Charities

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.

Los Angeles – Attorney General Edmund G. Brown Jr. today warned Californians wishing to assist victims of the California fires to avoid “sham charities” that rip off consumers in the wake of major disasters.

“After virtually every disaster, scam artists come out of the woodwork to defraud individuals wishing to help victims,” Brown said. “Californians should give only to reputable organizations so their donations don’t end up lining the pockets of criminals and opportunists.”

Brown noted that fraudulent and misleading charitable solicitations are common following disasters – whether the donation request comes by phone, mail, in front of retail stores, or email. He advised consumers to take time to carefully consider fire-relief solicitations before giving, and offered the following tips:

• Closely review disaster-relief appeals before giving.

• Stick with charities that are reputable rather than those that spring up overnight. If you are unsure, check to see if the charity is registered in California with the Attorney General's Registry of Charitable Trusts. Registration does not guarantee legitimacy, but it is an important indicator. A searchable database is available at http://ag.ca.gov/charities.php. Information on national charities is available from the Better Business Bureau's Wise Giving Alliance at 800-575-4483 or www.give.org.

• Take action on your own rather than responding to solicitations. Seek out known organizations and give directly by phoning the group, finding its official web site, or via regular mail.

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

• Don't give through email solicitations. Clicking on an email may lead you to a site that looks real but is established by identity thieves seeking to obtain money or personal information.

• Do not give cash. Make checks out to the charitable organization, not the solicitor.

• 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.

• Ask what percentage of donations will be used for charitable activities that help victims and how much will fund administrative and fundraising costs. State law requires solicitors to provide such information if requested by donors. Be wary of fundraisers who balk at answering.

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

For additional tips on charitable giving, go to http://ag.ca.gov/charities/charit_giving.php

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 – As part of a nationwide crackdown on fraudulent charities, Attorney General Edmund G. Brown Jr. is filing today eight lawsuits against 53 individuals, 17 telemarketers and 12 charities that “shamelessly exploited” people’s generosity and squandered millions of dollars of donations intended to help police, firefighters and veterans.

Brown’s suits are intended to permanently stop the charities’ deceptive practices and require the repayment of all funds raised under false pretenses. Brown is seeking involuntary dissolution of eight of the charities.

“These individuals shamelessly exploited the goodwill of decent citizens trying to help police, firefighters and veterans,” Brown said. “In point of fact, a shockingly small portion of donations went to those in need, while millions went to pay for aggressive telemarketing and bloated overhead – and in one case – to purchase a 30-foot sailboat.”

Brown filed these suits in conjunction with the Federal Trade Commission and 48 other states as part of a nationwide sweep called “Operation False Charity.”

In California, just as in the other participating states, the so-called charities raised millions of dollars based on false claims that donors’ contributions would benefit police, firefighters and veterans organizations. But in reality, these charities rarely benefit public safety personnel. And, in most cases, 85 percent to 90 percent of donations are used to pay the fees of for-profit telemarketing firms.

Last year, Brown launched an investigation into 12 of the worst offenders, resulting in the eight cases filed today in Los Angeles, Orange, San Bernardino, and San Mateo counties. It is estimated that since 2005, hundreds of thousands of Californians have been deceived by the solicitation campaigns these charities and their fundraisers have conducted.

Brown is filing three suits against 5 charities and their fundraisers in Los Angeles County Superior Court:
• Law Enforcement Apprenticeship Program, based in Los Angeles.
• California Police Youth Charities, based in Sacramento.
• American Association of Police Officers, Police Protective Fund, Inc. and Junior Police Academy -- all of which are based in Los Angeles and are operated by the same directors.

Brown is filing three suits against 5 charities and their fundraisers in Orange County Superior Court:
• Association for Firefighters and Paramedics, based in Santa Ana.
• Association for Police and Sheriffs, Inc., based in Fullerton.
• Coalition of Police and Sheriffs, Disabled Firefighters Fund, and American Veterans Relief Foundation – all of which are based in Santa Ana and are operated by the same staff.

Brown is filing one suit against a charity and its fundraiser in San Mateo County Superior Court:
• Homeless and Disabled Veterans Corporation, based in Washington D.C.

Brown is filing one suit against a charity and its fundraisers in San Bernardino County Superior Court:
• California Organization of Police and Sheriffs, based in San Bernardino.

