SAN DIEGO – California Attorney General Xavier Becerra announced today a jury verdict in favor of the State against individuals who fraudulently solicited charitable donations under the pretext of assisting wounded veterans and their families and instead illegally enriched themselves with the donated funds. In April 2017, Attorney General Becerra filed a lawsuit alleging that the operators committed fraud against California donors. Following trial, the jury awarded nearly $8.8 million to the state against defendants Matthew G. Gregory and spouse Danella J. Gregory, their adult children Matthew J. Gregory and Gina D. Gregory, and their business Gregory Motorsports.
“These unscrupulous con artists exploited the generosity of Americans by falsely claiming to help our country’s wounded warriors and their families. Instead, they used our charitable donations for personal gain,” said Attorney General Becerra. “A jury of their peers has justly slapped down the Gregory family and their corrupt enterprise. But there are more sham charities out there plotting to defraud us. That’s why the California Department of Justice has ramped up its investigation and enforcement against suspect charities. We intend to hold them accountable before they prey on you.”
In this case, the jury found that the defendants, as directors of Wounded Warriors Support Group and Central Coast Equine Rescue and Retirement, breached their fiduciary duty to act in the best interest of the two charities. Wounded Warrior Support Group, a nonprofit that purportedly supported military veterans and their families, is located in Carmel-by-the-Sea, California, and engaged in fundraising and raffle activities in Alameda County and throughout the State of California. Central Coast Equine Rescue and Retirement, a nonprofit with a mission to rescue abused and unwanted horses and educate the public on the horses’ care and neglect, operated out of Livermore, California, and Carmel-by-the Sea, California.
The jury found that the defendants breached their fiduciary duty by failing to use donated funds for charitable purposes for which the donations were sought. The filed complaint alleged that the defendants instead spent the donated proceeds for personal use, including shopping at Victoria’s Secret, paying off personal credit card debt, traveling, dining, and purchasing dressage equipment, admittance to traffic school, and other personal expenses. The jury also found that the defendants conducted misleading and deceptive fundraising by running illegal charity raffles in locations throughout California; breached their fiduciary duty to act in the best interest of the charities by filing false reports with the Attorney General’s Office; violated the Attorney General’s Cease and Desist Orders; engaged in self-dealing transactions; gave improper loans to directors; and operated the two charities without keeping corporate records and minutes. Against the non-director defendants, the jury found that they aided and abetted the directors in their unlawful acts to advance their own interests and financial gain.
The jury found the defendants acted illegally a total of 3,430 times and awarded damages to the state as follows:
In addition, the court issued a separate judgment for the involuntary dissolution of both charities as well as an order permanently prohibiting the individual defendants from operating or serving on the board of any California charity and from soliciting charitable donations or holding charitable raffles.