The BBB Standards for Charity Accountability are used by BBB Wise Giving Alliance in completing evaluative reports on charities. These standards are voluntary and go beyond what is required by government regulators. From time to time, however, charities are the subject of government action by state government agencies, federal agencies, or both. If the identified charity has been the subject of a report produced by BBB Wise Giving Alliance, it will review the circumstances and timing of the issues in the case to determine if it impacts the accountability evaluation of that charity.

The information in this section is intended to provide summaries of final actions on charity cases undertaken by these authorities. This is not intended to provide information on all actions that have recently taken place but a representative sample that highlights the nature of issues that emerge in such instances. The cases noted below were based on 2023-2024 information from the National Association of State Charities Officials (NASCO) which is an association of state offices (attorneys general, secretaries of state and other offices) charged with the regulation and oversight of soliciting charitable organizations in the United States. In addition, other final actions involving charities from 2023-2024 that come to the attention of BBB Wise Giving Alliance are also included in these summaries.

I. ALLEGED DECEPTIVE SOLICITATION

Kansas In April 2024, the Kansas Attorney General (AG) was awarded a default judgment against Southern Winds Equine Rescue and Recovery Inc. (SWER), a Kansas charity, and its president for using donations for other than charitable purposes. Specifically, SWER’s president failed to properly dissolve SWER after the board approved dissolution, continued to receive donations for the next two years, and used the donations for personal and for-profit purposes. The AG obtained an order permanently enjoining the defendants from operating any charitable organization or soliciting donations in Kansas and requiring them to pay actual damages of $50,922.36. In addition, the court assessed a civil penalty. During the pendency of the litigation, SWER’s president violated a TRO and was held in contempt after a show cause evidentiary hearing.

Maryland An investigation by the Maryland Attorney General led to a Cease and Desist Order issued to Johns Hopkins House and its director, Robert Brown, banning the organization from soliciting in Maryland. Violations alleged include use of false or materially misleading advertising or promotion in connection with a charitable solicitation, committing an act or engaging in a practice that by affirmative representation, or by omission, was misleading about a matter important to, or likely to affect, a person’s decision to make a charitable contribution, application of charitable contributions in a way substantially inconsistent with the charitable solicitation, use of a name, symbol, emblem, device, service mark, or printed matter that belongs to or is associated with another charitable organization to solicit charitable contributions without authorization, and failing to provide a copy of a financial statement to a person upon request. Enforcement activity is ongoing.

Massachusetts After an investigation, the Massachusetts Attorney General’s Office (AGO) filed suit in 2019 against Dawn Cardinal and Destiny’s Road Animal Rescue, the Massachusetts public charity controlled by Ms. Cardinal. As alleged in the complaint, Ms. Cardinal employed deceptive solicitation practices to raise funds for Destiny’s Road, significant amounts of which were misappropriated for her personal use. In January 2024, the AGO reached an agreement with Ms. Cardinal, memorialized in a Consent Judgment, under which she will pay $90,000 over a period of years. Those funds will be directed, under principles of cy pres, to another public charity that also conducts animal rescue efforts. Destiny’s Road is dissolving.

Minnesota In October 2023, the Minnesota Attorney General (AG) entered into an Assurance of Discontinuance with the Kitchen Kingz Corporation, a Minnesota nonprofit. Kitchen Kingz claimed to operate a recycling program for “high-end kitchens and luxury home goods” in which Kitchen Kingz would repurpose or sell items and use the proceeds to help charities such as Secondhand Hounds and Prevent Child Abuse America. An AG investigation revealed that Kitchen Kingz had not donated any funds to any charitable beneficiaries. Additionally, the investigation found that Mitchell Helling, the charity’s president, used at least $19,501.63 of Kitchen Kingz’s assets for his personal benefit. Under the terms of the settlement agreement, Helling must pay back $19,501.63 and is permanently banned from charitable-sector activity. He is also subject to a penalty of $25,000 if he violates any term of the settlement. The charity must liquidate its assets, distribute them to one or more Minnesota nonprofit corporations with similar charitable purposes, and dissolve.

Minnesota In December 2023, the Minnesota Attorney General investigated Florida-based charity Kids Wish Network, Inc. (Kids Wish) for deceptively soliciting donations from Minnesotans by giving the impression that funds would be used to grant wishes to area children with serious medical diagnoses, when, in reality, the vast majority of the funds raised supported mail campaigns rather than helping kids. Kids Wish entered into an Assurance of Discontinuance with the Attorney General in which it agreed to refrain from soliciting contributions in Minnesota for five years.

