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Attorney General James Provides $2.4 Million to Brooklyn Substance Abuse Treatment Programs with Funds Derived from Fraudulent Charity Shut Down by AG’s Office

New York Attorney General Letitia James today provided more than $2.4 million to the Brooklyn Community Foundation (BCF) to fund substance abuse treatment programs throughout Brooklyn. The funds are derived from charitable assets that remained after the Office of the Attorney General (OAG) dissolved Canarsie A.W.A.R.E., Inc. for its participation in a scheme that exploited some of New York’s most vulnerable residents and defrauded Medicaid.

“Substance abuse is a harmful and pervasive issue in so many of our communities,” said Attorney General James. “Although recovery is never an easy journey, it can be a lot easier with access to reliable treatment programs. Today’s agreement ensures that these funds will finally be used in the manner in which they were intended — to support some of our most vulnerable communities. I thank the Brooklyn Community Foundation for their partnership and dedication to helping New Yorkers access these lifesaving treatment services.”

“We are deeply honored and excited to partner with the Office of the Attorney General to redistribute these funds in a way that will repair harm and provide vital resources to trusted and thoroughly vetted community-based health providers,” said Cecilia Clarke, president and CEO of Brooklyn Community Foundation (BCF). “Brooklyn Community Foundation’s approach centers community members as key decision-makers to invest in organizations that share our commitment to racial justice. We hope this partnership will serve as a powerful new model for government and foundation collaboration.”

In 2016, as a part of the OAG’s investigation into fraudulent substance abuse providers and their exploitation of individuals living in substance abuse transitional housing — also known as “three-quarter houses” — the OAG indicted Canarsie A.W.A.R.E. Inc. — a New York not-for-profit organization that provided substance abuse treatment services — and its owner for defrauding Medicaid. In September 2018, Canarsie A.W.A.R.E. pleaded guilty to grand larceny in the first degree. In 2019, the OAG won a New York Supreme Court order to dissolve Canarsie A.W.A.R.E. and distribute its assets for use by other substance abuse treatment programs. Today’s agreement between the OAG and the BCF is in connection with the OAG’s settlement of its claims against Canarsie A.W.A.R.E. Inc.

Under New York’s Not-for Profit Corporation Law, assets remaining after the dissolution of a non-profit organization must be distributed to another non-profit organization engaged in similar activities to those of the dissolving nonprofit. The BCF — a well-established grant-making organization dedicated to mobilizing people, funds, and expertise for a fair Brooklyn — will award grants to Brooklyn not-for-profit providers of substance abuse treatment. The funds will support treatment programs providing technical assistance and capacity-building support to the grant recipients, including assistance with fundraising, financial management, and strategic planning. The BCF will also conduct site visits to the grant recipients, and monitor the recipients’ use of funds through regular reporting requirements and communications. The BCF will award the grants in each of three successive years, beginning in 2021.

“I am pleased that the Brooklyn Community Foundation will be offering grants to substance abuse treatment programs that will operate in our community,” said State Senator Roxanne J. Persaud (SD-19). “The services offered are much needed as we fight the scourge of addiction while helping people to uplift their lives.”

“I applaud Attorney General Letitia James for her efforts to redistribute assets recovered in a previous settlement against a dishonest drug treatment provider back into our communities,” said Assemblymember Nick Perry (AD-58). “The $2.4 million disbursement to the Brooklyn Community Foundation should go a long way to providing much needed substance abuse treatment for those Brooklynites struggling with addiction, and get them on the road to recovery rather than on a path through our criminal justice system.”

“The Substance Abuse and Mental Health Administration reported that in 2019, more than 6 million Black Americans suffered from a mental health illness and or substance abuse issue,” said New York City Council Majority Leader Laurie A. Cumbo. “Mental health and substance abuse are urgent issues that often go unaddressed due to stigma and lack of accessible resources, and COVID-19 has further deepened the mental health and substance abuse crises our communities are facing. Although it is gravely disappointing when patients are victimized by organizations meant to help them, I could not think of a better organization to recover funds from Canarsie’s A.W.A.R.E program. The Brooklyn Community Foundation, located in District 35, has provided over $50 million dollars in grants to non-profit organizations throughout our community for over a decade. I am confident that their community-based approach will allow these newly acquired resources to reach those who need them most at a time when we are all suffering. Thank you to the Charities Bureau for making this possible and to Attorney General James for her unwavering dedication to uplifting our Brooklyn community.”

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New Hampshire Court Orders Injunctive Relief in State v Worldwide Push Foundation, Inc.