Los Angeles:
People v. Law Enforcement Apprenticeship Program, et al.
Brown today sued Los Angeles-based Law Enforcement Apprenticeship Program, its directors and its for-profit fundraiser, Rambret, Inc., for falsely promising contributors that their donations would be used to operate an apprenticeship program for at-risk youth. The program was never operated and no students were ever enrolled in it.

Instead, donations were used to pay for fundraising expenses, the personal expenses of the charity’s directors and the purchase of a 30-foot sailboat.

In 2003, Law Enforcement Apprenticeship Program raised $529,863, but only $31,501 – just 6 percent -- was spent on its program services. In 2004, the charity raised $372,623, but spent only $5,615 – 1.5 percent -- on program services.

Brown’s suit against the charity, its directors and its for-profit fundraiser, contends that they:
• Conspired to defraud donors.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Made illegal distributions in violation of Corporations Code section 5237.
• Knowingly filed false public documents in violation of Corporations Code section 6215.
• Failed to keep corporate books and records in violation of Corporations Code section 6320.

Brown seeks to dissolve the charity, to prevent the directors from operating a charity in California again, and to prevent the fundraiser from soliciting funds for a charity in California until it complies with state law.

Brown also seeks a court order requiring the charity to file a report of its receipts and expenses, to recover the funds misappropriated by the directors and civil penalties in excess of $150,000.

People v. California Police Youth Charities, et al.
Brown today sued Sacramento-based California Police Youth Charities, its executive director and its for-profit fundraisers -- National Consultants, Inc. and Public Appeals, Inc. -- for falsely promising contributors that 100 percent of donations would go to support the charity’s programs to help at-risk youth. In reality, less than 20 percent of the $9 million raised in 2006 and 2007 was spent on charitable programs.

The charity also filed false documents with the IRS and the Attorney General’s Office. In 2006, the charity reported that it made almost $1 million in grants, when it actually made grants totaling only $110,000.

Brown’s suit against the charity, its executive director and its for-profit fundraisers contends that they:
• Conspired to defraud donors.
• Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
• Engaged in reporting violations in violation of Government Code sections 12586 and 12599.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Knowingly filed false public documents in violation of Corporations Code section 6215.

Brown seeks a permanent injunction to end these deceptive solicitation practices. He also seeks to recover misappropriated charitable funds and civil penalties in excess of $100,000 from the charity and its for-profit fundraisers.

People v. American Association of Police Officers, Police Protective Fund, and Junior Police Academy, et al.
Brown today sued Los Angeles-based American Association of Police Officers, Police Protective Fund, and Junior Police Academy, their officers David Dierks and Philip LeConte, and their for-profit fundraisers for misleading donors into thinking that their solicitors were volunteer police officers and that contributions would benefit donors’ local police departments.

The for-profit fundraisers include: West Coast Advertising (known as Professional Communications Network) and Mark Christiansen (doing business as Charitable Fundraising Services).

Additionally, the charities violated both state and federal law when they filed reports with the IRS and the Attorney General’s Office that under-reported fundraising and administrative expenses and over-reported the amount spent on charitable programs.

In 2007, for example, Police Protective Fund raised $6.8 million and claimed in its tax returns that it spent $1.7 million on its charitable program. However, that $1.7 million improperly included fundraising expenses, a $350,000 judgment paid to the State of Missouri and other administrative expenses.

Likewise, in 2007, American Association of Police Officers reported in its tax returns that it spent $493,798 on its charitable program. However, out of that amount, $425,000 was paid to the charities’ officers and other administrative and fundraising personnel. David Dierks and Philip LeConte were each paid $168,000 in salary, and were also provided with vehicles such as a $45,000 Range Rover and a $25,000 Jeep Cherokee.

Brown’s suit against the charity, its directors and its for-profit fundraisers, filed in Los Angeles County Superior Court, contends that they:
• Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Knowingly filed false public documents in violation of Corporations Code sections 6215 and 6812.
• Improperly compensated its directors and officers in violation of Corporations Code section 5227.

Brown seeks injunctive relief to prevent defendants from operating any charities in California and to stop future fraudulent solicitation and reporting practices. Brown also seeks to recover misappropriated funds and civil penalties in excess of $150,000.

Orange County:
Association for Firefighters and Paramedics
Brown filed suit today against Santa Ana-based Association for Firefighters and Paramedics, its president, Michael F. Gamboa and its for-profit fundraisers -- Public Awareness, L.L.C., Community Support, Inc., and Courtesy Call, Inc -- for falsely claiming that it used donations to assist local firefighters, paramedics, and burn victims.

