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AG Yost Shuts Down Eight ‘Knock-off’ Sham Charities

Five people involved in eight “charities” whose names were stolen from reputable organizations to lend credence to their scam have been ordered to pay a combined $190,000 in civil penalties and banned from associating with any charitable organization in the future, Attorney General Dave Yost announced today. 
 
As recommended in a complaint filed by Yost, a Franklin County Common Pleas judge has also ordered that the articles of incorporation be canceled for the following groups, none of which was affiliated with the established charities of similar names:

  • American Cancer Society of Cincinnati Inc.
  • American Cancer Society of Cleveland Inc.
  • American Cancer Society of Ohio Inc.
  • American Cancer Foundation of Cincinnati Inc.
  • American Cancer Foundation of Cleveland Inc.
  • American Cancer Foundation of Ohio Inc.
  • American Cancer Foundation of Columbus Inc.
  • United Way of Ohio Inc.

“These scammers were pretending to be big-time charities to swindle money from Ohioans,” Yost said. “But playtime is over, and the jig is up on your sham operation.”
 
In overseeing the charitable sector, the Ohio Attorney General’s Office works to protect charities and their beneficiaries and to ensure that donations are appropriately used for the missions of the organizations.
 
The five individuals named in the lawsuit are:

  • Ian R. Hosang
  • Jomar Holmes
  • Rhett McIntosh
  • Judith A. Culzac
  • Claudia Stephen

Legal action has also been taken against Hosang in Michigan, Washington, New York and other states where he set up dozens of similar fake charities.

The Franklin County judgment bans all five defendants from incorporating, organizing or serving in any fiduciary capacity for a charitable organization. 

“I’m extremely proud of the ongoing work our team does to protect Ohioans’ wallets,” Yost said.  

Before donating to a charity, Attorney General Yost encourages Ohioans to use the online tools provided by the Charitable Law Section of his office, including:

  • Checking whether a charity is in compliance with Ohio’s registration requirements.
  • Reviewing a charity’s annual reports to see how it spends your donations.
  • Seeing whether the charity employs professional fundraisers and finding out what percentage of donations actually goes to charity.
  • Reviewing tips for safe giving.

Also, complaints about charitable organizations – including misuse of charitable funds, fraudulent fundraising activities, violations of professional solicitation standards, bingo and charitable gaming issues, nonprofit theft and embezzlement, and breaches of fiduciary duty by nonprofit leaders – can be filed on the Ohio Attorney General’s website.

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The NASCO Board responds to The 50-State Index of Charity Regulations, released by Philanthropy Roundtable

The NASCO Board responds to The 50-State Index of Charity Regulations, released by Philanthropy Roundtable in January, as follows:

We are concerned that some of the information contained in the report about current state laws and rules may be incomplete. We encourage charities to be in direct contact with their state charity regulatory offices if they have questions about specific laws or regulations in their states.

We join the report’s recognition of the need for more research related to charity regulations and charitable activity, especially with regard to causation and correlation. Our view is that, although regulation may be one factor contributing to the formation and operation of more charitable organizations, there are likely other factors that are also significant. We look forward to more research in this area.

We believe that the report’s key assumption that the number of charitable organizations is a good measure for the volume of actual charitable activity needs further analysis and study. For example, having multiple small charities with the same purpose could be an inefficient and ineffective use of charitable dollars, resulting in more funds being used for administration and fewer dollars for actual charitable activity.

Relatedly, our experience as regulators tells us that there are tax-exempt organizations in existence that might be counted as charities for purposes of this report, but that not actually operating for charitable purposes but rather are fraudulently misrepresenting themselves as charities.

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Attorney General Bonta Conditionally Approves Sale of Four Retirement Communities to Pacifica Companies LLC

California Attorney General Rob Bonta today conditionally approved the sale of four continuing care retirement communities (CCRCs) located in Northern and Southern California. The CCRCs in Auburn, Long Beach, Placerville, and Sacramento are currently owned by Retirement Housing Foundation (RHF), a nonprofit public benefit corporation. The conditional approval will allow them to come under the ownership of Pacifica Companies LLC (Pacifica). Under California law, any transaction involving the sale or transfer of control of a healthcare facility owned by a nonprofit corporation must secure the approval of the Attorney General. The conditions of Attorney General Bonta’s approval preserve access to high-quality care and services for the residents of these communities.
 