In March 2024, the Federal Trade Commission and nine states including California, Florida, Maryland, Massachusetts, North Carolina, Oklahoma, Oregon, Texas, Virginia and Wisconsin sued Cancer Recovery Foundation, Inc. (d/b/a Women’s Cancer Fund) and its operator, Gregory B. Anderson, for allegedly deceiving donors who sought to offer financial support to women battling cancer and their families.

II. ALLEGED GOVERNANCE ISSUES / BREACH OF FIDUCIARY DUTY

California In 2017, charity African-American Male Achiever’s Network (AMAN) paid $2,401,100 to Bettye Walker and Hildreth Walker, Jr., as “retroactive compensation” for their 25 years of service to AMAN. The Attorney General (AGO) alleged that the AMAN board of directors failed to follow proper procedures and lacked supporting documents to demonstrate that the compensation was just and reasonable, as required under California law. In addition, the payment was funded by the sale of AMAN’s primary asset, a building in Inglewood, and AMAN failed to give the AGO notice of the sale as required. The matter was resolved through a settlement agreement, with the Walkers returning $1.7 million to the charity.

California The AERO Institute received funding from NASA to promote STEM in local schools. In June 2017, the Los Angeles County District Attorney filed charges against the mayor of Palmdale, who was paid by the charity as a consultant, and two of AERO’s officers/directors for embezzlement, misappropriation of public funds, and grand theft, resulting in guilty pleas. In June 2021, the District Attorney filed related charges against AERO’s executive director. The Attorney General filed a complaint in the Los Angeles County Superior Court to involuntarily dissolve AERO. In June 2024, the Court entered judgment involuntarily dissolving AERO and distributing more than $1 million in its remaining assets to other charities to fulfill its charitable purpose.

DC In 2020, the DC Office of the Attorney General filed a complaint challenging the NRA Foundation, Inc.’s transactions with the NRA, including transfers of its funds to the NRA in a series of loans, grants to the NRA that were made without legally required oversight, and inflated management fee payments. In April 2024, the parties entered into a consent order resolving the District’s claims. Under the agreement, the NRA Foundation must conduct annual compliance training for all new officers and directors, create an audit committee separate from the NRA’s, enter into a revised shared services agreement with the NRA that specifically sets forth the basis for the fee, create its own conflict of interest policy, require the NRA to submit written grant applications for Foundation funds, enter into written grant agreements with the NRA that ensure proper oversight of grants to the NRA to support its charitable programs, and create a policy governing future loans to the NRA of $250,000 and above. The consent order also requires the Foundation to provide the DCOAG with copies of all related new or revised policies and agreements through at least December 2026.

DC In October 2023, the Coast Guard Auxiliary Association entered into an assurance of voluntary compliance with the Office of the Attorney General (DCOAG). DCOAG opened an investigation into the Association after it learned of improper payments from the Association to its president Vincent Pica. That investigation revealed that in 2017, 2018, and 2019, Mr. Pica donated a total of $315,000 to the Coast Guard Foundation—another nonprofit organized to support the Coast Guard—to buy tables at its annual fundraising gala. The Foundation then returned $302,716 of Mr. Pica’s donations to the Association. Rather than using the funds for its charitable programs, the Association transferred them back to Mr. Pica without board approval or ratification. The Association entered into a settlement with DCOAG that requires it to make compliance reports to DCOAG for two years and to report all meeting minutes regarding either the election or appointment of officers and directors or the review and approval of conflicted transactions between the Association and an officer or director.

DC The Fraternal Order of Police, Jerrard F. Young Lodge #1 (Lodge) is a nonprofit corporation whose membership includes active and retired DC law enforcement officers. The Office of the Attorney General opened an investigation into the Lodge after The Washington Post reported on its “Jack Daniels Committee” which was allegedly running an extensive illegal off-premises liquor sales program that had raised hundreds of thousands of dollars, approximately one-third of which were paid to the Lodge’s chair, Michael Kruggel, as “reimbursements” for travel and lodging expenses he allegedly incurred. The investigation uncovered that the Lodge violated numerous alcohol and beverage regulations and did not have sufficient oversight or procedures for credit card usage or reimbursements. In October 2023, the Lodge entered into a settlement agreement requiring it to comply with the District’s alcohol and beverage code, ensure key personnel take courses in nonprofit governance and financial accountability, implement policies governing credit card use and reimbursements, and cooperate with any continuing investigation into Mr. Kruggel.

