Tag: Letitia James

Posted on

Attorney General James Wins Dismissal of NRA’s Fraudulent Bankruptcy, Fight for Dissolution to Continue in New York

NEW YORK – New York Attorney General Letitia James today scored a major victory in her case against the National Rifle Association (NRA) when a federal bankruptcy court in Texas rejected the organization’s claims of bankruptcy after the NRA sought to reorganize in Texas, stating, “that the NRA did not file the bankruptcy petition in good faith.” Despite its attempts to escape New York’s jurisdiction, Attorney General James will now continue to pursue her enforcement action against the NRA, in addition to seeking a number of other forms of relief she requested when initially filing her lawsuit last summer.

“Weeks of testimony have demonstrated that the NRA and Wayne LaPierre simply filed chapter 11 bankruptcy to avoid accountability,” said Attorney General James. “This trial underscored that the NRA’s fraud and abuse continued long after we filed our lawsuit. Without a doubt, the board was deceived when bankruptcy language was hidden in Mr. LaPierre’s contract earlier this year. Today’s order reaffirms that the NRA does not get to dictate if and where it will answer for its actions. The rot runs deep, which is why we will now refocus on and continue our case in New York court. No one is above the law, not even one of the most powerful lobbying organizations in the country.”

Last August, Attorney General James filed a lawsuit against the NRA and four of the organization’s current or former top executives for failing to manage the NRA’s funds; failing to follow numerous state and federal laws, as well as the NRA’s own bylaws and policies; and contributing to the loss of more than $64 million in just three years. The suit was filed against the NRA as a whole, as well as Executive Vice-President Wayne LaPierre, former Treasurer and Chief Financial Officer Wilson “Woody” Phillips, former Chief of Staff and the Executive Director of General Operations Joshua Powell, and Corporate Secretary and General Counsel John Frazer.

This past January, in an effort to avoid accountability, the NRA filed for chapter 11 bankruptcy even though the organization still claimed to have healthy financial reserves. Over the course of the bankruptcy trial, LaPierre and other senior leaders admitted that the bankruptcy was simply a way of avoiding New York’s enforcement action, yet still stated that they believed that New York courts and judges could be trusted to fairly and impartially oversee the case.

In today’s decision, U.S. Bankruptcy Judge Harlin Hale of the Northern District of Texas condemned the NRA’s attempts to avoid accountability, making clear that the organization’s actions were “not an appropriate use of bankruptcy.”

Specifically, Judge Hale said, “The question the Court is faced with is whether the existential threat facing the NRA is the type of threat that the Bankruptcy Code is meant to protect against. The Court believes it is not. For the reasons stated herein, the Court finds there is cause to dismiss this bankruptcy case as not having been filed in good faith both because it was filed to gain an unfair litigation advantage and because it was filed to avoid a state regulatory scheme. The Court further finds the appointment of a trustee or examiner would, at this time, not be in the best interests of creditors and the estate.”

Judge Hale also went on to specifically lay blame for the fraudulent bankruptcy at LaPierre’s feet: “What concerns the Court most though is the surreptitious manner in which Mr. LaPierre obtained and exercised authority to file bankruptcy for the NRA. Excluding so many people from the process of deciding to file for bankruptcy, including the vast majority of the board of directors, the chief financial officer, and the general counsel, is nothing less than shocking.”

The case against the NRA will proceed in the New York County State Supreme Court, where Attorney General James will continue to fight for the organization’s dissolution; for removal of two of its top leaders, LaPierre and Frazer; for full restitution of tens of millions of dollars from LaPierre, Phillips, Powell, and Frazer; for penalties; and for the four individuals to never be able to serve on the board of a charity in New York state again.

