Charities

LOS ANGELES — Attorney General Edmund G. Brown Jr. today announced a settlement with a charity that “betrayed the trust of its donors” by using deceptive fundraising tactics and diverting thousands of dollars from the care of burn victims to pay for meetings in resort communities.

“The trustees of this charity grossly abused their responsibilities as guardians of charitable assets,” Brown said. “They betrayed the trust of donors by squandering donations on such things as an expensive Caribbean cruise and trips to posh resorts.”

The Association for Firefighters and Paramedics, Inc., based in Santa Ana, misrepresented how and where donations would be spent, and mailed out invoices for pledges that had never been never made. Board members also diverted $33,000 from the charity for out-of-town board meetings in San Diego and Las Vegas, and a Caribbean cruise for board members and their families before a meeting in Florida.

The settlement, filed in the Orange County Superior Court, recovers $100,000 in funds diverted from the charity, plus attorney’s fees and investigative costs. For the next four years, the charity’s fundraising materials and program expenses will be closely monitored.

In May 2009, Brown’s office filed eight lawsuits against 12 charities and 17 fundraising groups that performed telemarketing on their behalf. The lawsuits were filed as part of a nationwide effort to crack down on fraudulent fundraising activities by or on behalf of charities with names that give the false impression that the charities are associated with public safety organizations.

Through its investigation, Brown’s office obtained a list of California residents who donated to the Association for Firefighters and Paramedics. Responses to a questionnaire sent to those California residents revealed that telemarketers calling on behalf of the charity told people their donation would be used to help pay for the care of burn victims in their area, along with supporting the fire department and paramedics in their town.

The charity’s website reiterated this claim, noting that the charity would seek out cases “within a reasonable radius of your area so that the impact of your donation can be felt close to home.”

In fact, the grants were only made to Southern California residents, even though funds were solicited nationwide, and none of the funds were used to support local fire departments or paramedics. Further, donors who asked were told that 80 to 100% of their donation would go to the charity when, in fact, the charity received less than 15 percent. Eighty to ninety percent of the donations received were used to pay for the charity’s fundraising expenses.

A copy of the settlement with the Association for Firefighters and Paramedics is attached.

SAN FRANCISCO – Concluding an investigation into fundraising practices at California State University at Stanislaus, Attorney General Edmund G. Brown Jr. announced today that the CSU Stanislaus Foundation has agreed to improve oversight of the money it raises and spends for the school.

“We examined whether money given to a charitable foundation was handled appropriately, but found no violation of law,” Brown said. “However, the foundation board has agreed to make changes to improve oversight of its funds.”

Brown’s Charitable Trusts Section found that the foundation exercised inadequate oversight of its $20 million in assets, but found no misuse of its funds and no violations of state law.

In April, at the request of state Senator Leland Yee of San Francisco, Brown agreed to investigate the foundation, including whether it was spending its money for the benefit of the campus as it promises its donors, the university and the public. Brown also investigated the refusal of CSU Stanislaus to turn over records of an appearance by Sarah Palin at a university fundraising event.

Subsequently, Californians Aware, a non-profit watchdog group, filed a civil lawsuit against both the university and the foundation to compel disclosure, and Brown suspended his investigation pending resolution of the lawsuit.

Brown’s audit showed that the foundation’s accounting procedures were inadequate, it failed to understand fully its duties and responsibilities under the law – including basic charitable trust concepts – and it failed to implement its own auditor’s recommendation to prepare a budget for all fundraising events. Recently, the foundation has been working with an independent auditor to rectify these lapses.

The foundation’s board of directors agreed to:

• Participate in directors’ training on management of charitable organizations and the fiduciary duties of charitable boards of directors.
• Consider immediately all recommendations made by its independent auditor.
• Ensure that its relationships with all outside fundraisers comply with California law.
• Ensure that it consistently follows all its fiscal and governance policies.

The Attorney General’s Charitable Trusts Section oversees charities to make sure they comply with the law and their articles of incorporation. The Attorney General is authorized to bring legal actions against charities if they misuse funds under their control or otherwise fail to follow the law.

The closing letter to CSU Stanislaus is attached.

MONTEREY – Attorney General Edmund G. Brown Jr. has filed a lawsuit to shut down the Monterey County AIDS Project and recover more than $2.8 million intended for the benefit of people affected by HIV/AIDS that was illegally diverted to other uses.

