Bryan Cohen Jun. 28, 2011, 9:50am
NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman filed a lawsuit on Tuesday against a charity that had allegedly funneled donation money to organization insiders and fundraisers.
The Long Island, N.Y.-based Coalition Against Breast Cancer solicited $9.1 million over the past five years but allegedly spent virtually no money on the breast cancer programs it claimed to support. Schneiderman alleges the money was used to pay exorbitant fundraiser fees, benefits packages, unjustified salaries and for other personal goods like cell phones, TV, internet services and home phones.
The lawsuit charges CABC and its for-profit fundraiser, Campaign Center with violations of New York not-for-profit and charitable solicitations laws.
"By using a charity as a personal cash machine, the Coalition Against Breast Cancer and Campaign Center shamelessly exploited New Yorkers' natural sympathies and generosity," Schneiderman said. "Instead of benefiting breast cancer victims and their families, millions of dollars were misused for personal benefit. This type of scam will not be tolerated in New York, and my office will continue its work to stop charities fraud and hold those who commit it accountable."
Schneiderman alleges that CABC and Campaign Center exploited breast cancer as a national charitable cause, making false claims about the activities and services they provided. He alleges that CABC's website uses stock photos of children and mothers, plays emotional music and asks donors to help achieve the "dream" of "eradicating breast cancer" despite the organization directing barely any of the funds it raised to such a cause.
Other allegations include advertising a bogus relationship with Memorial Sloan-Kettering Cancer Center, falsely telling donors that their money would be used to fund breast cancer research, mammogram screenings, support seminars and forums for survivors and their families, and spending less than one-half of 1 percent of donations raised for any purpose related to breast cancer prevention or detection.
Schneiderman alleges that in 2008, CABC raised $1.4 million from the public and spent only $374 on mammograms. In the past three years, CABC allegedly only funded mammograms for 11 women in total. CABC allegedly spent less than four percent of all donations on its alleged charitable programs in total.
Campaign Center, which is owned by a longtime association of CABC's founding director, controlled CABC's fundraising operation, retaining 85 percent of the money it raised, Schneiderman says.
Staffers allegedly engaged in fraudulent fundraising tactics such as providing misleading information about CABC, including that it helps donors' local community and that the services would assist individuals living in the same town as the donors, sending phony invoices to individuals claiming that they agreed to pledge certain amounts when they did not, sending invoices to individuals who never received a phone call and to others who had made a donation but from whom Campaign Center wanted to elicit a duplicate pledge.
CABC, its directors Debra Koppelman, Andrew Smith and Patricia Scott, as well as Campaign Center and its owner, Garrett Morgan, are named in the lawsuit. They are charged with engaging in a scheme to defraud and violating the state's not-for-profit and charitable solicitation laws. The lawsuit alleges awarding generous, unjustified salary and benefits packages, making unlawful insider loans to two of the directors and devising a scheme to collect unemployment insurance after termination of Smith from his full-time employer.
Schneiderman is seeking to shut down CABC and hold the defendants financially accountable for the alleged waste and misappropriation of CABC's charitable assets.