A.G. Schneiderman Obtains Court Decision Shutting Down Major Charitable Fundraiser For Defrauding The Public
One Of Largest NYS Fundraisers Reaped Millions For Sham Breast Cancer Charity Using Deceptive Tactics; Sham Charity Also Closed
Schneiderman: I Will Protect New York Donors Against Unscrupulous Fundraisers Who Exploit Breast Cancer And Other Charitable Causes For Their Own Benefit
NEW YORK – Attorney General Eric T. Schneiderman today announced that his office obtained a landmark decision shutting down Campaign Center, Inc., one of New York's largest professional fundraising firms, for defrauding the public out of millions of dollars in the name of fighting breast cancer. The decision requires Campaign Center and owner Garrett Morgan to pay restitution for the fraud, the full amount of which will be determined at an upcoming hearing. It also bars Morgan and Campaign Center from any further charitable fundraising in New York State.
The directors of the now-shuttered sham charity, Coalition Against Breast Cancer (CABC), separately reached an agreement with Attorney General Schneiderman’s office last month requiring them to pay $1.55 million in restitution and prohibiting them from ever again running a New York charity.
“Sham charities and professional fundraisers who line their pockets by tricking New Yorkers into thinking they are donating their hard earned money to fund breast cancer research and other charitable causes have no business operating in our state, and we will take action to shut them down,”Attorney General Schneidermansaid. “This important decision reaffirms my office’s determination to use the powers available under New York law to ensure honesty and integrity in the field of charitable fundraising, and to protect New Yorkers.”
The decision, issued yesterday by New York Supreme Court Justice Emily Pines in Suffolk County, found that Campaign Center and Morgan deceived thousands of donors into making charitable contributions to CABC based on false representations that CABC helped women fight and survive breast cancer through research, education and early detection. In reality, despite raising nearly $10 million from the public from 2005-2011, CABC did not engage in any research, it did not carry out any public education and it supported mammograms for only 40 women over this 7-year period. The decision held that Campaign Center and Morgan’s deceptive fundraising constituted repeated violations of New York law.
The decision permanently barred both Campaign Center and Morgan from any further charitable fundraising in New York State and ordered that Campaign Center be dissolved. The court set a May 20 hearing date for the limited purpose of determining how much in restitution Campaign Center and Morgan will be required to pay. Prior to the court's decision, the Attorney General entered into a settlement agreement with CABC and its directors, Andrew Smith, Debra Koppelman and Patricia Smith. Under the settlement, CABC will be dissolved and its directors permanently barred from serving as officers or directors of a New York charity and from engaging in charitable fundraising in the State. In addition, the directors have been ordered to pay a money judgment totaling $1,555,000 in restitution.
Attorney General Schneiderman sued Campaign Center, Morgan and CABC and its directors in June 2011, charging them with violations of New York State not-for-profit and charitable fundraising laws. The Attorney General’s investigation revealed that CABC and Campaign Center exploited breast cancer as a national charitable cause and made false claims about the activities and services it provided. CABC’s website featured stock photos of children and mothers, played emotional music and asked donors to help achieve the “dream” of “eradicating breast cancer,” though the organization itself directed virtually none of the funds it raised to that cause. Donors were misled into believing that their money would be used to fund breast cancer research, mammogram screenings through a mobile van, and seminars and forums for survivors and their families.
Morgan is a longtime associate of CABC’s founding director, Andrew Smith, and controlled CABC’s fundraising operation. His company, Campaign Center, was CABC's principal outside fundraiser and, under a deal with CABC, kept up to 85 percent of the money it raised for CABC.
The Attorney General’s investigation determined that CABC was not affiliated with any cancer institution, and spent virtually nothing on breast cancer programs. According to the lawsuit, CABC spent less than one-half of 1 percent of donations raised for mammograms or any other purpose related to breast cancer prevention or detection. In 2010, a year in which CABC raised more than $1.1 million from the public, it spent a mere $632 on mammograms. In total, CABC spent only 4 percent of all donations on any of its alleged charitable programs.
This case has been handled by Charities Bureau Enforcement Section Chief David E. Nachman, Scott R. Wilson, Special Counsel to the Attorney General, and Assistant Attorneys General Rose Firestein and Kerin E. Coughlin, under the supervision of Charities Bureau Chief Jason Lilien and First Deputy of Affirmative Litigation Janet Sabel.
A copy of the decision can be found here: www.ag.ny.gov/pdfs/judge_pines_order.pdf.