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Post date: October 29 2015

A.G. Schneiderman Announces $700k Settlement with Operator of Clothing Donation Bin Charity Scam

For-profit Thrift Land USA Of Yonkers, Inc. Misled The Public Into Believing That Donated Clothing Would Benefit a Charity, Instead Sold The Clothing At A Huge Profit

Settlements Also Reached With Charities Whose Names and Logos Appeared On Thrift Land Bins

Schneiderman: When A For-Profit Company Masquerades As A Charity, My Office Will Hold It And Its Owners Accountable

WESTCHESTER—Attorney General Eric T. Schneiderman today announced that his office has reached a settlement with Thrift Land USA of Yonkers, Inc. (“Thrift Land”), a for-profit company which operates more than 1,100 clothing donation bins placed in shopping center parking lots, gas stations and other locations throughout the New York metropolitan area. The settlement resolves allegations that Thrift Land used a charitable veneer to trick and mislead the public into believing that the clothing it collected would benefit the charity whose name and logo appeared on its bins.  However, Thrift Land sold the clothing at a huge profit and the charities named on the bins – Big Brothers Big Sisters of Rockland County and I Love Our Youth, Inc. – received only a small, monthly fee for the use of their name and logo. The Attorney General also reached settlements with Big Brothers Big Sisters of Rockland County and I Love Our Youth, Inc. for entering into agreements with Thrift Land that enabled the company to use their name and logo to deceive the public.

“Duping members of the public into thinking that they are making a charitable donation, when in fact they are enriching a for-profit corporation, is both deceptive and illegal,” said Attorney General Schneiderman.  “When a for-profit company masquerades as a charity, my office will hold it and its owners accountable.”

The settlement with Thrift Land and its principal Carl Vella requires the company to rebrand its bins so they do not state or imply that clothing deposited in the bins will benefit any charity or serve any charitable purpose. Thrift Land will also permanently attach a prominent disclosure label on all of its bins clearly stating that none of the clothing deposited in its bins, or the proceeds from the sale of such items, will benefit a charity. As part of the settlement, Thrift Land has also paid $50,000 in penalties and costs, and made a payment of $650,000 to two not-for-profit organizations, the New York Community Trust and the Westchester Community Foundation, so that the charitable intent of the people who placed clothing in its bins will be fulfilled.

The Attorney General’s investigation of Thrift Land also found that the company:

·       Entered into contracts with charitable organizations as a professional fundraiser without having registered as a professional fundraiser with the Attorney General, and without having filed a bond approved by the Attorney General, as required by law;

·       Engaged in false advertising through mailings and its website which misled the public to believe that proceeds from the sale of used clothing  placed in its bins benefited I Love Our Youth and Big Brothers Big Sisters of Rockland County;

·       Scheduled home pickup of used clothing through deceptive means, such as answering its own telephone number using the name I Love Our Youth;

·       Falsely led people who arranged for home pickup to believe that their donations were tax deductible.

The Attorney General’s investigation of I Love Our Youth, Inc. found that the charity continued to permit Thrift Land to use its name to solicit funds from the public even after the charity’s state registration and federal tax exempt status had been revoked.  In addition, Hosea James Givan II, the chairman of I Love Our Youth, Inc., was found to have used charitable funds to pay for personal expenses unrelated to the mission of the charity.  As part of the settlement with I Love Our Youth, Inc., Mr. Givan has paid $50,000 in penalties and costs and has agreed to dissolve the organization.

The investigation of Big Brothers Big Sisters of Rockland County found that the organization failed to take adequate steps to ensure that its name and logo were not being used by Thrift Land in a deceptive manner.  By failing to oversee the manner in which Thrift Land was using its name and logo, Big Brothers Big Sisters of Rockland County allowed Thrift Land to solicit charitable donations from the public in a deceptive, fraudulent and unlawful manner.

As part of the settlement, Big Brothers Big Sisters of Rockland County has agreed to directly oversee, manage and supervise any and all charitable solicitations and/or advertisements in the name of the charity moving forward. In addition, within six months of the settlement, the Board of Directors of Big Brothers Big Sisters of Rockland County, and its CEO and President will complete a nonprofit board education training course that includes training in ethics, fiduciary duties and responsibilities and charitable solicitation.

Among the “best practices” to be instituted by Thrift Land as a result of the investigation and settlement include:

·       Thrift Land shall clearly disclose the for-profit nature of its business on its bins, and that none of the clothing or other items deposited in the bins/drop boxes, or the sale of such items, will benefit any charity.  The label shall clearly and conspicuously state: “This is not a charity. Donated items deposited here will NOT support any charity and are not charitable donations, but will be sold for profit.”

·       Thrift Land shall ensure that its donation bins have the company’s name and telephone number conspicuously displayed;

·       Thrift Land shall obtain written consent from each property owner on whose property bins are placed, and shall provide each property owner with a working telephone number and commit to responding to any complaints regarding bin/box maintenance within 24 hours of receiving notification during regular business hours;

·       Thrift Land shall comply with all applicable zoning and or permitting requirements, including state, local and municipality requirements.

In the event that Thrift Land enters into a contract with a charity pursuant to which the charity receives a portion of the proceeds of the sale of clothing placed in its bins, the following additional best practices shall apply:

·       Donation bins shall prominently disclose the name and telephone number of the charitable organization for which donations are being solicited

·       Donation bins shall prominently disclose whether the clothing that is donated is sold for a profit by Thrift Land, and the percentage of the sale proceeds that is paid to the charitable organization.

The Thrift Land, I Love Our Youth and Big Brothers Big Sisters of Rockland County cases were handled by Assistant Attorney General Sandra Giorno-Tocco, Volunteer Assistant Attorney General Irma K. Nimetz and Law Department Investigator John Slevin led by supervision of Gary S. Brown, the Assistant Attorney General-in-Charge of the Westchester Regional Office, and Marty Mack, Executive Deputy Attorney General for Regional Affairs.