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"Right now I fight not only for my honour, not only for money but also for the future of America that is exactly what I want to see in the United States of America because I think this nation is the best nation of humans."

 

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Why Taking Legal Action Against Charity Fraud Is So Hard

 

 

By Robert E. Cooper Jr.

 

When all 50 states and the Federal Trade Commission joined together in May to sue Cancer Fund of America and three related charities for fraud after a four-year investigation, some commentators asked, "What took so long?"

 

As a former state attorney general, I thought, "What an accomplishment!" In my experience, state nonprofit regulation presents formidable structural, financial, and legal challenges that make this first broad-based enforcement action a significant milestone.

 

When I was appointed Tennessee attorney general in 2006, one of my biggest surprises was the scope and complexity of the office’s nonprofit work. I knew the office had a broad portfolio, but I did not expect to litigate over a multimillion-dollar university art collection, foundation mismanagement, or misuse of nonprofit corporations. I should not have been surprised, since the nonprofit sector is estimated to account for 5 percent of the nation’s gross domestic product and 10 percent of its private-sector work force.

 

State attorneys general frequently collaborate on enforcing consumer protection, false claims, and antitrust laws. For example, 49 states and the federal government negotiated a highly publicized $25-billion consumer-protection settlement in 2012 with the five largest U.S. banks over allegations of fraud in servicing home mortgages. But in the nonprofit area, while many states have strong individual traditions of enforcement, broad collective action has been absent, at least until now.

 

So why did the states need four years to pull together the case against Cancer Fund of America and three related entities, which the complaint alleges were engaged in "massive, nationwide fraud" in their fundraising for cancer victims? After all, the defendants raised over $187 million from 2008 to 2012, and less than 3 percent went to cancer patients, according to the complaint.

 

First, there are structural challenges to nonprofit enforcement. In many states, nonprofit regulation is spread among multiple offices. For example, Tennessee’s attorney general enforces the state’s nonprofit statute, while the secretary of state enforces the charitable-solicitation statute and handles nonprofit registration and reporting.

 

The cancer-charity fraud case reflects this complexity. The complaint identifies 50 state attorneys general, the attorney general of the District of Columbia, eight secretaries of state, the Rhode Island Department of Business Regulation, and the Utah Division of Consumer Protection as participants in the lawsuit. As the number of responsible parties multiplies, cases inevitably move more slowly, and matters are more likely to fall through the cracks.

 

Second, nonprofit cases have financial challenges that other civil enforcement does not. Consumer cases, for example, are frequently brought against well-capitalized for-profit entities and often result in recoveries that state enforcement agencies can use to fund future cases. In the 2012 mortgage-servicing settlement, my office received $1.8 million for its work.

 

In contrast, during my eight years as attorney general, none of our charitable-litigation recoveries went to fund the office’s enforcement efforts.

 

Nonprofit enforcement, particularly involving fraudulent solicitation, often involves entities whose assets have been dissipated before a suit is ever filed. And recoveries, whether large or small, are more likely to be directed to bona fide charities than applied to the costs of investigation and litigation. This result respects the defrauded donors’ charitable intent, which is good legal policy and the right thing to do, but it does not help pay for future enforcement.

 

The cancer-charities case appears to be following the same path. According to the pleadings, the government will collect only a fraction of the settlement judgments against individual defendants because of their inability to pay. What little is recovered from the settling entities will likely be distributed to legitimate charities.

 

The lack of a reliable funding stream for nonprofit enforcement work is a problem in an era of shrinking state budgets. Because nonprofit fraud does not generally attract the same public interest as criminal protection or consumer enforcement, there is less political pressure to invest scarce resources there.

 

Even without financial incentives, all 50 states recognized the need to stop the alleged fraud at the four related cancer charities, so donors would no longer be cheated and funds would not be diverted from legitimate charities. The settlement shut down two entities and placed permanent solicitation bans on three individuals. That leads to the third challenge facing the states: Fraudulent solicitation cases like these are difficult to prove.

 

The U.S. Supreme Court has set a high First Amendment bar for governments seeking to limit speech related to charitable solicitation. As a result, the line between constitutionally protected speech and fraudulent solicitation can be hard to define. Exorbitant fundraising costs and paltry charitable spending are not enough. The government must prove fraud to make a case, which takes considerable time and resources.