Brown’s office discovered that from 2005-2008, only 3 percent of approximately $10 million dollars was spent on assistance to burn victims. No funds were ever used to assist firefighters and paramedics.

The remainder – some $9.7 million -- went to pay for the charity’s fundraising expenses and overhead.

In addition, the charity sent fraudulent invoices to people who had not made a pledge and sent letters to donors who had never given, asking them to mail in their “usual” annual donation.

Brown’s suit against the charity, its president and for-profit fundraisers contends that they:
• Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Violated Federal regulations regarding deceptive and abusive telemarketing practices.

Brown is seeking to dissolve the charity. He also seeks a permanent injunction against the charity’s president to prohibit him from any future involvement with a California charity, and civil penalties in excess of $150,000.

People v. Association for Police and Sheriffs, Inc., et al.
Brown today sued Fullerton-based Association for Police and Sheriffs, Inc., its directors and its for-profit fundraisers -- Public Awareness, LLC, and Courtesy Call, Inc., for falsely claiming that the majority of donations would be used to help the victims of domestic violence.

Brown’s investigation revealed that of the $2.6 million raised in 2005 and 2006, 90 percent of the donations went to pay the for-profit fundraisers. Most of the remaining donations were used to pay salary and other personal benefits for its president, Lloyd Jones, and others.

In violation of federal law, the fundraisers blocked donors’ Caller ID. Once on the phone, the fundraisers engaged in aggressive and abusive conduct.

The investigation also found that the charity and its for-profit fundraisers sent pledge confirmation cards to people who never agreed to donate and that some of the charity’s fundraisers represented that they were police officers, when they were not.

Brown’s suit against the charity, its directors, and its for-profit fundraisers contends that they:
• Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
• Committed registration and reporting violations in violation of Government Code sections 12599 and 12599.6.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Breached their fiduciary duty to the charity in violation of Corporations Code section 5231 and 5233
• Violated federal regulations regarding deceptive and abusive telemarketing practices.
Brown seeks to dissolve the charity, recover improperly diverted funds, recover civil penalties in excess of $150,000, and to obtain a permanent injunction preventing all defendants from any involvement with a California charity until they comply with California law.

People v. Coalition of Police and Sheriffs, Disabled Firefighters Fund, American Veterans Relief Foundation, et al.
Brown today filed a lawsuit against Santa Ana-based Coalition of Police and Sheriffs, Disabled Firefighters Fund, and American Veterans Relief Foundation, their directors and for-profit fundraisers for falsely claiming that donations would be used for programs to help injured police and firefighters, and homeless veterans.

The for-profit fundraisers include Campaign Center, Inc., KWS Productions, Inc., Tel-Mar Productions, Inc, Community Publications, Inc., and Roman Promotions, Inc.
Through 2005, the charities raised $17 million, but only $351,000 – approximately 2 percent -- was spent on programs for cops, firefighters, and veterans. The vast majority of donations went to paid telemarketers.

The President, Jeffrey Duncan, used charitable funds for his personal expenses, including trips to Hawaii and to Las Vegas, and for meals, including one for $1,200 at Medieval Times.

Joseph Shambaugh, who founded all three of these charities, was indicted by federal authorities on charges of mail fraud and money laundering. He is currently at large.

Brown’s suit against the charities, their directors, and for-profit fundraisers contend that they:
• Conspired to defraud donors.
• Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Violated federal regulations regarding deceptive and abusive telemarketing practices.

Brown seeks to dissolve the charity, to prevent the directors from operating a charity or being involved in charitable fundraising in the future, and to prevent the fundraisers from soliciting on behalf of a charity in California until they comply with state law.

He also seeks to recover misappropriated charitable funds and civil penalties in excess of $100,000 from the charities, their directors and for-profit fundraisers.

San Mateo:
People v. Homeless and Disabled Veterans, et al.
Brown today sued Washington, D.C.-based Homeless and Disabled Veterans, and its for- profit fundraiser, Atmost, Inc. for falsely representing to donors that their charitable contributions would be used to assist homeless and disabled veterans in California with food, shelter, and self-help programs. Yet no donations were used for these purposes.

Instead, the vast majority of the donations -- over 70 percent -- were used for fundraising expenses, and the rest went for administrative expenses at its headquarters in Washington, D.C.