Brown said that former officers and directors of the Seaside charity, called MCAP, took some of the money for personal use and for-profit ventures, in violation of state law and a May 2000 court order specifying that at least $1.8 million be used “solely for the purpose of providing housing for people with the HIV disease.” The complaint alleges that another $1 million in other grants and donations was misspent as well.

“The duty of these officers and directors was to protect the charity’s assets so the funds could be used for the support of very sick people,” Brown said. “Instead, they violated their trust and spent the money any way they wanted.”

The Attorney General’s lawsuit, filed Friday in Monterey County Superior Court, seeks to dissolve MCAP, obtain a complete accounting of its finances, and recover any remaining assets dissipated through “the mismanagement and neglect of former officers and members of its board of directors.” Brown also seeks return of assets that were illegally diverted. Sixteen former officers and directors are named.

The complaint describes a scheme in which the MCAP officials, over nearly a decade, drained the organization’s coffers of money earmarked for HIV/AIDS patients.

The organization’s record-keeping was so sloppy and incomplete that it’s hard to determine exactly where all the money went. MCAP continued to provide housing and services for AIDS patients, but at a lesser level than its overall expenditures would suggest.

Some of the charity’s money was spent on unauthorized expenditures, such as meals at expensive restaurants, personal expenses on credit cards, purchasing items for personal use at auctions, personal moving and storage expenses, a personal mortgage payment, and steam-cleaning a carpet in a private residence.

MCAP was created in 1985 to provide support, resources and services, including housing assistance and hospice care, for HIV/AIDS patients in Seaside, north of Monterey.

Eleven years ago, MCAP received $1.8 million in cash and property from the estate of Douglas E. Madsen, a Monterey County resident, with the restriction that the bequest be used for the sole purpose of housing active AIDS patients.

But, according to Brown’s complaint, more than $2.8 million of charitable assets, including the Madsen money, was “misappropriated, misapplied or wasted.” In 1999, MCAP listed assets of $2.1 million. By 2004, that had dwindled to $1.4 million, and by 2007, only $205,000 was left.

As Attorney General, Brown is the official charged with ensuring that charitable organizations in California spend their money for the purposes specified by their founding documents, internal policies and state law.

MCAP’s filings with the Attorney General’s Registry of Charitable Trusts can be found at http://ag.ca.gov/charities/index.php

The complaint is attached.

SAN FRANCISCO – Attorney General Edmund G. Brown Jr. announced today that he has launched a broad investigation into the California State University Stanislaus Foundation to include an examination of its finances and the alleged dumping of documents into a university dumpster.

This action follows an inquiry Brown began last week into whether the CSU Stanislaus Foundation violated the California Public Records Act. On April 7, State Senator Leland Yee asked Brown to investigate the refusal of California State University Stanislaus to turn over records, under the Public Records Act, pertaining to the $500-a-plate June 25 speaking engagement of former vice presidential candidate Sarah Palin at the university’s 50th anniversary gala. Palin’s compensation for speaking at the CSU Stanislaus gala hasn’t been disclosed, but she earned $100,000 for speaking in February at a Tea Party convention in Nashville.

The expanded inquiry will seek to determine whether the foundation, which has assets of more than $20 million, is spending its money to benefit the campus, as it promises donors, the university and the public. The CSU Stanislaus Foundation spends more than $3 million each year on university endeavors. The Attorney General is asking university officials to preserve foundation documents.

“We are taking this action to make sure that the money raised goes toward the intended educational purposes and not a dollar is wasted or misspent,” Brown said, “Prudent financial stewardship is crucial at a time in which universities face vastly decreased funding and increased student fees.”

The Attorney General oversees charitable organizations to make sure that they comply with the law. Brown’s office has recently sought records of several foundations following allegations of improprieties including a no-bid contract to a foundation board member, a loan -- with a large loss -- to a former foundation board member, a $1.5 million-dollar loss because of bad debts, a questionable real estate deal and a $200,000 low-interest loan to a university president.

The university foundations provide crucial financial help to state universities, supplementing student fees and state support for scholarships, academic programs, buildings and operating expenses.

Brown said his office would also review documents obtained from Yee today, including part of Palin’s speech contract, which students say they plucked out of a dumpster near the CSU Stanislaus administration building. Investigators will first attempt to determine whether the documents are authentic and how they ended up in the dumpster.