Lead trial counsel for the Office of the Attorney General (OAG) in this proceeding was Special Counsel for the Litigation Bureau Monica Connell, along with Bureau Chief James Sheehan, Bureau Co-Chiefs of the Enforcement Section Emily Stern and Yael Fuchs, and Assistant Attorneys General William Wang, Sharon Sash, Jonathan Conley, and Stephen Thompson — all of the Charities Bureau; with additional assistance from Legal Assistant Nyna Sargent and Assistant Attorneys General Peggy Farber of the Charities Bureau and Lucas McNamara of the Environmental Protection Bureau. The OAG was also represented in the bankruptcy proceeding by co-counsel Gerrit Pronske, Eric Van Horn, and Jason Kathman of Spencer Fane LLP. The Charities Bureau is a part of the Division for Social Justice, which is supervised by Chief Deputy Attorney General Meghan Faux and First Deputy Attorney General Jennifer Levy.

Posted on

Attorney General James Provides $2.4 Million to Brooklyn Substance Abuse Treatment Programs with Funds Derived from Fraudulent Charity Shut Down by AG’s Office

New York Attorney General Letitia James today provided more than $2.4 million to the Brooklyn Community Foundation (BCF) to fund substance abuse treatment programs throughout Brooklyn. The funds are derived from charitable assets that remained after the Office of the Attorney General (OAG) dissolved Canarsie A.W.A.R.E., Inc. for its participation in a scheme that exploited some of New York’s most vulnerable residents and defrauded Medicaid.

“Substance abuse is a harmful and pervasive issue in so many of our communities,” said Attorney General James. “Although recovery is never an easy journey, it can be a lot easier with access to reliable treatment programs. Today’s agreement ensures that these funds will finally be used in the manner in which they were intended — to support some of our most vulnerable communities. I thank the Brooklyn Community Foundation for their partnership and dedication to helping New Yorkers access these lifesaving treatment services.”

“We are deeply honored and excited to partner with the Office of the Attorney General to redistribute these funds in a way that will repair harm and provide vital resources to trusted and thoroughly vetted community-based health providers,” said Cecilia Clarke, president and CEO of Brooklyn Community Foundation (BCF). “Brooklyn Community Foundation’s approach centers community members as key decision-makers to invest in organizations that share our commitment to racial justice. We hope this partnership will serve as a powerful new model for government and foundation collaboration.”

In 2016, as a part of the OAG’s investigation into fraudulent substance abuse providers and their exploitation of individuals living in substance abuse transitional housing — also known as “three-quarter houses” — the OAG indicted Canarsie A.W.A.R.E. Inc. — a New York not-for-profit organization that provided substance abuse treatment services — and its owner for defrauding Medicaid. In September 2018, Canarsie A.W.A.R.E. pleaded guilty to grand larceny in the first degree. In 2019, the OAG won a New York Supreme Court order to dissolve Canarsie A.W.A.R.E. and distribute its assets for use by other substance abuse treatment programs. Today’s agreement between the OAG and the BCF is in connection with the OAG’s settlement of its claims against Canarsie A.W.A.R.E. Inc.

Under New York’s Not-for Profit Corporation Law, assets remaining after the dissolution of a non-profit organization must be distributed to another non-profit organization engaged in similar activities to those of the dissolving nonprofit. The BCF — a well-established grant-making organization dedicated to mobilizing people, funds, and expertise for a fair Brooklyn — will award grants to Brooklyn not-for-profit providers of substance abuse treatment. The funds will support treatment programs providing technical assistance and capacity-building support to the grant recipients, including assistance with fundraising, financial management, and strategic planning. The BCF will also conduct site visits to the grant recipients, and monitor the recipients’ use of funds through regular reporting requirements and communications. The BCF will award the grants in each of three successive years, beginning in 2021.

“I am pleased that the Brooklyn Community Foundation will be offering grants to substance abuse treatment programs that will operate in our community,” said State Senator Roxanne J. Persaud (SD-19). “The services offered are much needed as we fight the scourge of addiction while helping people to uplift their lives.”

“I applaud Attorney General Letitia James for her efforts to redistribute assets recovered in a previous settlement against a dishonest drug treatment provider back into our communities,” said Assemblymember Nick Perry (AD-58). “The $2.4 million disbursement to the Brooklyn Community Foundation should go a long way to providing much needed substance abuse treatment for those Brooklynites struggling with addiction, and get them on the road to recovery rather than on a path through our criminal justice system.”