Brown’s suit against the charity, its directors and its for-profit fundraiser contends that they:
• Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
• Engaged in solicitation activities in California in violation of the registration and reporting requirements set forth in Government Code sections 12599, 12599.5, and 12599.6.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Breached their fiduciary duty to the charity in violation of Corporations Code sections 5231 and 5237.

Brown seeks to dissolve the charity, to prevent the directors from operating a charity in California again, and to prevent the fundraiser from soliciting on behalf of a charity in California until it complies with state law.

He also seeks to recover misappropriated charitable funds and civil penalties in excess of $150,000 from the charity, its directors and its for-profit fundraiser.

San Bernardino:
People v. California Organization of Police and Sheriffs, et al.
Brown today sued San Bernardino-based California Organization of Police and Sheriffs, its directors, officers and its for-profit fundraisers – Civic Development Group, LLC and Rambret, Inc. -- for falsely representing that donations would be used to benefit law enforcement officers and that 100 percent of each donation would be received by the charity.

Donors were told that their contributions would be used to purchase bullet-proof vests, make grants to families of officers killed or injured in the line of duty, provide veterinary treatment for service animals injured in the line of duty and mentoring of at-risk youths.

Out of the $30 million raised from 2005 to 2007, over $25 million was spent on fundraising.

No money was spent on bullet-proof vests, no grants were made to families of officers, $6,600 was spent on veterinary treatment for service animals, and $16,500 was spent on mentoring.

Brown’s suit against the charity, its officers, directors and for-profit fundraisers, contends that they:
• Conspired to defraud donors.
• Engaged in deceptive and misleading solicitation in violation of Government Code section 12599.6.
• Engaged in unfair business practices in violation of Business and Professions Code 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code 17510.8
• Violated federal regulations regarding deceptive and abusive telemarketing practices.
• Knowingly filed false public documents in violation of Corporations Code section 8215.
• Committed registration and reporting violations in violation of Government Code sections 12599 and 12599.6.

Brown seeks to dissolve the charity, to prevent the directors from operating a charity in California again, and to prevent the fundraisers from soliciting on behalf of a charity in California until they comply with state law.

He also seeks to recover misappropriated charitable funds and civil penalties in excess of $150,000 from the charity, its directors and its for-profit fundraisers.

States participating in “Operation False Charity” include:
Alabama, Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, , Virginia, Washington, West Virginia, Wisconsin and Wyoming. The District of Columbia is also participating.

The Attorney General’s Office offers the following tips to potential donors to help them avoid being the victims of charity fraud:
• If you receive an unsolicited call asking for a donation, it is most likely from a paid telemarketer who may keep a substantial part of your donation as payment of fundraising fees.
• Recognize that the words 'veterans' or 'military families' in an organization's name don't necessarily mean that veterans or the families of active-duty personnel will benefit from your donation.
• Donate to charities with a track record and a history. Charities that spring up overnight may disappear just as quickly.
• If you have any doubt about whether you have made a pledge or a contribution, check your records. If you don=t remember making the donation or pledge, resist the pressure to give.
• Check out an organization before donating. Some phony charities use names, seals and logos that look or sound like those of respected, well-established organizations.
• Ask the soliciting charity or the paid fundraiser what percentage of your donation will go towards fundraising expenses and what percentage will go towards the charity’s charitable purpose.
• Do not send or give cash donations. For security and tax record purposes, it is best to pay by check made payable to the charity.
• Ask for a receipt showing the amount of your contribution.
• Be wary of promises of guaranteed sweepstakes winnings in exchange for a contribution. You never have to give a donation to be eligible to win a sweepstakes.

There are a number of resources to obtain information about a charity. The Attorney General’s website is a good place to start ( http://ag.ca.gov/charities.php ).

Use the search feature (http://justice.doj.ca.gov/cfr/cfr.asp) to find out if a charity and its fundraiser are registered. Review the Attorney General’s Guide to Charitable Giving for Donors (http://ag.ca.gov/charities/publications/CharitiesSolicitation.pdf ) for additional tips. Other sites that have valuable information include:

www.charitywatch.org - American Institute of Philanthropy
www.bbb.org - Better Business Bureau Wise Giving Alliance
www.charitynavigator.org - CharityNavigator
www.ftc.gov/charityfraud/ – Federal Trade Commission

FOR IMMEDIATE RELEASE
December 23, 2008
Contact: Christine Gasparac (916) 324-5500

Attorney General Brown Releases Report Revealing Successes and Failures of Commercial Fundraisers in 2007

SACRAMENTO – Attorney General Brown today made public a report outlining the revenues generated by the 730 commercial fundraisers registered with the California Department of Justice in 2007 and describing what percentage of the donations ended up in charitable coffers.