“This is not about Sarah Palin,” Brown said. “She has every right to speak at a university event, and schools should strive to bring to campus a broad range of speakers. The issues are public disclosure and financial accountability in organizations embedded in state-run universities. We’re not saying any allegation is true, but we owe it to the taxpayers to thoroughly check out every serious allegation.”

The assets controlled by 95 auxiliary bodies and foundations associated with the entire CSU system amount to $1.34 billion, according to the CSU chancellor’s office. UC system foundations control another $4 billion in assets.

The Attorney General’s investigation is being conducted by its Charitable Trusts Section, which works with charities to make sure they comply with the law and their articles of incorporation. The Attorney General is also authorized to bring legal actions against charities if they misuse funds under their control.

For more information on the Attorney General’s Charitable Trusts Division, see http://ag.ca.gov/charities.php.

Oakland - Attorney General Edmund G. Brown Jr. today is encouraging Californians to make charitable donations for victims of the devastating earthquake in Haiti, but warns citizens to avoid “scam artists” who may prey on the goodwill of California donors.

“After every tragedy, a wave of scam artists take advantage of generous individuals who want to help the victims of a tragedy,” Brown said. “It’s important to thoroughly research charitable organizations before you write a check.”

The Attorney General’s Office regulates charities and professional fundraisers in order to prevent the misapplication of charitable donations made by Californians. Brown offers the following tips on how to give wisely in order to assure that donations will be used for the intended purpose:

1. Carefully review disaster-relief appeals before giving. In times of disaster, many “sound-alike” organizations and sham operations solicit donations.

2. Know the charity before you donate. Review the charity’s website and written material to assure the program is one you want to support. Check the organization’s financial filings to see how it spends its assets, how long it has been operating and what program services it offers.

3. Make sure the charity is registered in the Attorney General’s Registry of Charitable Trusts. Registration does not guarantee that a charity is effective, but it is an important indicator. A searchable database is available at http://ag.ca.gov/charities.php.

4. Beware of organizations that don’t have a track record. Only give to established charities, not organizations that seem to spring up overnight. Again, check the Registry database to confirm this information.

5. Take action on your own rather than responding to solicitations. Seek out known organizations and give directly, either by calling the organization, using the organization’s official web site, or mailing a check to the address listed on the organization’s website.

6. Listen closely to the name of the group and beware of 'copycat' names that sound like reputable charities.

7. Avoid donating through email solicitations. Clicking on an email may lead you to a website that looks authentic, but is established by identity thieves seeking to obtain money or personal information.

8. Do not give cash. Write checks to the charitable organization, not a solicitor.

9. Do not be pressured into giving. Even in times of emergency, reputable organizations do not expect you to contribute immediately if you are unfamiliar with their services. Be wary of appeals that are long on emotion, but short on details about how the charity will help disaster victims.

10. If you are contacted by a solicitor, ask what percentage of your donations will be used for charitable activities that help victims and how much will be used to pay for administrative and fundraising costs. State law requires solicitors to provide such information if requested by donors. Be wary of fundraisers who balk at answering.

11. Find out what the charity intends to do with any excess contributions remaining after victims' needs are met.

12. There are many forms of giving. Alternative forms of giving include charitable gift annuities, in-kind contributions, and endowments.

For additional tips on charitable giving, go to http://ag.ca.gov/charities/charit_giving.php. Information on national charities is available from the Better Business Bureau's Wise Giving Alliance at 800-575-4483 or www.give.org.

Californians who believe they or others have been victimized by fraudulent charitable solicitation can file a complaint online with the Attorney General's Registrar of Charitable Trusts at http://ag.ca.gov/charities.php.

Los Angeles –Attorney General Edmund G. Brown Jr. today reached a settlement with UCLA Professor Gerald D. Buckberg, M.D., and five officers of the nonprofit L.B. Research and Education Foundation (“L.B.”) that forces them to stop using the charity as a “personal bank account” to finance their business ventures.

“Professor Buckberg and his associates used the charity as a personal bank account to finance their research and business ventures,” Brown said. “This self-dealing is a clear breach of their fiduciary duties and under today’s settlement, Buckberg must return $140,000 in diverted funds to the charity.”

Buckberg founded L.B. in 1997 and has served as the charity’s director, chief executive officer, and manager. The purpose of the charity, as stated in the articles of incorporation, is to “provide help to persons with physical and psychological problems, provide funding for research activities related to physical or psychological problems and to provide funding for scholarships and other programs that improve education.”