Illinois The Office of the Attorney General (OAG) continues to pursue a civil accounting action against Wheaton Historic Preservation Council (WHPC) and three of its board members for violations of the Illinois Charitable Trust Act and the Illinois Solicitation for Charity Act. WHPC was founded in 1980 and operated a historical museum in the City of Wheaton, Illinois until at least 10 years ago when it entered into an agreement with the city to store its historical artifacts in a city storage facility that is not open to the public. WHPC subsequently sold its museum property and ceased active operations. WHPC also stopped filing required annual reports, resulting in cancellation of its registration. Questions arose as to (a) whether WHPC was properly protecting its historical artifacts, (b) whether WHPC had misused money, and (c) whether WHPC had improperly loaned money to a board member. WHPC and its board members did not cooperate in providing accounting documents and did not authorize access to the WHPC storage facility. The OAG later obtained WHPC bank records showing questionable distributions of $300,000 to a WP board member. In August 2023, the Court granted the OAG’s Partial Motion for Judgment, ruling that $192,000 of the monies that were paid out to a board member must be forfeited, and that the pleadings established that the Defendants are unfit to serve as charitable trustees and should be removed and replaced with new trustees or a receiver. In June 2024, the Court appointed a receiver to enforce the $192,000 judgment and collect and inventory the organization’s artifacts and assets.

Minnesota In December 2023, the Minnesota Attorney General’s Office (AG) filed an Assurance of Discontinuance that required Gateway STEM Academy (Gateway), a Minnesota charter school, to part ways with its founder, who allegedly directed $300,000 to companies owned or controlled by himself and three of the school’s directors or officers. An investigation by the AG’s Charities Division determined that Abdiaziz Shafii Farah, founder and executive director of Gateway, violated his fiduciary duties, and that previous directors or officers violated their fiduciary duties by failing to sufficiently oversee Farah and failing to have policies and procedures that would have detected and prevented improper transactions. In the Assurance, Gateway’s reconstituted board agrees to investigate how the improper transactions occurred, ensure sufficient training for directors and officers regarding their duties under state and federal law, and not work again with the former directors and officers accused of benefiting from the self-dealing transactions. Separately, Farah was convicted in a federal criminal trial for stealing millions of dollars in federal child-nutrition funds and was subsequently charged with attempting to bribe a juror in the trial.

Minnesota In December 2023, the Minnesota Attorney General entered into an Assurance of Discontinuance with the Minnesota 100 Club. The Minnesota 100 Club provides charitable assistance to the families of first responders seriously injured or killed in the line of duty. The Minnesota 100 Club voluntarily complied with a Charities Division investigation that revealed that the organization engaged in related-party transactions without having proper policies or procedures or otherwise taking affirmative steps to determine whether these transactions were fair and reasonable. The investigation further revealed that the alleged violations were the result of general governance deficiencies at the Minnesota 100 Club. In the Assurance, the nonprofit agreed to conduct a review of its governing documents, policies, and procedures, adopt written conflict of interest and vendor contract management policies, conduct regular board and committee meetings and reporting, and undergo training on their duties as nonprofit directors and officers under Minnesota and federal law.

Minnesota The Minnesota Attorney General (AG) investigated Honor the Earth, a charity supporting Native American and environmental causes, after the nonprofit incurred a $750,000 sexual harassment judgment that implicated the nonprofit’s governance. The investigation revealed former leadership’s dismissal of internal misconduct that exposed the organization to significant legal and financial liability, as well as additional governance issues including inadequate financial controls and recordkeeping and failure to comply with registration requirements. The charity had made significant compliance improvements, and in February 2024, the AG entered into an Assurance of Discontinuance with the organization, requiring it to continue compliance efforts including reinstating its registration.

Minnesota The Minnesota Attorney General (AG) investigated Eagles Healing Nest, a charity providing veterans and their families with housing and services, after reports that the founder was misusing funds. The investigation uncovered evidence that the founder was running the nonprofit without board supervision and was mismanaging the nonprofit’s finances, including using charitable assets for personal expenses. The charity had also failed to maintain its required registration. In March 2024, after the organization formed a new board and hired experienced nonprofit counsel to improve compliance, the AG and the charity and its founder entered into an Assurance of Discontinuance that required that the founder be terminated and that the organization continue its compliance efforts including reinstating its registration, and that mandated that the founder repay $10,000 to the nonprofit over three years.

Minnesota In March 2024, the Minnesota Attorney General’s Office (AG) filed an Assurance of Discontinuance requiring Action for East African People (AFEAP) to separate from its founder, whom the AG found had diverted millions of dollars in charitable assets to herself and family members. The AG alleged that AFEAP violated charity laws by making payments of at least $450,000 to Ayan Abukar, its founder and executive director, or to companies she headed, and additional payments of at least $287,000 to one of Abukar’s daughters or companies she headed as well as at least $894,000 to other Abukar family members or companies they headed. In the Assurance, AFEAP agrees to enact governance reforms and remove Abukar and the daughter from its financial accounts. Separately, a federal indictment alleges that Abukar used AFEAP as a conduit to allegedly steal millions of dollars in federal child-nutrition funds. AFEAP operates a dental clinic that serves low-income patients and others in need, including those from Minnesota’s Somali community and other uninsured and underinsured immigrant communities.

