Car donation charity fined millions, accepts fundraising restrictions in Colorado and 18 other states ...Middle East

Kars-R-Us.com and its ownership, Michael Irwin and Lisa Frank of California, reached a settlement with the Federal Trade Commission and the attorneys general from the states. 

Instead, the charity, its owners, and many of its vendors pocketed most of the money, per prosecutors.

Kars-R-Us.com ran radio and television advertisements nationwide.

More than 84,000 well-intentioned people donated their vehicles to Kars, the FTC stated in a press release.  

Prosecutors estimate the two operators and the charity's vendors took $34.9 million of the $45.5 million the charity raised through vehicle donations during those five years. 

Attorneys for Irwin, Frank and the charity told the court the three have no means to immediately pay the $3.8 million fine against them. Instead, the court ordered a $550,00 fine be paid within 10 days. "This sum," the court wrote in its judgement, "will be paid to one or more charities whose mission or purpose is consistent with the purported mission or purpose of United Breast Cancer Foundation." The judge gave the two owners and the charity six months to submit a schedule for paying the rest of the $3.8 million penalty. Failure to present a plan in that time could result in an order to pay the rest of the fine immediately.

A still image from a television advertisement that was broadcast nationally during fundraising efforts by Kars-R-Us.com, a charity which offered to apply money earned through vehicle donations to free and low-cost mammograms and breast cancer screenings. The charity and its two owners agreed this week to a $3.8 million fine and future restrictions to their fundraising in a settlement with the Federal Trade Commission and 19 states.  Federal Trade Commission

Complicating potential criminal prosecution was the publicly available information that proved money donated to the foundation was not reaching its intended target. UBCF's filings with the IRS, prosecutors noted, showed it spent only $393,644 on breast screening services out of the $174.4 million in revenue it raised in those five years. 

"Year after year, these financial reports consistently demonstrated UBCF's very minimal spending on breast screening services," prosecutors stated. "Defendants took no meaningful steps to investigate the truthfulness of the claims they made to the public so long as the ad claims generated revenue – even though a simple online search would have produced UBCF's IRS Form 990s and financial reports, charity watchdog ratings, and news articles identifying UBCF as one of the 50 worst charities in the nation."

A still image from a television advertisement that was broadcast nationally during fundraising efforts by Kars-R-Us.com, a charity which offered to apply money earned through vehicle donations to free and low-cost mammograms and breast cancer screenings. The charity and its two owners agreed this week to a $3.8 million fine and future restrictions to their fundraising in a settlement with the Federal Trade Commission and 19 states.  Federal Trade Commission

Joining the FTC in the case were the Attorneys General of the states of Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Maryland, New York, North Carolina, Oklahoma, Oregon, Utah, Virginia, West Virginia, and Wisconsin; the Secretary of State of Maryland; the Secretary of State of North Carolina; the Secretary of State of South Carolina; and the Utah Division of Consumer Protection.  

"Charity scams like the one in this case are despicable, and I'm glad to be working with a bipartisan group of attorneys general, other state officials, and the FTC to put an end to the Kars scheme," said Colorado Attorney General Weiser. "I am encouraging Coloradans who want to do some good, whether it's through donating their hard-earned money or valuable property like a vehicle, to do their homework and make sure a charity is legitimate before donating. Services like CharityNavigator tell consumers how much of their donations actually go to help the cause. Scammers are not interested in supporting a good cause; they simply seek to take advantage of good-hearted people for personal gain and must be held accountable."

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