Under California law, “no part of a charitable organization’s income or assets may inure to the benefit of any director, officer, member or private person.” However, an investigation launched by Brown’s office in 2007 revealed that Buckberg and L.B.’s officers used the charity’s assets to finance their own medical research, the research activities of companies in which they had a financial interest and the development of medical devices that they sold.

On September 9, 2009, Brown sued the charity and its officers to stop these illegal practices. Today’s settlement agreement forces Buckberg to return $140,000 in diverted funds to L.B., and:

• Prohibits L.B. from using grants or other funding to directly or indirectly support research by L.B.’s officers and directors or any entity in which they have a financial interest;
• Requires L.B. to report future grant awards to Brown’s office;
• Prohibits Buckberg from serving as an officer of L.B.;
• Requires the transfer of control of L.B.’s corporate checkbook and bank accounts from Buckberg to the Chief Financial Officer;
• Requires L.B. to hire experts to educate officers and board members about charitable trust law and their fiduciary duties, to develop a conflict of interest policy and to develop a grant-making review process to ensure that future grants comply with state and federal law;
• Mandates that new board members be elected by a majority of the board and that two independent board members be added; and
• Requires L.B. to keep financial books and records that clearly set forth expenditures.

Under the settlement, Brown’s office will also be reimbursed for its legal fees.

L.B. has been primarily funded by Buckberg, although it has received some funding from several other individuals and businesses.

To report charity fraud, contact the Attorney General’s Office at 1-800-952-5225 or file a complaint online at: http://ag.ca.gov/charities/forms/charitable/ct9.pdf.

The settlement agreement is attached.

Sacramento – Attorney General Edmund G. Brown Jr. today released his office’s annual report on commercial fundraisers, which finds that, while 1,359 commercial fundraisers in California raised almost $400 million in 2008, charitable organizations received less than 42% of those funds.

“Some commercial fundraisers do an excellent job of ensuring that the vast majority of funds they raise go to the charities, not to overhead or themselves. Others raise little, or worse, leave the charities in the red,” Brown said. “Donors should do their homework before giving and consider how they want their contributions spent.”

Commercial fundraisers, who are hired by charities to raise money on their behalf, typically charge a flat fee for their services or a percentage of the contributions they collect.

By law, commercial fundraisers must register with Brown’s office prior to fundraising in California and must file annual financial disclosure reports detailing income and expenses for each fundraising campaign.

According to reports filed with Brown’s office, commercial fundraisers collected $399.9 million in donations in 2008.

In total, just $167.6 million—or 41.9% of the funds raised—actually made it to the charities. The remainder was retained by the commercial fundraisers as payment of fees and expenses.

These figures, however, are averages and do not provide the full picture. Some charities received the vast majority of funds raised on their behalf, including:

• Doctors without Borders, who received $2.8 million, or 70%, of funds raised by its commercial fundraiser.
• Special Olympics Southern California, who received $366,306, or more than 75%, of funds raised by its commercial fundraiser.

Brown’s office also publishes the Guide to Charitable Giving for Donors that provides advice, guidelines and information to help donors make informed decisions about giving. The Guide suggests that donors:

1. Ask the solicitor how a donation will be distributed.
2. Ask what percentage of donations will be used to pay for fundraising expenses.
3. Ask if the solicitor works for a commercial fundraiser and is being paid to solicit.
4. Avoid cash donations.
5. Avoid giving credit card information to a telephone solicitor or in response to a telephone solicitation.
6. Learn about a charitable organization, its activities and its fundraising practices before giving. Brown’s office maintains a searchable online database on registered charities at: http://rct.doj.ca.gov/MyLicenseVerification/Search.aspx?facility=Y, and on registered commercial fundraisers at: http://cfr.doj.ca.gov . Donors can also check the Web sites of the Wise Giving Alliance at: www.bbb.org/us/charity and the American Institute of Philanthropy at: www.charitywatch.org.

The Guide is available online at: http://ag.ca.gov/charities.

The Attorney General’s annual report on commercial fundraisers, currently in its 17th year of publication, can be found at: http://ag.ca.gov/publications.php.

Los Angeles – Attorney General Edmund G. Brown Jr. announced today that his office has launched an investigation into whether four individuals defrauded more than 30 African American churches in Southern California by forcing them to pay up to $45,000 for shoddy computer kiosks originally presented as cost-free. These individuals—Michael Morris; Willie Perkins; Tonya Wilson; and Wayne Wilson—are also suspected of targeting dozens of churches in at least ten other states.