“When reviewing healthcare transactions, the safety of all Californians remains our top priority,” said Attorney General Bonta. “Thanks to the strong conditions we imposed today, hundreds of residents of these four communities can safely continue living and receiving care in the place they call home. At the California Department of Justice, we remain committed to placing vulnerable communities at the forefront of our work and ensuring continuous, uninterrupted quality care for residents across the state.”

The four CCRCs are the Auburn Ravine Terrace facility, which is located in Auburn and includes a 59 licensed-bed skilled nursing facility (SNF); the Bixby Knolls Towers facility, which is located in Long Beach and includes a 99 licensed-bed SNF; the Gold Country Retirement Center facility, which is located in Placerville and includes a 68 licensed-bed SNF; and Pioneer House, which is located in Sacramento and includes a 49 licensed-bed SNF. 
 
The expert report identified safety issues at other Pacifica facilities. Between 2017 and 2022, Pacifica’s rate of citations was significantly higher than the average rate for all RCFEs in California. 
 
Therefore, as part of his conditional approval, Attorney General Bonta has imposed specific conditions for the proposed $48.5 million sale, which will require Pacifica to, among other things:

  • Appoint a monitor to ensure resident safety;
  • Report semi-annually on safety;
  • Preserve access to skilled nursing facility services for the community;
  • Consult with a Community Advisory Board at each facility on a quarterly basis;
  • Pay off debt, including existing bond debt and existing lines of credit; and
  • Honor residents’ contracts.

The California Department of Justice’s Healthcare Rights and Access Section (HRA) works proactively to increase and protect the affordability, accessibility, and quality of healthcare in California. HRA’s attorneys monitor and contribute to various areas of the Attorney General’s healthcare work, including nonprofit healthcare transactions; consumer rights; anticompetitive consolidation in the healthcare market; anticompetitive drug pricing; privacy issues; civil rights, such as reproductive rights and LGBTQ healthcare-related rights; and public health work on tobacco, e-cigarettes, and other products. 

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In Aftermath of Recent Mass Shootings, Attorney General Bonta Urges Vigilance Against Fraudulent Crowdfunding and Reminds Californians of Available Support Services

As people in California and across the country mourn the recent horrific mass shootings in the state, California Attorney General Rob Bonta today highlighted support services and urged vigilance against fraudulent crowdfunding. Across California, there are a variety of state, local, and community entities that may be able to provide assistance and support — including immediate housing, financial, funeral, and mental health resources — to crime victims, survivors, and their families. However, in the aftermath of tragedy, there are also those who seek to take advantage of communities and people’s desire to help. Well-intentioned or otherwise, those operating crowdfunding pages often formed overnight in response to crises may lack the experience, contacts, and staff needed to fulfill their commitments. Before donating online, Attorney General Bonta urges Californians to do their research.

“Our nation has once again been forced to confront more senseless gun violence. From Monterey Park to Half Moon Bay, our entire state is reeling,” said Attorney General Bonta. “While we have much work ahead to tackle America’s disease, people are also coming together to support those who are hurting and who have lost loved ones. I encourage all Californians to extend a helping hand wherever possible and to take advantage of the resources available across the state. If you plan on giving, please be wary of scammers and do your research before you donate. My heart goes out to all who are in pain in this moment and, at the California Department of Justice, we will continue to do our part to support local response efforts.”

