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Attorney General Becerra Announces Sentencing in AIDS Research Alliance Fraud Scheme | State of California – Department of Justice – Office of the Attorney General

California Attorney General Xavier Becerra today announced the sentencing of Donnelly Montenegro, former acting Chief Operating Officer of the AIDS Research Alliance (ARA). Montenegro pleaded guilty in December to grand theft by fraudulent pretenses after being charged in a 22-count complaint. Montenegro falsely portrayed himself as an acting ARA staff member in order to steal $316,000 from a donor’s estate. As part of his plea, Montenegro received a two-year sentence today in Los Angeles County Superior Court.

“When people generously donate their hard-earned money, they’re hoping to support a cause they care about. They shouldn’t find themselves in the middle of a reckless scheme to take their money for selfish gain,” said Attorney General Becerra. “At the California Department of Justice, we take seriously our duty to protect good-hearted people from this type of fraud. It was important to hold Donnelly Montenegro accountable.”

The Los Angeles County-based ARA was a nonprofit research organization dedicated to developing better treatments for those affected by HIV and creating an HIV cure strategy. The ARA dissolved in early 2015, but Montenegro retained access to the organization’s records, and as a part of his scheme, led people to believe the organization was still in operation, rather than defunct, in order to obtain and then launder hundreds of thousands of dollars in donations intended for AIDS research from 2015 to 2017. Montenegro used the stolen donations for personal expenses including investments, credit card bills, and firearms. The 22-count felony complaint against Montenegro included six counts of grand theft, three counts of identity theft, and 13 counts of money laundering. 

The investigation of Montenegro was conducted by the Division of Law Enforcement’s White Collar Investigations Team (WCIT), which tackles white collar crimes like those that can bankrupt companies, devastate families by depleting their life savings, or cost government agencies billions of dollars. WCIT worked closely with the Fraud and Special Prosecutions (FSP) Section, which prosecutes complex criminal cases, primarily related to financial, securities, mortgage, and environmental fraud, public corruption, “underground economy” offenses, including tax and revenue fraud and counterfeiting; and human trafficking.

Attorney General Becerra is committed to protecting public safety and taking on financial crime. Last November, the Attorney General announced the arrest and arraignment of nine individuals on 136 felony counts for allegedly operating an advance fee mortgage relief scam that claimed to prevent the foreclosure of properties throughout Southern California. In October 2020, Attorney General Becerra announced arrests and charges following a multiagency investigation into a large scheme in the Bay Area to buy stolen goods and resell them for profit. In July 2020, the Attorney General announced arrests and charges against Christopher Mancuso, John Black, and Joseph Tufo for allegedly operating a multimillion-dollar investment fraud scheme that targeted more than 70 victims around the world. That same month, he announced a two-year jail sentence and tens of thousands of dollars in restitution as a result of the takedown of a bogus investment scheme. Attorney General Becerra also secured nearly $1 million in restitution and seized approximately $775,000 in counterfeit apparel. In June 2020, the Attorney General secured a felony tax evasion conviction and seized more than $1.5 million in unlicensed tobacco products.

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AG Ferguson: Sham charity must pay $95,000 to be donated to legitimate veterans’ charity.

Attorney General Bob Ferguson today announced that a sham veterans’ charity is legally required to pay $95,000 to Washington state. Healing Heroes Network Inc. deceived donors into believing most of their donations would help provide medical care for wounded veterans. In fact, it spent less than one percent of individuals’ donations on veterans’ medical care. For example, in 2016, the charity received $2.7 million in donations nationwide, yet spent only $1,128 to fund veterans’ medical care.

Today’s consent decree, filed in King County Superior Court, resolves Ferguson’s lawsuit against the Florida-based charity and its directors, Stacey and Allan Spiegel, for misleading donors. Thousands of Washingtonians made donations to Healing Heroes Network, also known as the Injured America Veterans Foundation. Consistent with the donors’ intent, Ferguson will donate the $95,000 recovery to a nonprofit that legitimately helps veterans receive medical care.

 “Few illegal acts are more appalling than exploiting the sacrifice of wounded veterans to line your own pockets,” Ferguson said. “My office will continue to hold accountable perpetrators of sham charities — and we will continue standing up for Washington’s veterans.”

Washington will donate the full recovery amount to a legitimate charity that helps veterans nationwide, including veterans in Washington, receive medical care. This charity will be confirmed at a later date.