Additionally, Brown is investigating what role three national leasing companies—Balboa Capital Corporation; United Leasing Associates of America Ltd.; and Banc of America Leasing and Capital, LLC—may have played in facilitating this scam.

“These individuals sold the churches on the promise of free services and advertising revenues,” said Brown. “Instead, the churches were enticed into expensive leases, which the leasing companies aggressively enforced, even after learning of the alleged scam.”

Since 2000, Morris, Perkins, Wilson and Wilson have operated two companies—Urban Interfaith Network and Television Broadcasting Online—that peddled computer kiosks to African American churches throughout the country. In California, these individuals targeted neighborhood churches in Compton, Los Angeles, Long Beach, Moreno Valley, Murrieta, Pasadena, Perris, Pomona, Rialto, Riverside and San Bernardino.

These individuals purportedly pitched the kiosks to church leaders as cost-free, high-tech devices that could serve as electronic message boards, print retail coupons from local businesses and generate advertising revenue.

Once a church agreed to house a kiosk, the individuals presented it with a lease agreement from United Leasing Associates of America Ltd. or Balboa Capital Corp (who later sold some of its leases to Banc of America Leasing and Capital, LLC). The individuals repeatedly assured church leaders that Urban Interfaith Network, Television Broadcasting Online or other church-friendly corporate sponsors would cover all leasing costs.

Instead, churches were left with leases as high as $45,000 per year for what amounted to little more than desktop computers and printers housed in podium-sized wooden boxes. Many of the kiosks did not function.

Even after learning of the alleged scam, leasing companies continued to aggressively enforce the terms of the leases, filing lawsuits against churches to collect payment, interest and late fees. For example:

• Los Angeles-based Bryant Temple AME Church was sued by Balboa Capital Corp. to collect on a kiosk lease even after the church informed the company that it had been defrauded into signing the lease. For months, the church pooled funds together to pay down the lease and avoid the cost of litigation, however, it has recently decided to stop making payments to Balboa.

• Los Angeles-based True Way Missionary Baptist Church contends in its own lawsuit against United Leasing Associates of America, Ltd. that even after learning of the alleged scam, the leasing company collected payments on the lease by debiting the church’s bank account without authorization. The lawsuit further contends that United obtained a default judgment in Wisconsin for over $30,000 for a kiosk that the leasing company knew was worth only $2,000.

• San Bernardino-based Ecclesia Christian Fellowship Church was sued by Balboa Capital Corp. and Banc of America Leasing and Capital, LLC to collect on two separate kiosk leases. The two leasing companies continue to aggressively pursue their lawsuits.

• San Bernardino-based New Hope Missionary Baptist Church was sued by Banc of America to collect payment on two leases it purchased from Balboa Leasing. The church filed a countersuit contending that Balboa, working with Urban Interfaith Network and Television Broadcasting Online, defrauded the church. Balboa’s motion to dismiss the church’s countersuit was overruled in court.

Brown has served investigative subpoenas on the three leasing companies: United Leasing Associates of America Ltd.; Balboa Capital Corporation; and Banc of America Leasing and Capital, LLC; and the two companies operated by Morris, Perkins, Wilson and Wilson: Urban Interfaith Network and Television Broadcasting Online.

Last month, Michigan Attorney General Mike Cox filed criminal charges against Morris and Perkins, including: one count of racketeering, one count of conspiracy to commit false pretenses over $20,000, four counts of false pretenses over $20,000 and four counts of fraudulently obtaining a signature.

San Francisco— Attorney General Edmund G. Brown Jr. today announced a landmark $1.4 billion settlement with three Wells Fargo affiliates to pay back investors, charities and small businesses that purchased auction-rate securities based on “misleading advice.”

“Wells Fargo convinced thousands of investors to purchase auction-rate securities with promises of robust returns and liquidity, but when the market collapsed, investors were left out in the cold,” Brown said. “Based on misleading advice, investors bought these risky securities. Now, retail investors and small businesses are finally getting their money back.”

Under today’s settlement, Wells Fargo will buy back $1.4 billion in non-liquid auction-rate securities from thousands of retail customers, charities, and small businesses nationwide, including about $700 million to California investors. Wells Fargo will also pay legal costs and future monitoring expenses incurred by Brown’s office.

In February 2008, nationwide auction markets froze, and investors have been unable to sell their securities.