 

Even before the 50-state lawsuit was filed, several states had obtained judgments against Cancer Fund of America over the years. But when one state succeeded, the business simply moved its focus to another.

 

That is why collective enforcement action was necessary. And the key to such action is enhancing the states’ ability to coordinate and share nonprofit information more efficiently.

 

Some of that work is already under way:

 

The National Association of State Charity Officials and the Charities Project of the Columbia Law School National State Attorneys General program provide important venues where state nonprofit-enforcement officials compare notes and collaborate.

The National Association of Attorneys General, the membership organization of state attorneys general, works with Nasco and is financially supporting the Cancer Fund of America litigation.

The Columbia Charities Project and the Urban Institute’s Center on Nonprofits and Philanthropy are close to finishing the first national survey of state charities regulators, which will provide the most detailed information to date on the nature and mission of these offices and the challenges they confront.

The most important advancement in collective enforcement, however, may be Nasco’s Single Portal project. The portal will offer a nationwide, web-based registration and filing system for nonprofits and their professional fundraisers and provide a central repository of regulatory data for officials, academics, policy makers, and the public. The project is working on a funding plan to launch the website. When the website goes live, a nonprofit will no longer be able to move from state to state to escape its past.

 

Federal agencies obviously play critical roles in multistate nonprofit enforcement. The FTC provided key support in pursuing the Cancer Fund of America case. Nasco is talking with the IRS and Treasury Department about making nonprofit tax data more accessible to state officials.

 

But state regulators are on the front line in regulating nonprofits in our federal system. It is a challenging job that demands greater efficiency, enhanced transparency, and stronger enforcement — all of which require money. While some of those resources must come from the states, the nonprofit community also needs to play a greater part. Let’s honor the generosity of America’s donors by finding the means to investigate and file the next multistate lawsuit or, better yet, to stop the fraud before a lawsuit is needed.

 

Robert E. Cooper Jr. is a member of the law firm of Bass, Berry & Sims, in Nashville. He served as Tennessee attorney general from 2006 to 2014 and as legal counsel to the governor of Tennessee from 2003 to 2006.

 

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Wade • a year ago

Thank you for your input, Mr. Cooper. As a volunteer citizen researcher of charity fraud for several years, my burning question has been this: given the financial and structural challenges to nonprofit enforcement, as detailed in your piece, why do state governments have no laws requiring charities to give a certain minimum percentage of funds raised to the actual causes they claim to support? Such a huge loophole, in my view, is a major reason why charity scams abound: the government is unwittingly making it easy for the fraudsters.

 

Back in the old days, I suppose it just seemed unthinkable that anyone starting a philanthropic organization would have ulterior motives, and conspire to give as little as possible to program spending, and look for ways to hold on to the money. But today it should be expected. Charity regulations need to be updated to reflect such an appalling reality. And even though arriving at a reasonable minimum charitable spending percentage would be difficult, it must be done. Many charity watchdog groups have suggested that at least 65% of a nonprofit's revenue should go toward program spending. It's a place to start. Of course, many if not most charitable organizations would vigorously protest such regulation, but as I say, we need to do something to stop the rampant conning.

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friarluca  Wade • a year ago

7 out of 10 of Charity Navigator's Top Notch Charities "spending percentage's" were 0%.

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Wade  friarluca • a year ago

Try CharityWatch instead. They're tougher on nonprofits.

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JR  Wade • a year ago

Unfortunately, CharityWatch is probably not nearly as well known as Charity Navigator (never heard of CW and I work in the nonprofit sector). Does this come from CN's more aggressive self-promotion, financed with kick-backs from those top 7?

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Wade  JR • a year ago

I agree that CharityWatch needs to be better known. But because it's reportedly more independent and assertive than other watchdogs, CharityWatch has ruffled a lot of feathers in the philanthropic world, which, after all, is big business. There are those who would try to limit CharityWatch's influence. In addition, perhaps a self-created limitation is that its founder and director, Daniel Borochoff, isn't a natural with public speaking. But he's very intelligent and can get his points across.

