JULY 2017

STATE LAW

 California

A Los Angeles based car donation charity that was sued in 2015 has agreed to stop engaging in misrepresentations. A lawsuit previously filed by the Attorney General accused People’s Choice Charities of misrepresenting to the public that 100% of the proceeds from the sale of cars would be given to charities selected by the donors. The state alleged that in reality 97% of the funds were purportedly used towards administrative costs, including advertising, towing, and car repairs. The Stipulated Judgment places a permanent injunction against the nonprofit’s president, banning him from serving as a director, officer, trustee, or employee of any other California charitable organization. A monetary component stays a judgment of $900,000 on the basis of no future violations but requires a $30,000 payment to the California Community Foundation for the benefit of children.

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Charities founded or favored by Hollywood stars like Leonardo DiCaprio and singer, Alicia Keys, are allegedly beneficiaries of more than $200 million in donations from a Malaysian businessman who is being investigated for potential money laundering.

Delaware

An eleventh-hour budget was approved in a special legislative session which averts a government shutdown that would have denied $37 million earmarked for the nonprofit community.

New York

National media has reported that as a result of growing pension costs and investment losses, the March of Dimes has put its national headquarters on the market. According to the published report in the USA Today, the March of Dimes reported a negative fund balance of nearly $13 million.

Commentary: These are difficult times for numerous charities. This is a particularly sad story because this 79 year old organization was founded by Franklin Roosevelt in 1938 and has always operated in an ethical and respectful manner.

Ohio

The state has filed a lawsuit accusing the founder and CEO of The Central Ohio Community Involvement Foundation of violating Ohio’s Charitable Trust Act and Charitable Organizations Act. The suit alleges that as much as half of $550,000 raised was withdrawn by the defendant in cash and allegedly spent inappropriately. He is also accused of filing misleading information and failing in his fiduciary duty to protect the organization’s integrity and resources.

Oregon

A state tax court judge denied a property tax exemption for a Willamette Valley Table Tennis Club ruling that the club’s central mission is not sufficiently charitable to justify the exemption.

OTHER MATTERS

NAAG Announcement

As of July 1st, the office of the National Association of Attorneys General has been moved to1850 M Street NW, 12th floor, Washington DC 20036.

International News

Barcelona superstar, Lionel Messi, is the subject of even more fraud claims following allegations that his charitable foundation was used to hide millions of dollars in undeclared income over the years. A major Spanish newspaper has accused Messi’s charitable organization of hiding at least 10 million euros from authorities in Spain and Argentina where the foundation has offices.

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A new Fundraising Preference Service (FPS) has gone into effect in the United Kingdom. The intent of the service is to allow British citizens to stop unwanted contact from charities via phone as well as e-mail, text messages, and mail. It doesn’t stop all contact from charities. Instead, it only stops direct marketing from up to three charities at a time that are specifically identified by a subscriber to the FPS. The penalty for charities that violate the notice equates to almost $42,500.