Bryan Cohen Dec. 14, 2012, 8:05pm

SEATTLE (Legal Newsline) - Washington Attorney General Rob McKenna has announced a settlement with a Snohomish County horse rescue charity to resolve allegations of misusing charitable funds.

Under the terms of Friday's settlement, the Arlington-based People Helping Horses agreed to audit its finances and use solicited funds for the specific programs or animals mentioned in appeals.

In a separate settlement, Gretchen Salstrom, the former executive director of the charity, agreed to a ban from leading a Washington state non-profit for 10 years.

"Gretchen Salstrom was helping herself to money intended to help horses," McKenna said. "She used the group's money to pay for her own horse and dog-breeding business, and used the non-profit's credit and debit cards for questionable travel and entertainment expenses."

After receiving a tip from a concerned citizen in December 2011, McKenna's office looked into the organization, which raised more than $1 million the previous year. McKenna alleged multiple violations of the state's Consumer Protection Act and the Charitable Solicitation Act.

The organization allegedly made misleading or false statements about offering a therapeutic riding program for kids, horse education programs and schools, and checking up on horses after their adoption from the shelter.

Under the terms of the consent decree, People Helping Horses will not make misrepresentations to donors or potential donors, and will hold donations in segregated accounts and apply them to purposes stated in fundraising requests, create and maintain records that document the amount of restricted donations it receives and how donations are used, implement financial controls, obtain a financial audit by a certified public accountant each three years, provide an audit upon request to McKenna's office, provide management training to executive-level employees, comply with all registration requirements of the Secretary of State's Charity Program prior to soliciting and accepting donations, not enter into any lease, contract or any other business agreement with Salstrom, and not retain Salstrom in any capacity on the board of directors.

"We often use the old saying, 'buyer beware' when it comes to businesses," McKenna said. "But this settlement shows that the giver ought to beware, too."

People Helping Horses has $50,000 in suspended penalties as long as the organization follows the terms of the settlement. Salstrom must pay $5,000 in attorney fees and faces $25,000 in penalties per violation if she fails to follow the injunctive portions of her separate individual settlement.

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