The consent decree requires Healing Heroes Network to permanently stop soliciting donations. Healing Heroes ceased its operations in 2018 after learning of the states’ investigation, but this judgment ensures the charity will remain closed. Its owners, Stacy and Allan Spiegel, are also now legally prohibited for five years from overseeing or managing any nonprofit organization.

This consent decree resolves both Washington’s lawsuit and a multistate investigation into the sham charity’s practices. Washington led a multistate investigation into Healing Heroes Network in partnership with Florida, Ohio, Oregon, Illinois, Maryland, Minnesota, Missouri, New Mexico, California, and Virginia.

Case background

The company received many of its donations through telemarketing campaigns. Nearly 4,000 Washingtonians donated to Healing Heroes Network from 2015 to 2017 through its telemarketing alone.

The charity’s main claim in its promotions was that it helped veterans receive medical care. One of its telemarketing scripts claimed that it referred veterans to a “nationwide network of providers” and “provides financial assistance for services not covered, or delayed under the U.S. Department of Veterans Affairs benefits.”

Healing Heroes maintained a list of 164 providers in 34 states. Most were chiropractors, massage therapists, hyperbaric oxygen specialists or acupuncturists. However, some providers reported that they rarely received a referral from Healing Heroes. Of the reported eight providers listed in Washington, two never received a single referral and three stopped practicing by 2017. One provider’s office was unaware of Healing Heroes.

One Washington massage therapist billed Healing Heroes for $1,200 worth of massages for a patient. The same provider eventually received a check for $300. Healing Heroes advised the provider to consider the remaining $900 balance her donation.

In some years, the charity did not provide any medical assistance to any Washington veterans at all, even as it raked in donations from thousands of Washingtonians. From 2015 through 2017, the sum total of services provided to wounded Washington veterans consisted of one tablet computer given to one veteran.

Healing Heroes spent the vast majority of its revenue on fundraisers, advertising, salaries, rent, insurance, t-shirts and decals to sell, office expenses and accounting services. It claimed in its 2016 reporting to the Internal Revenue Service that it spent $250,000 on “program expenses,” which included advertising and “community outreach” such as pub crawls it organized as advertising.

From 2015 through 2017, Healing Heroes bought at least $533,000 worth of T-shirts and decals from Charity Resources, also known as Spiegel Outfitters — a company owned by Neal Spiegel and Benjamin Spiegel, Stacey and Allan Spiegel’s two sons. Stacey Speigel then sold this merchandise for profit under a new company, “Hero Giveaways.”

Stacey Spiegel formed the new company immediately after Healing Heroes dissolved under pressure from the states’ investigation. She sold the merchandise on the Hero Giveaways website, claiming that proceeds would benefit wounded veterans. In fact, Ferguson’s suit asserts, Stacey Spiegel’s new operation was a for-profit business that has given nothing to wounded veterans or any other charity.

Ferguson’s lawsuit asserts that this conduct violates the Charitable Solicitations Act, which prohibits false or misleading solicitations for charitable donations. The suit also asserts Healing Heroes Network violated the Promotional Advertising of Prizes Act in one of its promotions: a sweepstakes letter to consumers that failed to properly inform consumers of the odds of winning the sweepstakes prize.

Assistant Attorneys General Craig Rader and Ben Brysacz are leading the case for Washington.

Operation Donate with Honor

Today’s judgment is part of Operation Donate with Honor, a nationwide effort against veterans’ fundraising fraud coordinated by the Federal Trade Commission and the National Association of State Charities Officials. Attorneys General and other state agencies from all 50 states, the District of Columbia, Puerto Rico, Guam and American Samoa are joining the project by leading more than 100 education and enforcement efforts.

Other lawsuits part of this initiative include one against Fallen Hero Bracelets, which resolved in November 2020 when a Pierce County Superior Court judge ordered the sham charity to pay nearly half a million dollars to legitimate veterans charities.

Scammers can use charities to prey on generosity. Do plenty of research before donating money. To make sure a charity is legitimate:

  • Ask for detailed information about the organization, including an address, phone number and name
  • Ask the organization what percentage of donations benefit the actual cause
  • Check if the charity is registered with the Washington Secretary of State
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Attorney General James Report Finds That Professional Fundraisers Retain Nearly One-Third of Charitable Campaign Donations. Some Retain More Than Half.