“The Substance Abuse and Mental Health Administration reported that in 2019, more than 6 million Black Americans suffered from a mental health illness and or substance abuse issue,” said New York City Council Majority Leader Laurie A. Cumbo. “Mental health and substance abuse are urgent issues that often go unaddressed due to stigma and lack of accessible resources, and COVID-19 has further deepened the mental health and substance abuse crises our communities are facing. Although it is gravely disappointing when patients are victimized by organizations meant to help them, I could not think of a better organization to recover funds from Canarsie’s A.W.A.R.E program. The Brooklyn Community Foundation, located in District 35, has provided over $50 million dollars in grants to non-profit organizations throughout our community for over a decade. I am confident that their community-based approach will allow these newly acquired resources to reach those who need them most at a time when we are all suffering. Thank you to the Charities Bureau for making this possible and to Attorney General James for her unwavering dedication to uplifting our Brooklyn community.”

Posted on

Attorney General James Report Finds That Professional Fundraisers Retain Nearly One-Third of Charitable Campaign Donations. Some Retain More Than Half.

New “Pennies for Charity” Report – Released Ahead of Giving Tuesday – Details Costs
of Fundraising Campaigns Conducted by Professional Fundraisers; In 2019,
Professional Fundraisers Pocketed Nearly $365 Million 

Report Also Offers Key Tips for Donors: Be Careful with Charitable Giving;
Not All Fundraisers Are Created Equal

NEW YORK – In preparation for Giving Tuesday and the holiday season, Attorney General Letitia James today released the annual “Pennies for Charity: Fundraising by Professional Fundraisers” report, which found that nearly one-third of charitable donations ended up in the pockets of professional fundraisers. This year’s report looks at trends in fundraising, such as the rise of online giving, as well as the percentage of funds raised that went to charities.

“Every year, New Yorkers give generously to charity. Unfortunately, not all the money they donate reaches the charities they intend to help,” said Attorney General James. “Today’s report highlights the high percentage of charitable dollars that are pocketed by outside fundraisers rather than reaching the charity itself. My office will continue to combat charity fraud, and I encourage all New Yorkers to follow our tips to ensure that their money is going to a reputable source this holiday season.”

New York has a robust charitable sector, supported by generous giving by New Yorkers. In 2019, more than $1.2 billion was raised in New York state through 824 fundraising campaigns conducted by professional fundraisers on behalf of charities. These campaigns, which are the focus of the report, used a range of methods including special events, direct mail, and telemarketing. The report and the searchable Pennies for Charity database containing the underlying data is posted at www.CharitiesNYS.com. 

Of the more than $1.2 billion raised through campaigns conducted by professional fundraisers, charities netted more than $918 million, or 72 percent of the proceeds, while professional fundraisers’ fees and expenses totaled $364 million, or 28 percent. This is in line with an overall improvement in amounts retained by charities, which the report attributes to a variety of factors including enforcement and donor education efforts by the Charities Bureau. 

This year’s report also analyzed current fundraising trends, such as the rise in online giving. Telemarketing, while continuing to decline as a fundraising method, remained among the costliest mechanisms, with 196 telemarketing campaigns by fundraisers retaining more than 50 percent of funds raised for charities.  

“Pennies for Charity” aggregates information from fundraising reports filed with the Attorney General’s Charities Bureau for campaigns conducted by professional fundraisers on behalf of charities in the previous year. Professional fundraisers must register with the Office of the Attorney General (OAG) and provide financial reports that break down the revenue raised and the expenses generated by the campaign.   

Other significant findings from analyzing the 824 fundraising campaigns covered by this report include: 

  • In 254 campaigns, or approximately 31 percent of the campaigns covered in the report, fundraisers retained more than 50 percent of the funds raised.  
  • Charities retained $918 million overall of the funds solicited from the campaigns; fundraisers retained $364 million.  
  • In 144 campaigns (17 percent), fundraising expenses exceeded charitable revenue. In 2019, this loss to charities totaled more than $17 million.  

The OAG actively investigates suspect fundraising practices. To assist charities in navigating the world of professional fundraisers, the report includes tips for charities hiring fundraisers.  

