Lindeman that state law requires a person to register with the Secretary of State before soliciting any charitable contributions, and recommended that she discontinue fund raising until she had registered with the Secretary of State. Maras-Lindeman ignored the investigators and for some time continued to solicit donations using the online fundraising sites GoFundMe and Fundly, through Facebook, her website, and by using direct solicitations to businesses in the Minot area.

As the investigation proceeded, investigators learned that Maras-Lindeman also had misrepresented her affiliation with both the Bank of North Dakota and the City of Minot in her solicitations. Without permission, and even after being advised that the Bank of North Dakota could not be a sponsor, Maras-Lindeman used the Bank’s logo in her website solicitations, magiccitychristmas.com. She also used the Coin of the City of Minot on her website and Facebook page, even after the City had repeatedly asked her to remove it. Maras-Lindeman ignored the City’s attempts to contact her and as a result, on October 27, 2017, the City of Minot was forced to issue a press release disclaiming any involvement with Maras-Lindeman or A Magic City Christmas. Even after the supposed benefit concert was then canceled, Maras-Lindeman continued to sell items, now claiming the proceeds were intended for homeless shelters.

The Attorney General’s investigation, which is ongoing, has been hampered by Maras-Lindeman’s refusal to provide requested documentation, information about her supposed charitable efforts, or even to be consistent in her responses. However, Maras-Lindeman has admitted to investigators that the money she raised from the solicitations went directly into the bank account for her business, ML Labs. Maras-Lindeman claimed that ML Labs (also known as ML Laboratory) was registered as a business entity in North Dakota, but only after the investigation was initiated did Maras-Lindeman register the trade name “ML Labs-Events” with the Secretary of State.

Stenehjem noted it has been very difficult to determine the truth among Maras-Lindeman’s various claims. However, he confirmed that the investigation already has determined that Maras-Lindeman has engaged in prohibited or questionable expenditures of donated funds received for the “A Magic City Christmas” event. Bank records confirm that donations were deposited in an October 2017 account and some donations later were used for purchases of fast food and QVC purchases. There also is evidence to suggest that when her personal bank account funds were depleted, Maras-Lindeman made personal expenditures from the donated funds accounts.

“My office offered Ms. Maras-Lindeman a very reasonable settlement for her violations of the charitable solicitation laws and misrepresentations to the public in connection with her solicitations and, unfortunately, she declined the settlement,” said Stenehjem. “Although she has every right to choose to contest the allegations, she must cooperate with our lawful investigation. Instead, she has chosen to make false claims about the purpose or nature of the investigation.”

The Attorney General is also concerned that Ms. Maras-Lindeman has been involved in many lawsuits in North Dakota and other states with different name variations.

“We are required to enforce the charitable solicitation laws for the protection of the public. Efforts by Ms. Maras-Lindeman to characterize the investigation as other than that, including her spurious effort at a frivolous ‘criminal complaint’ do not help. We are therefore determined to see that this matter concludes in a court of law,” said Stenehjem.

Press release here.

April 27, 2018

PENNSYLVANIA: Department of State Takes Action Against Charitable Organizations

Harrisburg, PA – The Pennsylvania Department of State recently ordered four charitable organizations to cease fundraising until they are in compliance with the commonwealth’s law governing charities, Acting Secretary of State Robert Torres announced today.

In March, cease-and-desist orders were issued to the following organizations:

– Voice 4 The Fallen, 34 North Kennedy Street, McAdoo, PA 18237

– National Character Education Foundation, 120 East Beaver Street, Zelienople, PA　16063

– The Angeletti Group, LLC, 17 Village Road, New Vernon, NJ 07976

– H. Freeman Associates, LLC, 2204 Salisibury Road, South Richmond, IN 47374

Acting Secretary Torres noted that those organizations may not solicit donations or conduct fundraising activities until they have come into compliance with the Solicitation of Funds for Charitable Purposes Act.

The Bureau of Corporations and Charitable Organizations maintains a comprehensive list of charitable organizations, professional solicitors and professional fundraising counsel that have been subject to sanctions or corrective measures. This list contains the most up-to-date information on any specific disciplinary action.

Each entry includes the name of the charitable organization, professional solicitor or professional fundraising counsel, address, sanction imposed, a description of the basis for the disciplinary or corrective measure and the effective date.

Anyone who suspects unethical activity by a charitable organization can contact the Bureau’s Division of Charities Investigations/Audits by emailing RA-STBEICIU@pa.gov or by calling (717) 787-0700.