Crowdfunding Donation Tips:

  • Research the Organizer: Learn all you can about the organizer before making a contribution. Use Google and LinkedIn to look up the organizer. Does the organizer have expertise in the area the campaign concerns? Check out their Facebook page. Does it look fake? Are the friends real? Are there real-time comments? Be suspicious of pages that were created right before the campaign started.
  • Research the Crowdfunding Platforms: There are many different crowdfunding platforms and they all have different rules. If you want a refund, you may have to get it from the organizer. Some platforms provide refunds only in certain situations, i.e., when the organizer makes false statements or is charged with a crime.
  • Do a Reverse Image Search: Fake campaigns often copy and paste other people’s stories or photos. Doing a reverse image search of the photos used in the campaign, as well as those used on the organizer’s social media pages, can show you if the photos are stolen. Be careful if the campaign is posted on multiple sites. Scammers will do this to reach more people.
  • Contact the Organizer and Ask Questions: Each crowdfunding site allows you to ask the organizer questions through the comments section. If an organizer is answering questions regularly, it is more likely that they are not trying to scam you.
  • Be Suspicious: Beware of campaigns that make you feel sorry for someone, but do not give you any details of how your money will be used. Be extra careful after a major disaster or tragedy because scammers will often try to take advantage of your desire to help victims. Beware of campaigns that seem too good to be true. They probably are.
  • Understand the Purpose of Crowdfunding: Remember that there is no guarantee that the crowdfunded campaign will be successful. When donating to a worthy cause, contributions are probably not tax deductible unless they are made to a nonprofit.
  • Learn More: Learn more about online crowdfunding and how to file a complaint through the California Department of Justice here. 
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Attorney General Ellison sues nonprofit and its leaders for misusing funds and extensive governance violations; seeks to shut down nonprofit

State files lawsuit against ThinkTechAct Foundation and three of its leaders for running a sham nonprofit, misusing nonprofit funds obtained from the federal child nutrition program, and other charities violations

Minnesota Attorney General Keith Ellison has filed a lawsuit against Minnesota nonprofit ThinkTechAct Foundation and founder and President Mahad Ibrahim, board member Abdiaziz Farah, and executive director Bianca Scott, alleging they ran a sham nonprofit, misused nonprofit funds, and violated numerous other governance requirements under Minnesota charities laws. AG Ellison’s lawsuit asks the court to dissolve ThinkTechAct, impose civil penalties on the individual defendants, and prevent the individual defendants from serving as officers or directors of any nonprofit or charitable corporation in Minnesota in the future.

The complaint, filed in Hennepin County, accuses the defendants of pocketing sizable nonprofit assets obtained through the federal child-nutrition program. The complaint also alleges that ThinkTechAct failed to comply with numerous governance requirements for nonprofits, failed to register with the Attorney General’s Office as a soliciting public charity or charitable trust, failed to file required annual reports on its activities, and failed to cooperate with the Office’s investigation as required by law.

“It is wrong that ThinkTechAct’s leaders took advantage of funds meant to help children.” Attorney General Ellison said. “My office launched this investigation and filed this lawsuit because we cannot allow nonprofits to be hijacked to line the pockets of their directors and officers. The overwhelming majority of Minnesota’s nonprofit organizations do vital work supporting our communities, but sham nonprofits and their leaders who abuse the public trust must be held accountable.”

The Charities Division of the Minnesota Attorney General’s Office launched this investigation under Minnesota’s civil nonprofit corporation, charitable solicitation, and charitable trust laws. The Office’s independent investigation revealed that Ibrahim received at least $21.8 million of nonprofit assets, of which he steered more than $14.8 million to entities owned or co-owned by Farah.  Meanwhile, one of Farah’s entities made payments to Ibrahim of nearly $850,000 for “consulting.”  Ibrahim and Farah were criminally indicted in September 2022 by a federal grand jury on several charges related to the federal child-nutrition funds, including wire fraud, money laundering, and conspiracy to commit those offenses.

In Minnesota, the Attorney General through the Charities Division has civil enforcement authority over the state’s nonprofit corporation and charitable-solicitation, and charitable-trust laws. The Charities Division does not enforce criminal laws.  Under state law, nonprofit executives owe fiduciary duties to act in the best interests of the charities that they serve, including putting the interests of the nonprofit above any personal financial interests. The Attorney General’s Office provides additional information about these fiduciary duties, as well as other resources to help nonprofit leaders properly serve their organizations, on its website at www.ag.state.mn.us/Charity/InfoNonProfits.asp.