Charity Scam Highlights Need For Scrutiny In Making Donations
Attorney General Spitzer today announced that his office has won a court order blocking a charitable solicitor from cashing in on ill-gotten donations and barring him from further fundraising in New York State.
Justice W. Patrick Falvey of State Supreme Court in Yates County signed a temporary restraining order preventing Douglas David Henschen, Jr., owner of Henschen Ministry Services, a Texas consulting company that provides fundraising services, from transferring donations meant for a Monroe County charity to his Texas address. Spitzer's office also was successful in freezing bank accounts controlled by Henschen totaling approximately $20,000.
The judge ordered the fundraiser to appear in court on December 19, 2000 to explain his allegedly fraudulent actions.
"Charities fraud robs both the worthy causes of needed financial support and the community of public trust," Spitzer said. "In order to encourage the continued commitment and generosity of charitable donors, and to ensure the integrity of its beneficiaries, my office must aggressively prosecute those who violate this public trust."
The lawsuit filed by Spitzer's office alleges that Henschen used a private mail box in Elmira, New York to trick potential donors to mail to him their checks for Freedom Village USA - a Yates County charitable organization that runs a halfway house for troubled teens.
For two years Henschen provided fundraising services for Freedom Village until the winter of 1999, when Founder and Director Fletcher A. Brothers discovered that Henschen had opened a private mail box in Freedom Village's name and had been collecting donations without forwarding them to his organization.
Because of this discovery and due to other disputes, in January 2000, Brothers ordered Henschen to cease fundraising on his organization's behalf.
Consumers, however, have reported receiving solicitations in Freedom Village's name throughout the year 2000 and as recently as November 2000 with instructions to send their donations to the Elmira address. One such solicitation included an enclosure and return envelope for the Elmira drop box along with the following instructions: "Use this coupon with your next gift and it will be matched, dollar for dollar, by an anonymous donor! You must use the envelope provided and this coupon for your gift to be matched!"
Freedom Village reports that, although Henschen has allegedly continued to solicit funds in its name, no donations have been received from him since he was ordered earlier this year to cease fundraising on the charitable organization's behalf.
Although it is undetermined how many solicitations may have been misappropriated by Henschen through the "drop box," Freedom Village reports that its mailing list contained the names of at least 31,000 individuals from across the nation, but mostly from the Upstate New York area and many of whom are seniors.
In filing the lawsuit, Spitzer's office asks the court to permanently bar Henschen from charities solicitations in New York State and from acting as a fund raiser. Spitzer's office also seeks an order directing Henschen to provide an accounting of all proceeds he received for Freedom Village and to make full restitution to the donors and to the charity. Civil penalties and court costs also are requested.
This case was handled by Assistant Attorney General Carlos Rodriguez of the Rochester Regional Office.
In light of the holiday season, a time when many individuals consider making donations to charities, Spitzer's office provides the following tips:
- Find out what the charity will do with the money - ask for information about its programs and ask for a copy of its financial report. Find out how much of your money will be used for charitable programs.
- Be wary if the organization will not provide information about its program and finances upon request.
- Ask what portion of your gift actually goes to support the charity's program and what proportion goes to administrative costs.
- Consult the Attorney General's annual publication, "Pennies for Charities," which reports the amounts raised by charity telemarketers and the amounts actually received by the charities on whose behalf the telemarketers solicit contributions.
- Be careful of charities with names that sound impressive or resemble those of other organizations - some organizations use names similar to those of well known organizations in order to confuse donors.
- Be wary of emotional appeals that talk about problems but do not explain how money raised will be spent or what the programs of the organization are.
- Read mail solicitation literature carefully to make sure it identifies the charity and tells what will be done with your money. If it does not, call or write for financial information.
- Be careful of appeals asking you to return something such as a questionnaire or survey. Such devices may be used to divert your attention from the organization's program and who it will spend your money.
- Ask for identification if the solicitation is made in person.
- Ask if donations are tax deductible.
- Don't fall for high pressure tactics of solicitations made over the phone. Ask for written materials containing information about the charity.
- If you decide to contribute, do not pay in cash, but instead pay by check.
- If giving to a law enforcement group, keep in mind that some people take advantage of the public's concern and make fraudulent solicitations in the name of legitimate police groups. When asked to give to a police organization, contact your local police or other law enforcement agency to check on the identity and the legitimacy of the group asking for the contribution. Be wary of a solicitor who uses coercive or abusive tactics or who promises that your contribution will entitle you to better police protection or special privileges.
- Contact the Attorney General's office at (800) 771-7755 to report charities fraud or to check on the records of a charity or its fundraiser.