'Tis the season for giving ... and watching out for scammers
KANSAS CITY, Mo. — When Bruce Pigozzi got a call earlier this year asking him to donate to a charity for veterans, he felt good about mailing the organization a check for $50.
After all, the Michigan State University geography professor figured, the Michigan Veterans of America was a local charity and his donation would help a worthy cause.
He told them he’d be willing to make an annual donation.
And that’s when the warning flags began to go up.
’Tis the season for giving — and for caution.
With more than 1.5 million nonprofit organizations in the country — many depending on end-of-year giving to keep their financials in the black — competition for your generosity can be fierce.
And among the players, consumer advocates warn, could be scammers seeking creative ways to make a buck.
Just look at what happened to Pigozzi.
A week later, the charity sent him a second bill. And two months after that, they called and asked if he’d quadruple his original donation.
Fed up, Pigozzi complained to the state attorney general, who investigated and shut it down. Just this month, the man behind it was sentenced to prison for establishing fake charities and impersonating legitimate veterans organizations for his personal gain.
“It’s very sad,” Pigozzi said. “They were preying on everybody’s best natures. I was pleased that they nailed him.”
Before writing your own check this season, how can you make sure your money is actually going to a legitimate cause and that your gift will make a difference?
Do your homework, experts say.
“There is a disproportionate amount of charitable solicitation from now until the end of the year, both because they’re counting on the spirit of giving during the holiday season and also because people may be thinking of charitable donations for income tax purposes,” said Kansas Attorney General Derek Schmidt.
“It’s a very timely issue right now, and people need to be aware.”
Missouri Attorney General Chris Koster also cautioned that donors should be informed about their local charities.
“Most people like to help local organizations, especially during the holidays, and scam artists will not hesitate to take advantage of your kindness,” he said.
Charities depend on donors, and even in tough economic times those donors are coming through. Americans made $299 billion in charitable contributions in 2011, up from $287 billion in 2010, according to the Giving USA Foundation.
But questionable charities are all around.
In August, the Better Business Bureau in St. Louis warned donors about a charity purportedly founded to assist U.S. military veterans and their families. The charity, Veterans Relief Network, had addresses in Kansas City and Indiana and was using a for-profit fundraising consultant called Precision Performance Marketing to help several organizations raise millions of dollars.
Financial documents aren’t yet on file for the charity because it is relatively new, but records of the other charities that the consultant was raising money for showed that most of the donations had gone to pay for the fundraising instead of helping those in need, the BBB said. Some of the charities were only receiving between 3 and 11 cents of each dollar that was donated to them, the bureau said.
“Donors have every right to question whether charities using Precision Performance Marketing are raising money to help further their missions or to provide a steady stream of income to Precision Performance Marketing and its owners,” said Chris Thetford, a spokesman for the Better Business Bureau in St. Louis.
The Veterans Relief Network could not be reached for comment. A message on the organization’s phone said the voice mail was full, and emails went unanswered.
Last year, another charity soliciting donations on behalf of veterans came under scrutiny in Kansas. The Lawrence Journal-World found that only 11 cents of every dollar donated to the Tonganoxie-based Purple Heart Veterans Foundation in 2010 went to support veterans. Nearly 80 percent of the money raised by the charity went to a fundraising company run by the brother of the charity’s director.
The newspaper also found that both men had criminal records. The charity was dissolved late last year after it settled a trademark infringement lawsuit with the Military Order of the Purple Heart.
“There are wonderful organizations out there that do support veterans and their families, but there also are a lot of shady operators,” Schmidt said.
If you want to give, Schmidt said, the best advice is to decide what cause you want to support, then find a charity that supports that cause and execute a giving plan directly with them.
“Be in charge of your charitable contributions just as you would be in charge of any purchase you made or any investment you made,” he said. “Many people rely on receiving a solicitation from a group before deciding whether to give. But once you put yourself in that posture, it becomes much more difficult to screen out the crooks and the con artists from the legitimate charities.”
Pigozzi, who got the call from Michigan Veterans of America last February, knows all about it now.
“When I contributed, I told them I wanted to give once a year and I wanted the donation to be local,” he said.
When they called at the end of April and asked for a bigger donation, he said, he looked at his canceled check and saw that it had been deposited out of state. Then he called the organization and got a recording saying it was not a working number.
“I was getting more and more ticked off as this day went by,” he said. “They also claimed they were registered with the Attorney General’s Office here, and they weren’t. So I had four or five deceptions, and I thought, ‘That’s enough.’?”
In May, the Michigan attorney general halted the operations of the Michigan Veterans of America, alleging it had used deceptive or misleading fundraising practices.
And this month, Neil Thrasher, of West Bloomfield, Mich., the man who formed the Michigan Veterans of America, was sentenced to serve 17 months to 10 years in prison after pleading no contest to creating two fake charities: Paralyzed American Veterans and Disabled Veterans of America. The names of those charities were remarkably similar to two well-established national nonprofits that assist veterans: Paralyzed Veterans of America and Disabled American Veterans.
Thrasher also was ordered to pay more than $74,000 restitution to the two legitimate charities.
The attorney general’s investigation found that Thrasher had collected more than $180,000 from donors and spent a large portion of the money at athletic clubs, liquor stores and restaurants.
“Creating phony charities to line your pockets violates state law and abuses the public trust,” said Michigan Attorney General Bill Schuette, adding that “citizens deserve to know that money they give to veterans organizations actually goes to help veterans.”
Pigozzi said his experience taught him a valuable lesson, and he hopes that talking about it will help others.
“I don’t do anything over the phone any more,” he said. “I tell them to send me a hard copy so I can look them up and see what’s there.”