Minnesota The Minnesota Attorney General’s Office (AG) investigated All In Minnesota, a youth soccer charity, after receiving complaints about the nonprofit’s governance. The investigation uncovered evidence that the board of directors failed to hold meetings, appoint a treasurer, or implement policies and procedures to protect the charity’s assets, resulting in conflicted transactions with the founder and entities tied to related parties. The charity also failed to register with the AG and abandoned the corporation in 2022 without following dissolution procedures. In August 2024, the AG entered into an Assurance of Discontinuance with the charity notifying the public of the organization’s governance violations and requiring the charity to dissolve.

New Hampshire The New Hampshire Charitable Trust Unit (CTU) executed an Assurance of Discontinuance with the New Hampshire nonprofit charitable corporation Bearcamp for Sustainable Community for alleged breaches of fiduciary duties. The Board’s conduct included voting to sell real estate below market value to former board members and in violation of the terms of a conservation easement. The Board also failed to pay wages in a timely manner to the Executive Director and voted to change its purpose, then used its existing assets for the new purpose without seeking court approval. As part of the Assurance, the charity was required to retain legal counsel to resolve real estate issues, repay loans from the Executive Director, pay compensation timely, and undergo Board training. The charity was also required to pay CTU’s cost of investigation and a voluntary payment of $10,000 in lieu of civil penalties.

New Hampshire The New Hampshire Charitable Trust Unit (CTU) executed an Assurance of Discontinuance with the New Hampshire nonprofit corporation NuDay, which provided humanitarian aid inside Syria and helped displaced Syrians in the areas bordering Syria. The president of NuDay, Nadia Alawa, pled guilty in federal court to three counts of failure to file export information in violation of federal law. CTU investigated NuDay regarding its annual reports and determined there were irregularities, including an excessive value assigned to in-kind donations (approximately $40 million), which allowed the charity to appear more successful than it was. In the course of CTU’s investigation, Alawa made false statements under oath regarding bank accounts controlled by NuDay. The Assurance required Alawa to pay CTU the cost of investigation as well as a $20,000 voluntary payment in lieu of civil penalties. Alawa is also prohibited from serving on any New Hampshire charitable organization for a period of 50 years.

New York Following an investigation that began in Spring 2019, the New York Attorney General’s Office (NY OAG) in August 2020 sued the National Rifle Association of American and several of its officers and directors including Wayne LaPierre, the Executive Vice-President, Wilson Phillips, the former Chief Financial Officer and Board Treasurer, and John Frazer, the then General Counsel and Corporate Secretary, alleging various statutory violations of state law governing charities and their fiduciaries. The case proceeded to a jury trial in early 2024, the first time a New York jury addressed claims asserted under state charity law in a regulatory enforcement action. After a six-week trial, the jury found: (1) improper administration of a charity and its assets under N.Y. Estates, Powers & Trusts Law by the NRA; (2) violations of New York’s whistleblower provisions of the N.Y. Not-for-Profit Corporation Law (N-PCL) by the NRA, (3) violations of statutory fiduciary responsibilities under the N-PCL by the individual defendants, who were senior leaders of the NRA. The jury further determined there was cause to remove the chief executive officer and assessed damages of $7.4 million from breaches of fiduciary duty by LaPierre and Phillips. In addition, the jury found that the organization and its former general counsel had made false statements in regulatory filings in violation of N.Y. Executive Law.

The Court bifurcated the issue of non-monetary equitable remedies for a second, non-jury trial, which was held in July 2024. The Court barred Mr. LaPierre from returning to the NRA or any of its affiliates in any fiduciary role for 10 years. The Court declined to appoint an independent monitor over the NRA, citing remedial measures and governance changes at the NRA during the pendency of the litigation. These measures included changes in personnel at the executive level and establishing a Compliance function led by a new Chief Compliance Officer and Director of Internal Audit. The Court, however, found more changes at the NRA should be considered and directed the parties to make further submissions of proposed forms of relief to be ordered at a later time.