The Bureau oversees the registration of more than 12,000 charitable organizations, professional solicitors and professional fundraising counsel. A list of registration exclusions and exemptions for charitable organizations can be found on the Department’s website.

Violations of the Solicitation of Funds for Charitable Purposes Act may result in disciplinary actions including civil penalties and the suspension or revocation of a registration.

MEDIA CONTACT: Wanda Murren, 717-783-1621

Press release HERE.

April 20, 2018

OREGON: Attorney General Rosenblum Announces Settlement with Race Director of the Portland Marathon

Oregon Attorney General Ellen Rosenblum announced today that the Oregon Department of Justice (DOJ) and the Portland Marathon have reached an $865,000 settlement with Lester Smith, former board member and Race Director of the Portland Marathon.

The settlement requires Mr. Smith to pay the Portland Marathon $865,000, of which $50,000 will be paid to DOJ to reimburse for investigative costs. Under the settlement Mr. Smith is prohibited from serving as a director, officer, or fiduciary of any charitable organization, and requires him to dissolve his for-profit company Next Events, LLC. In addition, he is not able to operate, or be involved with, any foot races in the future, and he is prohibited from seeking reinstatement with the Oregon State Bar.

“Our Charities Section supervises and regulates over 21,000 registered charities in Oregon; this means we have an obligation to make sure each one is run with integrity and in accordance with Oregon charities laws,” said AG Rosenblum. “I am pleased that we were able to work with the new board of the Marathon to evaluate the organization’s financial situation and ultimately assist in recovering substantial funds owed to the Marathon by Lester Smith.”

The Oregon DOJ investigation found that Mr. Smith operated the Marathon for many years without meaningful board oversight. Records revealed that over the years Mr. Smith, or his related companies, received hundreds of thousands of dollars in loans from the Marathon—a practice that is illegal.

“The Portland Marathon is a capstone event in Oregon, and I am hopeful that this settlement will enable more successful events in the future,” said Attorney General Rosenblum.

The Oregon Department of Justice’s Charitable Activities Section supervises and regulates the activities of more than 21,000 charitable organizations in the state. To review financial information of all registered charities in Oregon, visit our database.

Press release here.

April 4, 2018

USDOJ: Justice Department Sues to Stop Attorney From Promoting Nationwide Charitable Giving Tax Scheme

The United States filed a civil complaint seeking to permanently bar Michael L. Meyer, of Southwest Ranches, Florida, from providing federal tax advice for compensation because Meyer allegedly promotes, organizes, and executes a national charitable giving tax scheme that has cost the United States Treasury more than $35 million. The complaint alleges that Meyer executes his scheme through three bogus charities that he controls. The United States also seeks to disgorge the fees that Meyer received from the scheme.

According to the complaint filed in the United States District Court for the Southern District of Florida, Meyer, an attorney licensed in Kentucky and Indiana, advises scheme participants to claim unwarranted charitable deductions for purported contributions to one of three bogus charities that Meyer controls. The complaint alleges that the purported donations are made on paper only and the participants never actually surrender dominion or control of the donated property to the charities. Some of the purported contributions allegedly consist solely of backdated promissory notes created by Meyer as well as fabricated intellectual property. The complaint alleges that Meyer prepares baseless appraisals and false federal tax forms to facilitate the scheme.

Meyer allegedly markets his charitable giving tax scheme nationwide through financial planners and CPAs, and he executes every material aspect of the scheme. The complaint alleges that Meyer sells his scheme by making demonstrably false statements about his experience and credentials, including falsely claiming that he is a licensed Certified Public Accountant and Certified Valuation Analyst, and by making false statements about the legality of his tax scheme.

Return preparer fraud, abusive tax shelters, and transactions involving fake charities are three of the IRS’s Dirty Dozen Tax Scams for 2018, and taxpayers seeking a tax return preparer or a tax adviser should remain vigilant. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details(link sends e-mail)

Press release here.

Complaint here.

March 28, 2018

MARYLAND: Attorney General Frosh, Secretary of State Wobensmith Announce Settlement in Look-A-Like Cancer Charity Scheme

BALTIMORE, MD (March 9, 2018) – Maryland Attorney General Brian E. Frosh and Secretary of State John C. Wobensmith today announced a settlement agreement reached with a look-a-like cancer charity (Cancer Society of America, Inc., dba USA Cancer Foundation, Inc.) based in Maryland that unlawfully used a name similar to the American Cancer Society to collect donations from unsuspecting donors.