“The report reveals that some fundraising campaigns are wildly successful and others are profound disappointments,” Attorney General Brown said. “In some cases, commercial fundraisers have stunning successes, generating millions for good causes. In others, the overhead costs outpace the dollars raised, and the charities have to foot the bill.”

The Attorney General’s Charitable Solicitation Report found that in 2007, commercial fundraisers collected $370.33 million from Californians in donations.

In total, just $161.6 million – or 43.6% of the donations raised actually made it to the charities. The remainder went to commercial fundraisers who receive a percentage from each donation or a flat fee as payment.

These figures, however, are averages and do not provide the full picture.

There are some cases where the vast majority of funds make it to the charity. For instance:

• A commercial company raised $15.9 million for the March of Dimes Foundation, which received $11 million, or more than 70%.

• A commercial company raised $1.2 million for the Alzheimer’s Association, which received $873,606, or 72%.

But other cases are not so successful, where the charity can find itself tens of thousands of dollars in the red.

The California Legislature passed a law in 1989 requiring commercial fundraisers to file these financial reports with the Attorney General. This is the 16th year that the Attorney General has published this annual report.

The report also describes and provides statistics for automobile donations and thrift store operations.

The Attorney General also publishes the Guide to Charitable Giving for Donors that provides advice, guidelines and information to help donors in making giving decisions. The Guide suggests that donors:

1. Ask the solicitor how a donation will be distributed.
2. Ask what percentage of donations pays for fundraising expenses.
3. Learn about the charitable organization, its activities and its fundraising practices. Research charities by going to the Attorney General’s website. Check with the Wise Giving Alliance (www.give.org), Council of Better Business Bureaus (www.bbb.org) and the American Institute of Philanthropy (www.charitywatch.org).
4. Ask if the solicitor works for a commercial fundraiser and is being paid to solicit.
5. Avoid cash donations.
6. Avoid giving credit card information to a telephone solicitor or in response to a telephone solicitation.

The Guide is available on the Attorney General’s website at http://ag.ca.gov/charities/ or a copy can be requested by writing to the Attorney General’s Registry of Charitable Trusts, P.O. Box 903447, Sacramento, CA 94203-4470.

The report can be found at:
http://ag.ca.gov/charities/publications/2007cfr/cfr2007.pdf

SACRAMENTO – California Attorney General Edmund G. Brown Jr. today announced that Noah’s Wish, a nonprofit organization founded to help animals harmed by natural disaster, has transferred $4 million in charitable assets to the Department of Justice, to be distributed for the benefit of the animal victims of Hurricane Katrina. This action follows an investigation conducted by his office which found that contributions raised by Noah’s Wish for that purpose were improperly classified and some of those contributions were used for purposes other than helping animals harmed by Hurricane Katrina.

Noah's Wish, Inc. was formed to respond globally to the needs of animals affected by disasters. After Hurricane Katrina, this small organization—with a normal budget of $210,000—issued multiple press releases purportedly seeking donations to assist the animal victims of the hurricane. This solicitation campaign raised more than $8 million but only $1.5 million was expended on Katrina rescue efforts.

Attorney General Brown said: “The funds will now fulfill the donors’ intent--to aid animals harmed by Hurricane Katrina--starting with a complete reconstruction of the animal shelter in Slidell.”

Prior to the attorney general’s investigation, Noah’s Wish pledged funding to rebuild the destroyed City of Slidell Animal Control, an animal shelter in Slidell, Louisiana. As such, the first distribution from the restitution fund will be $3 million to rebuild the destroyed animal shelter. Remaining funds will be distributed through a charitable foundation to assist other animal victims of Katrina.

Louisiana Attorney General Charles C. Foti, Jr., who has agreed to assist in overseeing distribution of the funds in the Gulf Coast region, said, “We sincerely appreciate Attorney General Brown’s efforts on behalf of Louisiana hurricane victims and their pets. The settlement with Noah’s Wish will go a long way to provide a safe haven for animals during a disaster. I pledge my support to the implementation of the settlement and look forward to working the local groups to ensure that the funds are properly spent.”

The settlement agreement is attached.