New “Pennies for Charity” Report – Released Ahead of Giving Tuesday – Details Costs
of Fundraising Campaigns Conducted by Professional Fundraisers; In 2019,
Professional Fundraisers Pocketed Nearly $365 Million 

Report Also Offers Key Tips for Donors: Be Careful with Charitable Giving;
Not All Fundraisers Are Created Equal

NEW YORK – In preparation for Giving Tuesday and the holiday season, Attorney General Letitia James today released the annual “Pennies for Charity: Fundraising by Professional Fundraisers” report, which found that nearly one-third of charitable donations ended up in the pockets of professional fundraisers. This year’s report looks at trends in fundraising, such as the rise of online giving, as well as the percentage of funds raised that went to charities.

“Every year, New Yorkers give generously to charity. Unfortunately, not all the money they donate reaches the charities they intend to help,” said Attorney General James. “Today’s report highlights the high percentage of charitable dollars that are pocketed by outside fundraisers rather than reaching the charity itself. My office will continue to combat charity fraud, and I encourage all New Yorkers to follow our tips to ensure that their money is going to a reputable source this holiday season.”

New York has a robust charitable sector, supported by generous giving by New Yorkers. In 2019, more than $1.2 billion was raised in New York state through 824 fundraising campaigns conducted by professional fundraisers on behalf of charities. These campaigns, which are the focus of the report, used a range of methods including special events, direct mail, and telemarketing. The report and the searchable Pennies for Charity database containing the underlying data is posted at www.CharitiesNYS.com. 

Of the more than $1.2 billion raised through campaigns conducted by professional fundraisers, charities netted more than $918 million, or 72 percent of the proceeds, while professional fundraisers’ fees and expenses totaled $364 million, or 28 percent. This is in line with an overall improvement in amounts retained by charities, which the report attributes to a variety of factors including enforcement and donor education efforts by the Charities Bureau. 

This year’s report also analyzed current fundraising trends, such as the rise in online giving. Telemarketing, while continuing to decline as a fundraising method, remained among the costliest mechanisms, with 196 telemarketing campaigns by fundraisers retaining more than 50 percent of funds raised for charities.  

“Pennies for Charity” aggregates information from fundraising reports filed with the Attorney General’s Charities Bureau for campaigns conducted by professional fundraisers on behalf of charities in the previous year. Professional fundraisers must register with the Office of the Attorney General (OAG) and provide financial reports that break down the revenue raised and the expenses generated by the campaign.   

Other significant findings from analyzing the 824 fundraising campaigns covered by this report include: 

  • In 254 campaigns, or approximately 31 percent of the campaigns covered in the report, fundraisers retained more than 50 percent of the funds raised.  
  • Charities retained $918 million overall of the funds solicited from the campaigns; fundraisers retained $364 million.  
  • In 144 campaigns (17 percent), fundraising expenses exceeded charitable revenue. In 2019, this loss to charities totaled more than $17 million.  

The OAG actively investigates suspect fundraising practices. To assist charities in navigating the world of professional fundraisers, the report includes tips for charities hiring fundraisers.  

The report also includes tips for donors, including specific guidance for responding to phone, direct mail, or online solicitations. Key tips include: 

