Michigan Attorney General Bill Schuette today announced a Notice of Intended Action and Cease and Desist Order against professional fundraiser Golden Recyclers, Inc., alleging over 2,000 violations of the Charitable Organizations and Solicitations Act.
“Michigan citizens are generous, especially around the holidays,” said Schuette. “I won’t tolerate companies that exploit that generosity for private gain. Not only does it harm donors, it also harms those charities that play by the rules by diverting donations from their charitable programs—donations they especially need during the holidays.”
Schuette alleges that the Dearborn-based professional fundraiser is illegally operating clothing donation bins and misrepresenting what happens to the donated items. Golden Recyclers currently operates 318 bins throughout Michigan, largely in the Metro Detroit area.
Golden Recyclers operates two differently labeled types of bins, both of which violate the Act. The first type of bin implies that it collects clothes for the charity, Cancer Federation, Inc.; the second type of bin is deceptively labeled with the logo “Mercy” but provides no indication where those donations go. In truth, donation to either bin do not go to charity but to the professional fundraiser, Golden Recyclers.
The Notice of Intended Action alleges 2,594 violations, with maximum penalties of $10,000 per violation. It also orders Golden Recyclers to cease and desist these violations and gives them twenty-one days to resolve the matter or face a civil action in court. Concurrent with the Notice of Intended Action, the Attorney General is also ordering Golden Recyclers to produce information and financial records regarding its operation of the bins.
Background
The Attorney General’s Charitable Trust Section began an investigation following a consumer complaint about the vagueness of the bins labeled “Mercy.” The Attorney General asked both organizations to explain the bins. Cancer Federation responded saying that the “Mercy” bins were unauthorized and that it was ordering Golden Recyclers to cease and desist their operation. However, Golden Recyclers continued operating the bins, as confirmed by photographs from the Attorney Generals’ investigators.
The investigation also revealed that Golden Recyclers was operating a second type of bin labeled with the name of Cancer Federation Inc., but that these bins also violated the Charitable Organizations and Solicitations Act.
Golden Recyclers pays $12,000 a year to Cancer Federation Inc. to use its name under their current contract. Thus, under the contract, all donations placed in the bins go to Golden Recyclers—not Cancer Federation Inc., which is not disclosed on the bins. It is not yet clear what Golden Recyclers does with the donations placed in the bins; however, records obtained by the Attorney General show Golden Recyclers earned gross receipts of $223,000 over a six-month period in 2015. The Attorney General’s office is also reviewing Cancer Federation Inc.’s charitable registration in the state.
In light of recent complaints regarding clothing donation bins, the Attorney General is also today issuing a Consumer Alert. That alert is available here and will remain posted at www.mi.gov/charity.
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More information can be found here.