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JR  Wade • a year ago

Thank you for your reply. And perhaps it's better that CharityWatch remains lesser known, but credible and fearless.

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Wade  JR • a year ago

But what's the point of the fearlessness and credibility if not enough people know about them?

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JR  Wade • a year ago

Because the old saying about absolute power corrupts absolutely? Bernie Sanders, who I thought was pretty much incorruptible, was defensive and flustered and desperately clung to his speech when interrupted by #BlackLivesMatter, rather than talk extemporaneously and honestly about how he truly feels regarding all the recent racist tragedies. He was trying to protect his chance for the presidency.

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Wade  JR • a year ago

It’s ridiculous to suggest that having a solid platform on which to reach the public equals being corrupt. And now you’re off-topic with Bernie Sanders.

 

But as for that incident at Netroots Nation a while back, Sanders was very rudely interrupted by the Black Lives Matter protesters. They apparently wanted him to address questions of racism only, particularly in relation to police brutality. Deal is, Sanders did this, but he kept circling back to better-paying jobs and cheaper education (there is a connection!). The protesters took that as him evading the question. On top of that, Sanders was quite irritated by the constant interruption. Wouldn’t anyone be?

 

Besides, the protestors obviously didn't do homework on Sanders. He entered into politics via the civil rights movement, a half century ago. He organized with the Congress of Racial Equality in Chicago, and led a sit-in against segregated housing as far back as 1962. Sanders actually attended the 1963 March on Washington, and saw Dr. Martin Luther King, Jr., give his “I Have A Dream” speech in person.

 

OK, that's about all I have to say here. Thanks for the chat!

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JR  Wade • a year ago

Don't arrogantly dismiss me because you're done with the "chat." I'm not. And like most white men, black killings (issues) are less important than white ones (yes, I know a lack of jobs for black people is a major reason these tragic crimes take place). So what if Sanders was big part of the Sixties civil rights movement. We need that kind of civil rights dedication, NOW!

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JR  Wade • a year ago

Now, we're done!

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drem3558 • a year ago

A unified portal is a great idea. My question is this: Given the burden and expense to prove fraud, would criminal sanctions not be helpful? The perpetrators in the cancer fraud spent $180m of donations on themselves and their various entities and received the equivalent of a slap on the wrist.

 

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Wade  drem3558 • a year ago

As I said in my main comment here, it would be extremely helpful to pass an actual law requiring nonprofits to give at least something in the range of 65% of funds raised to the cause(s) they claim to be supporting, and to be able to prove such spending (no, we shouldn't just take their word for it). Charities would then have to literally "put their money where their mouth is."

 

With a law like that in place, there would hopefully be a strong weeding-out effect; no self-serving charity scammer would tolerate that kind of percentage going out the door. Why, they couldn't make their Porsche payment, and they couldn't take their family to Disney World for a month!

 

But even having such a mandatory minimum, there would of course be all kinds of ways a nonprofit could eke out a decent fraud on the funds remaining. Other measures would still need to be taken, not the least of which is the government finding a way to stay on task with regulation. For every big charity fraud bust we read about, there are perhaps a hundred other groups getting away with it. It's like the Wild, Wild West out there!

 

Robert E. Cooper Jr. is a member of the law firm of Bass, Berry & Sims, in Nashville. He served as Tennessee attorney general from 2006 to 2014 and as legal counsel to the governor of Tennessee from 2003 to 2006.

 

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https://www.irs.gov/uac/newsroom/fake-charities-among-the-irs-dirty-dozen-list-of-tax-scams-for-2015

https://www.google.com/#q=charity+fraud+laws 

https://www.ftc.gov/news-events/press-releases/2015/05/ftc-all-50-states-dc-charge-four-cancer-charities-bilking-over

 

FTC, All 50 States and D.C. Charge Four Cancer Charities With Bilking Over $187 Million from Consumers

 

Complaint Alleges Defendants Falsely Claimed Donations Would Help Pay For Pain Medication, Hospice Care & Other Services; But Spent Donations on Cars, Trips, Sports Tickets, & Professional Fundraisers

 

FOR RELEASE

May 19, 2015

TAGS: deceptive/misleading conduct  Bureau of Consumer Protection  Northwest Region Consumer Protection  Charity

The Federal Trade Commission and 58 law enforcement partners from every state and the District of Columbia have charged four sham cancer charities and their operators with bilking more than $187 million from consumers. The defendants told donors their money would help cancer patients, including children and women suffering from breast cancer, but the overwhelming majority of donations benefitted only the perpetrators, their families and friends, and fundraisers. This is one of the largest actions brought to date by enforcers against charity fraud.