  • Take time to research the organization. Make sure you are familiar with the organization, its mission, and its effectiveness before giving. Always ask for information in writing — and be wary if an organization will not provide information about its charitable programs and finances upon request. Any legitimate organization will be happy to send you information.   
  • Consult charitiesnys.com to make sure that the organization is registered and to learn more about its mission and finances.  
  • Online platforms that host groups and individuals soliciting for causes do not vet those who use their service. Donors should find out whether a charity has authorized the campaign and if their contribution is tax deductible.  
  • Search the charity’s name on the internet for reports of possible scams or law enforcement actions and check the charity’s rating on watchdog sites like Charity Navigator (charitynavigator.org).
  • Know where your money will go. Find out how the charity plans to use your donation, including the services and programs your donation will support. Avoid charities that make emotional appeals but are vague in answering your questions. If you have been contacted by a telemarketer, review the Pennies for Charity database to see how much is spent on fundraising costs and how much is kept by the charity. 
  • Don’t be pressured by telemarketers. If you receive a telephone call from someone asking you to contribute to a charity, you have the right to hang up. Often the caller is a professional fundraiser who is being paid to call you.  
  • If you choose to consider the caller’s request, ask how much of your donation will go to charity and if the telemarketer is being paid. Many telemarketing companies receive most of the money they raise. Be wary of claims such as “all proceeds will go to charity.” Telemarketers are required to identify themselves and their employer and tell you they are being paid to call you. They also must respond truthfully to your questions. Don’t fall for pressure tactics, such as repeated phone calls or threats. These are signs that the organization may not be legitimate. Always remember you have the right to say no to any charitable request.  
  • You can ask to receive information about the cause and a solicitation by mail.  
  • Consider making a plan for your charitable giving so you are not vulnerable to sudden pressure.  
  • Ask to be put on a “do not call” list. You have the right to request to be placed on the telemarketer’s “Do Not Call” list. It is not illegal for telemarketers for charities to call telephone numbers on the FTC’s Do Not Call Registry, but consumers can stop such calls by telling telemarketers not to call them on behalf of specific charities. Telemarketers are required to honor such requests. You may also ask a charity to take you off its solicitation list.
  • Be wary of deceptive tactics and emotional appeals. Watch out for charities with names that resemble those of prominent or established organizations — especially on days designated to charitable giving. Some charities do this in order to confuse donors. Be wary of emotional appeals that talk about problems, but are vague on how donations will be spent.  
  • Don’t disclose personal information. Never give your social security number or other personal information in response to a charitable solicitation. Never give out credit card information over the phone or to an organization you are not familiar with.  
  • If donating online or via text, donate securely. Always make sure that you are using secure methods of payment. When donating online, make sure the website is secure and includes “https://” in the web address. Before hitting send on a text donation, check the charity’s website or call the charity to make sure contributions by text message are authorized. Some text solicitations are scams. Also, remember that donating by text means the organization may not receive the funds until after your phone bill is paid; contributions made directly to a charity can reach them faster.  
  • Never give cash. Give your contribution by check made payable to the charity.   
  • To help in a disaster, give to organizations you know or that have experience in this work. Ask if the charity has already worked in the affected area or has relationships with local relief organizations.  
  • Report suspicious organizations. If you believe an organization is misrepresenting its work, or that a scam is taking place, please contact the Attorney General’s Charities Bureau at bureau@ag.ny.gov or (212) 416-8401. 

Hanna Rubin, Director of Registrations and Fundraising Sections for the Attorney General’s Charities Bureau, authored this report, with the assistance of Charities Bureau Fundraising supervisor Siobhan Blank and Legal Department Document Specialist Rebecca Groves. Data analysis was provided by Deputy Research Director Megan Thorsfeldt and Data Analyst Anushua Choudhury. James Sheehan is the Charities Bureau Chief and Karin Kunstler Goldman is the Deputy Bureau Chief. The Charities Bureau is part of the Social Justice Division, led by Executive Deputy Attorney General for Social Justice Meghan Faux. 

More information about the Attorney General’s Charities Bureau and organizations regulated by the Bureau may be found at https://www.charitiesnys.com/. 

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Giving Tuesday Tips

#GivingTuesday refers to the Tuesday after Thanksgiving in the United States. It is a global generosity movement which seeks to unleash the power of people and organizations to transform their communities and the world.

NASCO encourages everyone to exercise caution when giving this #GivingTuesday because when charitable monies go to a scam artist, great organizations doing real good in the world miss out on those dollars. Once those dollars are lost to the scam artists the opportunity to help real people and causes are gone.

Please see the attached flyers from some of our State partners with some great tips for charitable giving.

https://www.nasconet.org/wp-content/uploads/2020/12/Consumer-Alert-Giving-Tuesday.pdf

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Thank You From the NASCO Board

With our first fully digital NAAG/NASCO Annual Conference now safely completed, the NASCO board would like to take the time to thank every one of our friends, attendees, and partners who made this year’s event a truly special one.

The current pandemic has required all of us to adapt and innovate, and we are proud that the conference was able to meet the needs of the time.

Special thanks to those who helped plan this year’s conference. You dedication to the conference’s success was especially important this year. We also very much appreciate Attorney General Gordon McDonald (NH), Attorney General Letitia James (NY), Secretary of State John Wobensmith (MD) and Commissioner of Agriculture and Consumer Service Nikki Fried (FL) who welcomed and inspired us.

https://www.nasconet.org/wp-content/uploads/2020/11/2020-NAAG-NASCO-Conference-Public-Sessions-Agenda-003.pdf