May 24 2019
Haueter family operated four sham charities, keeping more than $1M from Washington donors for themselves
SEATTLE — Attorney General Bob Ferguson today
announced that as a result of his lawsuit, a family who operated a group
of sham charities are banned for life from all activity in the charity
sector and must pay nearly $300,000 to the Attorney General’s Office. A
judge previously ruled that the Haueters broke the law in multiple ways
operating its charities.
Over many years, the family used its four charities in an elaborate,
deceptive scheme to solicit donations from Washingtonians that they
instead used to enrich themselves by more than $1 million.
“The Haueters used an elaborate, deceptive scheme to use donors’
money for their own personal gain,” said Ferguson. “As a result of my
office’s lawsuit, this family will no longer take advantage of the
generosity of Washingtonians.”
Today’s resolution
prohibits Roy Bronsin Haueter, his wife, and two of his children and
their spouses from soliciting for any charitable cause in any state,
unless it supports a minor child or grandchild’s fundraiser and the
amount is less than $2,000. As a result of the lawsuit, the family
members cannot serve in any executive or financial role at any
charitable organization, cannot own or operate a commercial fundraiser,
cannot act as fundraising consultants and cannot serve as trustees of
any charitable trust.
The Haueter family must pay nearly $300,000 to the Attorney General’s
Office. Additionally, the family is required to sell most of their
Leavenworth, Maple Valley, and Moses Lake properties and use the
proceeds to fulfill the payment. Based on the family’s financial
disclosures, this represents most of their current assets.
If the family members violate the terms of the resolution, they could face civil penalties up to $5 million.
Case Background
Attorney General Ferguson filed a lawsuit
in December 2017 asserting that the Haueters’ charities were a sham
that the family used to enrich themselves by more than $1 million.
The family operated four charities, most recently named Children’s
Hunger Relief Aid, Children’s Safety Society, Emergency Relief Network
and Search and Rescue Charities. After Ferguson filed his lawsuit, the
Haueters dissolved two of these, but continued to operate the remaining
two using the same deceptive tactics.
The charities’ financial documents sometimes claimed the
organizations spent up to 99 percent of donations on their charitable
programs. In reality, the Haueters’ charities provided little, if any,
benefit at all.
The Attorney General’s investigation, which included a review of tax
and other financial records, revealed that the Haueter family was the
primary beneficiary of the donations. Between 2011 and 2017, the
charities reported that they collected $3.6 million from donors through
their deceptive outreach. Out of that money, it appears the family
retained around $1.4 million for themselves. Records indicate that most
of the remaining funds went toward administrative costs, such as postage
and rent.
In his motion for partial summary judgment,
Ferguson outlined the family’s deceptive behavior: enriching themselves
with charitable donations, failing to give donors the true name and
location of the charities they were donating to, exchanging funds
between charities with very different missions and providing little, if
any, assistance to the needy people they claimed to help.
In November 2018, a King County Superior Court judge agreed
with Ferguson that the Haueter family’s deception violated the
Charitable Solicitations Act and the state Consumer Protection Act. As a
result of Ferguson’s lawsuit, the court required the Haueters to
dissolve all of their remaining charities.
Haueters deceived donors with donation solicitations
Roy Bronsin Haueter, his wife, and his children and their spouses
operated four charities and a commercial fundraiser. Over many years,
the four charities went by 23 official names and 19 “doing-business-as”
entities and claimed to benefit several vulnerable groups, including
foster children, war widows and cancer patients.
Over the past eight years, the fundraiser exclusively served the four
charities, making millions of calls and disseminating tens of thousands
of donation solicitations.
The four charities often solicited the same donors multiple times a
year under the guise of different local charities, without disclosing
where the donor’s money actually went. One Sumner resident received
eight solicitations using six different names from the Haueters’ four
charities in 12 months.
Many Washingtonians donated to the Haueters’ organizations believing
their money would go toward one beneficiary, when in fact that money
went toward a completely different person in need, or to enrich the
Haueters themselves.
No matter the charities’ claimed missions, they all, with minor
exceptions, provided “charity” in the same way: A small portion of the
donations and grants went toward gift cards distributed either to Head
Start programs or to low-income children at “shopping sprees.”
Deceiving donors into believing their donations would help local
people in need and using donations for causes other than the donor
intended, as the Haueters did, are violations of the Charitable
Solicitations Act and the state Consumer Protection Act.
Assistant Attorneys General Joshua Studor and Lynda Atkins handled the case.
More information about how individuals can protect themselves from charity scams can be found here.
The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Visit www.atg.wa.gov to learn more.