 

The FTC infographic 'Sham Cancer Charities', showing the four so-called charities, what they claimed they did, what they really did, how they spent the money

Sham Cancer Charities infographic – click to view full-size.

Named in the federal court complaint are Cancer Fund of America, Inc. (CFA), Cancer Support Services Inc. (CSS), their president, James Reynolds, Sr., and their chief financial officer and CSS’s former president, Kyle Effler; Children’s Cancer Fund of America Inc. (CCFOA) and its president and executive director, Rose Perkins; and The Breast Cancer Society Inc. (BCS) and its executive director and former president, James Reynolds II.

 

CCFOA and Perkins, BCS, Reynolds II and Effler have agreed to settle the charges against them. Under the proposed settlement orders, Effler, Perkins and Reynolds II will be banned from fundraising, charity management, and oversight of charitable assets, and CCFOA and BCS will be dissolved.  Litigation will continue against CFA, CSS and James Reynolds Sr.

 

“Cancer is a debilitating disease that impacts millions of Americans and their families every year. The defendants’ egregious scheme effectively deprived legitimate cancer charities and cancer patients of much-needed funds and support,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “The defendants took in millions of dollars in donations meant to help cancer patients, but spent it on themselves and their fundraisers. I’m pleased that the FTC and our state partners are acting to end this appalling scheme.”

 

Virginia Attorney General Mark Herring said, “The allegations of fundraising for personal gain in the name of children with cancer and women battling breast cancer are simply shameful. This is the first time the FTC, all 50 states, and the District of Columbia have filed a joint enforcement action alleging deceptive solicitations by charities and I hope it serves as a strong warning for anyone trying to exploit the kindness and generosity of others.”

 

South Carolina Secretary of State Mark Hammond said, “When charities lie to donors, it is our duty to step in to protect them. At the same time, however, this historic action should remind everyone to be vigilant when giving to charity. This case is an unfortunate example of why I always tell my constituents to give from the heart, but give smart.”

 

According to the complaint, the defendants used telemarketing calls, direct mail, websites, and materials distributed by the Combined Federal Campaign, which raises money from federal employees for non-profit organizations, to portray themselves as legitimate charities with substantial programs that provided direct support to cancer patients in the United States, such as providing patients with pain medication, transportation to chemotherapy, and hospice care. In fact, the complaint alleges that these claims were deceptive and that the charities “operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation, with none of the financial and governance controls that any bona fide charity would have adopted.”

 

According to the complaint, the defendants used the organizations for lucrative employment for family members and friends, and spent consumer donations on cars, trips, luxury cruises, college tuition, gym memberships, jet ski outings, sporting event and concert tickets, and dating site memberships. They hired professional fundraisers who often received 85 percent or more of every donation.

 

The complaint alleges that, to hide their high administrative and fundraising costs from donors and regulators, the defendants falsely inflated their revenues by reporting in publicly filed financial documents more than $223 million in donated “gifts in kind” which they claimed to distribute to international recipients. In fact, the defendants were merely pass-through agents for such goods. By reporting the inflated “gift in kind” donations, the defendants created the illusion that they were larger and more efficient with donors’ dollars than they actually were. Thirty-five states alleged that the defendants filed false and misleading financial statements with state charities regulators.

 

In addition, the FTC and 36 states charged CFA, CCFOA and BCS with providing professional fundraisers with deceptive fundraising materials. The FTC and the attorneys general also charged the defendants with violating the FTC’s Telemarketing Sales Rule (TSR), CFA, CCFOA and BCS with assisting and facilitating in TSR violations, and CSS with making deceptive charitable solicitations.

