A.G. Schneiderman Obtains Court Decision Ordering Major Long Island Fundraiser To Pay $3.1 Million In Restitution For Defrauding Donors
Telemarketing Firm Shut Down And Principal Permanently Barred From Charitable Fundraising In New York
Total Restitution For Breast Cancer Charity Fraud Exceeds $4.6 Million
Schneiderman: Recovered Funds Will Be Distributed To Legitimate Organizations To Support The Fight Against Breast Cancer
NEW YORK – Attorney General Eric T. Schneiderman today announced that his office obtained an award of nearly $3.1 million in restitution from Campaign Center, Inc., one of New York's largest professional fundraising firms, and its principal Garrett Morgan, for using a sham charity, Coalition Against Breast Cancer (CABC), to defraud the public out of millions of dollars in the name of fighting breast cancer. Combined with the $1.55 million judgment reached in April against the charity's board, Attorney General Schneiderman has now secured over $4.6 million in restitution for this fraud.
The decision announced today was issued by Suffolk County Supreme Court Justice Emily Pines in a lawsuit Attorney General Schneiderman brought in 2011 against the fundraiser and its Long Island-based client, CABC.
“Charitable fundraising scams are among the lowest of the low. They defraud the public and divert valuable funds away from important causes– in this case the fight against breast cancer,” Attorney General Schneiderman said. “As this decision demonstrates, New York fundraisers will be held accountable when they defraud the public to line their own pockets. Professional fundraisers are prohibited by law from deceiving or misleading donors to raise funds, and my office will continue to use its powers to ensure honesty and integrity in the field of charitable giving.”
In addition to obtaining $3.1 million in restitution, the Attorney General’s office obtained a decision in May shutting down Campaign Center and barring Morgan from future charitable fundraising in New York State. In April, Attorney General Schneiderman’s office reached a separate agreement with the directors of the now-shuttered CABC, requiring them to pay an additional $1.55 million in restitution. Under this separate agreement, the former CABC directors also are barred from ever again running a New York charity.
The most recent ruling by Justice Pines, issued yesterday, followed a two-day trial to determine the amount of restitution Campaign Center and Morgan would be required to pay. In addition to awarding $3,094,246 in restitution, the court granted the Attorney General’s office an award of $12,345 in reimbursement for out-of-pocket costs incurred during the investigation and litigation.
The Court’s order authorizes the Attorney General’s office to distribute the restitution funds “to not-for-profit organizations in good standing that perform charitable activities relating to breast cancer,” activities of the sort donors to CABC were told that the charity actually performed.
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.” Despite that, 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.
In May, the court 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 millions of dollars 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 May decision held that Campaign Center and Morgan’s deceptive fundraising constituted repeated violations of New York law.
The trial was handled by Scott R. Wilson, Special Counsel to the Attorney General, and Assistant Attorneys General Kerin E. Coughlin and Rose Firestein, under the supervision of Charities Enforcement Section Chief David E. Nachman, Charities Bureau Chief Jason Lilien and First Deputy of Affirmative Litigation Janet Sabel. The Court’s decision relied heavily on the testimony of Charities Bureau Senior Accountant Cintia Brown-Felder, who worked on the case from investigation through trial.