Earlier this year, Brown filed the suit against three Wells Fargo affiliates—Wells Fargo Investments, LLC; Wells Fargo Brokerage Services, LLC; and Wells Fargo Institutional Securities, LLC—for violating California’s Securities Law. Brown’s suit contended that Wells Fargo routinely misrepresented, marketed and sold auction-rate securities as safe, liquid and cash-like investments, omitting material facts. The company was also charged with failing to supervise and train its sales agents and selling unsuitable investments.

The lawsuit contended that Wells Fargo ignored clear industry and internal warnings about risk and previous auction failure. In March 2005, the Securities and Exchange Commission (SEC), the “Big 4” accounting firms, and the Financial Accounting Standards Board all determined that auction-rate securities should not be considered “cash equivalents.”

Despite these warnings, Wells Fargo continued to aggressively sell and falsely market auction-rate securities as safe, liquid, cash-like investments until the nationwide auction markets froze in early 2008.

In marketing and selling these investments, Wells Fargo failed to inform investors about how auction-rate securities or the auction process worked, as well as the risks and consequences of auction failure.

Los Angeles – Attorney General Edmund G. Brown Jr. has filed legal action to permanently stop Professor Gerald D. Buckberg, M.D., and five officers of the nonprofit L.B. Research Foundation from “diverting donations” from the charity to their own personal business ventures and medical research activities.

“California law strictly prohibits the use of charitable donations for one’s personal benefit,” Brown said. “Yet, Professor Buckberg and his associates diverted donations from L.B. Research Foundation to fund their research and development projects in clear violation of California law.”

Under California law, “no part of a charitable organization’s income or assets may inure to the benefit of any director, officer, member or private person.” However, since 1997, L.B. Research Foundation’s officers have used its funds to finance their own medical research, the research activities of companies in which they had a financial interest and the development of medical devices that they sold.

Dr. Buckberg founded L.B. Research Foundation in 1997. The purpose, as stated in the articles of incorporation, was to assist people suffering from physical and mental disabilities. The Foundation was funded primarily by Buckberg, although it also received some donations from several other individuals and businesses.

Brown’s office launched an investigation in 2007. The investigation revealed that the foundation has been under the primary control of Buckberg and LB has been used primarily to fund Buckberg's research and development projects and the research of his colleagues and friends.

For instance:

• From 1997 through 2004, Buckberg used $120,000 in donations to produce an educational DVD for use by medical professionals. The rights to the DVD belong to The Helical Heart Company, a for-profit corporation which Buckberg owns.

• In 2000, $1 million of the charity’s funds were donated to UCLA to establish an endowed faculty chair. Buckberg then applied for an appointment to the chair and, when that application was rejected, L.B. Research Foundation sued UCLA. Approximately $300,000 of the Foundation’s assets have been used to pay legal fees related to that lawsuit.

• In 2003, Buckberg used $15,000 of the charity’s funds to pay General Theming Contractors, LLC – which he owns -- to build plastic heart models, which he subsequently sold.

• From 2002 to 2006, Buckberg used over $50,000 of the charity’s funds to pay the travel and hotel expenses of physicians whose research benefited a medical device licensed and patented by a for-profit corporation owned and controlled by Buckberg.

The investigation further revealed that not all board members knew they were officers of LB or that they were even part of LB’s board of directors. Buckberg had sole custody of the charity’s financial records and checkbook. Very few of the board’s grant-making decisions were documented and board members failed to understand that the charity’s assets could not be used for their personal benefit.

Brown’s suit, filed in Los Angeles Superior Court, contends that the charity and its officers:

• Failed to maintain adequate books and records in violation of Corporations Code section 6320;
• Breached their fiduciary duties in violation of Corporations Code sections 5233, 5260 and U.S. Code section 4945;
• Failed to maintain an independently elected board of directors in violation of Corporations Code sections 5210 and 5213;
• Filed and distributed false and incomplete reports in violation of Corporations Code sections 6215 and 6812; and
• Engaged in unfair competition in violation of Business and Professions Code section 17200.

Brown is seeking to recover over $500,000 in misappropriated funds, permanently dissolve the charity, assess civil penalties of over $100,000 and prohibit the defendants from running a charity until they provide accounting statements to his office.

To report charity fraud, contact the Attorney General’s Office at 1-800-952-5225 or fill out a complaint form, available on the charities pages of the Attorney General’s website at http://ag.ca.gov/charities/forms/charitable/ct9.pdf.