 

In addition to the bans imposed on charity work by the settling individual defendants and the dissolution of two corporations, CCFOA and BCS, the proposed final order against CCFOA and Rose Perkins imposes a judgment of $30,079,821, the amount consumers donated between 2008 and 2012. The judgment against CCFOA will be partially satisfied via liquidation of its assets; the judgment against Perkins will be suspended based upon her inability to pay.

 

The proposed final orders against BCS and Reynolds II impose a $65,564,360 judgment, the amount consumers donated between 2008 and 2012. The BCS order provides an option, subject to court approval, for spinning off its Hope Supply Warehouses program to a legitimate, qualified charity. BCS’s remaining assets will be liquidated and used to partially satisfy the judgment. The judgment against Reynolds II will be suspended when he pays $75,000.

 

The proposed final order against Effler will impose a judgment of $41,152,231, the amount consumers donated to CSS between 2008 and 2012. The judgment will be suspended upon payment of $60,000. The full judgment amounts against the individuals will become due immediately if they are found to have misrepresented their financial condition.

 

The Commission vote authorizing the staff to file the complaint and proposed stipulated final orders was 5-0. The documents were filed in the U.S. District Court for the District of Arizona. The proposed orders are subject to court approval.

 

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated orders have the force of law when approved and signed by the District Court judge.

 

Before giving to a charity, read the FTC’s Charity Scams.

 

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.  To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook (link is external), follow us on Twitter (link is external), and subscribe to press releases for the latest FTC news and resources.

 

PRESS RELEASE REFERENCE:

FTC, States Settle Claims Against Two Entities Claiming to Be Cancer Charities; Orders Require Entities to Be Dissolved and Ban Leader from Working for Non-Profits

CONTACT INFORMATION

MEDIA CONTACT: 

Frank Dorman,

FTC Office of Public Affairs

202-326-2674

 

STAFF CONTACT:

Charles Harwood, Director

FTC Northwest Region

206-220-6350

 

Tracy Thorleifson,

FTC Northwest Region

206-220-4481

 

 

 

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Fake Charities Among the IRS “Dirty Dozen” List of Tax Scams for 2015

IR-2015-16, Jan. 30, 2015

WASHINGTON — The Internal Revenue Service today warned taxpayers about groups masquerading as a charitable organization to attract donations from unsuspecting contributors, one of the “Dirty Dozen” for the 2015 filing season.

"When making a donation, taxpayers should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities,” said IRS Commissioner John Koskinen. “IRS.gov has the tools taxpayers need to check out the status of charitable organizations.”

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their returns or hire someone to prepare their taxes.

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

The IRS offers these basic tips to taxpayers making charitable donations:

Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible.

Don’t give out personal financial information, such as Social Security numbers or passwords to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money. People use credit card numbers to make legitimate donations but please be very careful when you are speaking with someone who called you.

Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.

Call the IRS toll-free disaster assistance telephone number (1-866-562-5227) if you are a disaster victim with specific questions about tax relief or disaster related tax issues.

Impersonation of Charitable Organizations

Another long-standing type of abuse or fraud involves scams that occur in the wake of significant natural disasters.

Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.

They may attempt to get personal financial information or Social Security numbers that can be used to steal the victims’ identities or financial resources. Bogus websites may solicit funds for disaster victims.

To help disaster victims, the IRS encourages taxpayers to donate to recognized charities.

Follow the IRS on New Media

Subscribe to IRS Newswire

 

 

 


 

SERVED IN A NOBLE CAUSE

 

 

 

Vietnamese commandos : hearing before the Select Committee on Intelligence of the United States Senate, One Hundred Fourth Congress, second session ...

Wednesday, June 19, 1996

 

CLIP RELEASED JULY 21/2015

https://www.youtube.com/watch?list=PLEr4wlBhmZ8qYiZf7TfA6sNE8qjhOHDR6&v=6il0C0UU8Qg

  

 

US SENATE APPROVED VIETNAMESE COMMANDOS COMPENSATION BILL

http://www.c-span.org/video/?73094-1/senate-session&start=15807

BẮT ĐẦU TỪ PHÚT 4:22:12 - 4:52:10  (13.20 - 13.50)

 


 

 

Những người lính một thời bị lăng quên: Viết Lại Lịch Sử

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

  

 

 

 

 

 

 

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