Virginia Attorney General Mark R. Herring today announced that his office has taken legal action against two deceptive charitable organizations that he believes have conned Virginians by falsely promising their donations would help veterans, when the money really went to benefit those operating the so-called charities.
Herring has filed suit against Hearts 2 Heroes Inc., a for-profit company doing business as Active Duty Support Services Inc., and has entered into a settlement with Operation Troop Aid Inc. and its president and chief executive officer to resolve a multi-state investigation of the charity. The actions are part of “Operation Donate with Honor,” a nationwide sweep to crackdown on fraudulent charities that exploit the name of America’s veteran community to solicit donations.
“Virginians are caring people who want to give back to veterans who have risked their lives to keep our country safe. Charities that deceptively solicit funds from donors who want to help veterans are disgraceful and should be held accountable for their efforts to make money on the good name of those who have served our country,” said Herring. “I hope these enforcement actions send a strong message to similar organizations that they need to be honest about where their money is going, and make sure they follow through on their promises.”
Hearts 2 Heroes
Herring has filed a lawsuit against Hearts 2 Heroes, a for-profit company doing business under the name Active Duty Support Services Inc. The business conducts door-to-door sales of “care packages” that will allegedly be sent to service members overseas. The lawsuit alleges violations of the Virginia Consumer Protection Act and Virginia’s Solicitation of Contributions law through misrepresentations regarding the nature of the business and the care packages purchased, and the use of donated funds. The lawsuit alleges that the charity violated state charitable solicitation laws in the following manner:
- Leading prospective donors to believe that Hearts 2 Heroes is a charity, when it is not, or that donations made are tax deductible, when they are not;
- Delivering care packages, if delivered at all, to military bases in the United States, not overseas as represented;
- Representing to consumers that staff were veterans or volunteers when in fact those staff were not veterans or volunteers; and
- Employing staff who would “skim” cash donations for themselves.
The lawsuit asks the court to prohibit Hearts 2 Heroes from continuing to solicit donations, as well as award restitution to the affected consumers or impose a constructive trust on all funds received so that they will be distributed for legitimate charitable purposes. The suit also seeks an award of civil penalties, and reimbursement of the Commonwealth’s costs, investigative expenses and attorneys’ fees.
Operation Troop Aid Inc.
Herring has entered into a settlement between 16 states and Operation Troop Aid Inc. and its president and chief executive officer to resolve a multi-state investigation of the charity. The settlement resolves allegations that the Tennessee-based charity violated state charitable solicitation laws, including Virginia’s Solicitation of Contributions law, by improperly spending funds for purposes other than their solicited purpose and using unfair, false, misleading, or deceptive solicitation and business practices.
The multi-state group alleges the charity violated state charitable solicitation laws in the following manner:
- Failing to conduct proper oversight of a commercial co-venture called “Operation Teddy Bear,” in which certain retail stores sold teddy bears in military uniforms that would supposedly provide a fixed dollar amount to the charity for each bear sold for the express purpose of sending care packages to service members;
- Failing to maintain donated funds as restricted funds, even when designated for a particular purpose, and spending funds improperly on non-charitable purposes; and
- Using donated funds for purposes other than those expressly represented as the charitable purpose of the charity, and engaging in unfair, false, misleading, or deceptive solicitation and business practices.
The settlement requires the charity to dissolve and prohibits the president and chief executive officer, Mark Woods, from becoming an employee, officer, director, board member, or assuming any fiduciary role with a nonprofit corporation, and from soliciting on behalf of a nonprofit corporation. The charity and Woods are also prohibited from violating state charitable solicitation statutes. The settlement includes a $10,000 civil penalty enforceable by all the states to be held in abeyance to ensure compliance with the injunctive terms of the settlement.
The 16 states involved in the settlement are California, Delaware, Georgia, Hawaii, Idaho, Illinois, Kansas, Louisiana, Maryland, Nevada, New York, North Carolina, Pennsylvania, Tennessee, Virginia, and Washington.