The report also includes tips for donors, including specific guidance for responding to phone, direct mail, or online solicitations. Key tips include: 

  • Take time to research the organization. Make sure you are familiar with the organization, its mission, and its effectiveness before giving. Always ask for information in writing — and be wary if an organization will not provide information about its charitable programs and finances upon request. Any legitimate organization will be happy to send you information.   
  • Consult charitiesnys.com to make sure that the organization is registered and to learn more about its mission and finances.  
  • Online platforms that host groups and individuals soliciting for causes do not vet those who use their service. Donors should find out whether a charity has authorized the campaign and if their contribution is tax deductible.  
  • Search the charity’s name on the internet for reports of possible scams or law enforcement actions and check the charity’s rating on watchdog sites like Charity Navigator (charitynavigator.org).
  • Know where your money will go. Find out how the charity plans to use your donation, including the services and programs your donation will support. Avoid charities that make emotional appeals but are vague in answering your questions. If you have been contacted by a telemarketer, review the Pennies for Charity database to see how much is spent on fundraising costs and how much is kept by the charity. 
  • Don’t be pressured by telemarketers. If you receive a telephone call from someone asking you to contribute to a charity, you have the right to hang up. Often the caller is a professional fundraiser who is being paid to call you.  
  • If you choose to consider the caller’s request, ask how much of your donation will go to charity and if the telemarketer is being paid. Many telemarketing companies receive most of the money they raise. Be wary of claims such as “all proceeds will go to charity.” Telemarketers are required to identify themselves and their employer and tell you they are being paid to call you. They also must respond truthfully to your questions. Don’t fall for pressure tactics, such as repeated phone calls or threats. These are signs that the organization may not be legitimate. Always remember you have the right to say no to any charitable request.  
  • You can ask to receive information about the cause and a solicitation by mail.  
  • Consider making a plan for your charitable giving so you are not vulnerable to sudden pressure.  
  • Ask to be put on a “do not call” list. You have the right to request to be placed on the telemarketer’s “Do Not Call” list. It is not illegal for telemarketers for charities to call telephone numbers on the FTC’s Do Not Call Registry, but consumers can stop such calls by telling telemarketers not to call them on behalf of specific charities. Telemarketers are required to honor such requests. You may also ask a charity to take you off its solicitation list.
  • Be wary of deceptive tactics and emotional appeals. Watch out for charities with names that resemble those of prominent or established organizations — especially on days designated to charitable giving. Some charities do this in order to confuse donors. Be wary of emotional appeals that talk about problems, but are vague on how donations will be spent.  
  • Don’t disclose personal information. Never give your social security number or other personal information in response to a charitable solicitation. Never give out credit card information over the phone or to an organization you are not familiar with.  
  • If donating online or via text, donate securely. Always make sure that you are using secure methods of payment. When donating online, make sure the website is secure and includes “https://” in the web address. Before hitting send on a text donation, check the charity’s website or call the charity to make sure contributions by text message are authorized. Some text solicitations are scams. Also, remember that donating by text means the organization may not receive the funds until after your phone bill is paid; contributions made directly to a charity can reach them faster.  
  • Never give cash. Give your contribution by check made payable to the charity.   
  • To help in a disaster, give to organizations you know or that have experience in this work. Ask if the charity has already worked in the affected area or has relationships with local relief organizations.  
  • Report suspicious organizations. If you believe an organization is misrepresenting its work, or that a scam is taking place, please contact the Attorney General’s Charities Bureau at bureau@ag.ny.gov or (212) 416-8401. 

Hanna Rubin, Director of Registrations and Fundraising Sections for the Attorney General’s Charities Bureau, authored this report, with the assistance of Charities Bureau Fundraising supervisor Siobhan Blank and Legal Department Document Specialist Rebecca Groves. Data analysis was provided by Deputy Research Director Megan Thorsfeldt and Data Analyst Anushua Choudhury. James Sheehan is the Charities Bureau Chief and Karin Kunstler Goldman is the Deputy Bureau Chief. The Charities Bureau is part of the Social Justice Division, led by Executive Deputy Attorney General for Social Justice Meghan Faux. 

More information about the Attorney General’s Charities Bureau and organizations regulated by the Bureau may be found at https://www.charitiesnys.com/.