Deputy Attorney General Jane E. Young announced on Tuesday, February 23, 2021, that the Merrimack County Superior Court granted final judgment against Worldwide Push Foundation, Inc. (“WWPF”), a California corporation, for violations of the New Hampshire Consumer Protection Act and charitable trust laws.

In 2019, WWPF promoted on social media a road race entitled “Margarita Madness 5K” which was scheduled to take place at the Loudon, New Hampshire speedway on October 12, 2019. The website and social media posts promised that the race was “Where you get to celebrate with Margaritas” and indicated that the race would benefit the “Worldwide Push (Push Until Success Happens) Scholarship Foundation.” However, WWPF’s charitable entity status had been revoked by the Internal Revenue Service in May of 2019. WWPF collected thousands of dollars in registration fees but failed to obtain the necessary permits and licenses to hold the event and serve alcohol. In the weeks prior to the race date, WWPF notified the registrants that the race location had been moved to a park in Northfield, New Hampshire. WWPF, again, failed to obtain the necessary permits and licenses to hold the event as advertised. WWPF then “postponed” the event and failed or refused to refund registration fees.

In late 2019, WWPF began advertising on social media and its own website that the “Margarita Madness 5K” races were to take place at “Rollings [sic] Park” in Concord, New Hampshire on July 11, 2020, and at “Surrette Battery [sic] Park” in Northfield, New Hampshire on October 24, 2020. The race on July 11, 2020, did not take place and WWPF failed to obtain the necessary permits and licenses for the October race. WWPF collected a total of over $30,000.00 in registration fees.

In December 2019, the Director of Charitable Trusts issued a Cease and Desist letter to WWPF requiring them to cease advertising the race, return all entry fees, and register with the Charitable Trust Unit. WWPF failed to comply with all of those requirements.
The State filed a civil enforcement action against WWPF on July 10, 2020, for nine violations of the Consumer Protection Act and charitable trust laws for WWPF’s failure to comply with the Cease and Desist, committing unfair and deceptive acts in the course of commerce and charitable solicitations, and advertising services without the intent to sell them as advertised.

By the Court’s entry of Final Judgment, WWPF is permanently enjoined from advertising, organizing, soliciting, or accepting any consumer money for any event in New Hampshire unless and until it is registered with the Charitable Trust Unit. WWPF is further prohibited from committing any future violations of consumer protection or charitable trust laws. WWPF is required to refund race registration fees. The Court also awarded the State attorneys’ fees for the cost of investigating and prosecuting this civil enforcement action.

This case was investigated and litigated by the Charitable Trust Unit and Consumer Protection and Antitrust Bureau. The State was represented in this case by Assistant Attorney General Diane Quinlan, Assistant Director of the Charitable Trust Unit and Assistant Attorney General John Garrigan of the Consumer Protection and Antitrust Bureau.

This matter came to the attention of the Attorney General’s office as a result of complaints made by individuals who registered for the race. Consumers who have registered for the Margarita Madness 5K Run/Walk in New Hampshire and have not received a refund can file a complaint with the Consumer Protection Bureau online at https://www.doj.nh.gov/consumer/complaints/index.htm.  

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Missouri Attorney General Schmitt Announces Sentencing of Angela McMunn for Fraud Related to “Shop with a Cop”

Attorney General Eric Schmitt announced that on February 9, 2021, Angela McMunn pled guilty in the Circuit Court of Jefferson County to two class C felony counts of Receiving Stolen Property, one class D felony count of Receiving Stolen Property, and one class D felony count of Unlawful Merchandising Practices.

“Stealing from law enforcement, including Officer Michael Flamion, who put his life on the line in the line of duty, is beyond the pale,” said Attorney General Schmitt. “I’m grateful for the work that Sheriff Dave Marshak and the Jefferson County Sheriff’s Office did to investigate this case, and I’m pleased that my Office was able to hold McMunn accountable for her actions.”

While serving as the president of Shop with a Cop, a non-profit organization founded to assist underprivileged children, McMunn used a total of $18,398.07 from the organization’s bank account for personal purchases. Further, McMunn fraudulently solicited funds for Officer Michael Flamion after he was shot and paralyzed in the line of duty. While McMunn advertised all proceeds would go to Officer Flamion, she used $6,498.00 from the proceeds collected for personal purchases.

As a result of McMunn’s plea of guilty to all four counts, she was sentenced to four years in the Missouri Department of Corrections with the execution of the sentence suspended, and placed on 5 years of supervised probation with various conditions of probation including an order to pay a total of $24,886.07 in restitution to Jefferson County Shop with a Cop and Officer Flamion.

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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