Before the second stage of the trial, the NY OAG reached a settlement with Phillips, the former CFO, who accepted a 10-year bar on serving as a nonprofit fiduciary in New York. The settlement left in place the $2 million damages and liability verdict against him by the jury. In addition, the NY OAG reached a settlement before trial with a fourth NRA executive, Joshua Powell, former senior strategist and chief of staff to LaPierre, who admitted wrongdoing, paid $100,000 in restitution to the NRA, and agreed to a lifetime bar on being a nonprofit fiduciary in New York.

New York In April 2024, the New York Attorney General’s Office (NY OAG) reached an agreement with the Diocese of Brooklyn to resolve years of mismanagement of clergy sexual abuse cases by the Diocese and its failure to comply with the policies and procedures it had adopted for investigating and responding to abuse complaints. The agreement is reflected in an Assurance of Discontinuance that includes the NY OAG’s findings that the Diocese applied inconsistent standards to evaluate the credibility of an abuse allegation, delayed investigations, and failed to monitor priests who were found by the Diocese to have been credibly accused of sexual abuse. The agreement requires the Diocese to strengthen its existing policies and procedures for handling sexual abuse, including by mandating timelines for the review, independent investigation and determination process. It also requires the Diocese to implement measures to improve the availability of the complaint process and to put in place a whistleblower policy. The Diocese also agreed to changes and improvements to the personnel handling allegations of sexual abuse and misconduct, including appointing a director to oversee that function at the Diocese and adding a qualified person with law enforcement or counseling experience to be a Clergy Monitor. The Diocese further committed to making public disclosures when clergy are removed from active ministry due to a finding of credible allegations of abuse. The Diocese’s compliance with these and the other conditions in the Assurance will be reviewed by an independent secular monitor, who will be installed for a minimum of 3 years, and will issue annual reports, which will be published on the Diocese’s website.

Ohio Problems within the Wood County-based Impact with Hope Children’s Worldwide Hunger & Health Relief led to inter-agency enforcement efforts. The Charitable Law Section (CLS) staff assisted the Wood County Prosecuting Attorney’s Office in successfully prosecuting Linda Green, the organization’s founder and CEO, for making personal use of funds intended to support the organization’s mission. Green was sentenced to three years in prison with 18 months of mandatory post-release control, with a possibility of three years of post-release control. She was also ordered to make restitution of $300,000. CLS also examined breaches of fiduciary duties by the board members who failed to ensure that policies and procedures were in place that would have prevented Green from near total control of the charity’s books, records, finances, governance and operations. CLS received a consent judgment in an action targeting the members of the charity board. Under the judgment, all board members were directed to resign their positions. A receiver was appointed by the court to wrap up operations and sell any assets of the group, which will be directed by the Attorney General’s Office to other charitable entities.

Ohio In 2022, the Charitable Law Section sued Art Iron Foundation and its last remaining board member, Robert Schlatter, for allegedly breaching fiduciary duties in failing to properly operate the charity. Following mediation, the case was resolved with a consent judgment requiring payments of $30,000 in civil penalties and an agreement to submit missing reports, fees, and late fees for all registration-related reports since 2018. Schlatter will resign from the board and will be permanently enjoined from participating in the charitable sector. CLS will participate in the appointment of new board members, and all of them will be required to complete Charitable University, CLS’ online training for charitable boards.

Ohio The Ohio Attorney General’s Charitable Law Section was one of several different governmental entities and AG sections that became involved after The Columbus Dispatch published a story featuring a whistleblower’s account of alleged financial fraud and personal misuse of assets at the Columbus Zoo in 2021. After a multi-year investigation, criminal charges were filed against the former chief executive officer, the former chief financial officer, the former zoo marketing director, and the former zoo purchasing agent. All defendants entered pleas to a range of felony charges that included aggravated theft, conspiracy and tampering with records. Sentencing is expected in the Fall of 2024. The zoo was also required to adopt a wide range of internal controls and other procedures aimed at preventing the various schemes that defrauded the zoo of at least $2.3 million.

Washington In September 2023, the Washington Attorney General (AG) sued The Noble Foundation, its associated charities, and directors/officers (collectively, “Foundation”) for violations of Washington’s Nonprofit Corporation Act. The Foundation’s primary purpose was to help BIPOC members of Southwest Washington obtain government services, particularly during the COVID-19 pandemic. The AG alleges that the Foundation mismanaged and/or misappropriated over $1 million dollars in charitable assets. Ophelia Noble, the Foundation’s founder, received most of the misappropriated funds, including a house, car, and lump sum payments as purported “back pay.” The AG further alleges that the Foundation’s directors—largely comprised of Ms. Noble, her family, and friends—breached their fiduciary duties to the Foundation by assenting to the offending transactions. The AG continues to litigate the matter, with trial set for February 2025.