Last week, New York Attorney General Barbara D. Underwood announced that, in conjunction with the federal and state enforcement initiative “Operation Donate with Honor,” a settlement had been reached with Operation Troop Aid Inc., a Tennessee-based military charity. According to the NY OAG, OTA engaged in a deceptive marketing campaign and failed to properly oversee donations made from a commercial co-venture with a nationwide retailer.
“Charities have a fundamental responsibility when it comes to partnerships that use their charitable name and status,” said Attorney General Underwood. “Too often, co-ventures are little more than thinly-veiled marketing operations. Charities must not sell out their status for questionable gains.”
According to the OAG, OTA’s stated mission is to send care packages to deployed servicemembers – participated in an unlawful commercial co-venture with nationwide retailer, Harris Originals of NY, Inc. and its related stores. OTA allegedly allowed Harris Jewelry to use the charity’s name in Harris Jewelry’s so-called “Operation Teddy Bear,” in which Harris Jewelry advertised that it would donate a specific amount of money to OTA when consumers purchased its teddy bears dressed in military uniforms, based on a bear’s size.
The investigation found that OTA failed to ensure that Harris Jewelry was donating the full amount it advertised to the public. The investigation further found that Harris Jewelry sent OTA checks without documentation outlining how the donated amount was calculated, and at times provided different information to consumers as to the amount of money donated. Harris Jewelry allegedly used OTA’s logo and its relationship with the charity prominently in advertising and promotional materials, and OTA displayed Harris Jewelry’s logo on care packages sent overseas to deployed servicemembers.
OTA has acknowledged that it did not have a written agreement with Harris Jewelry, that it failed to oversee the co-venture with Harris Jewelry and that there was insufficient oversight of its operations and records. OTA further acknowledged that it failed to ensure that donated money was used for its stated charitable purpose, and that it made other purportedly charitable expenditures directly to individuals at the sole discretion of its chief executive, with no application or assessment process or action by its Board.
OTA, as part of the settlement, will cease operating and wind down its operation. OTA’s chief executive is also barred from serving as a fiduciary or soliciting for any nonprofit. The settlement assesses civil penalties and requires OTA to continue providing investigational cooperation and assistance.
Concurrently, the FTC has announced that the agency and its state partners have taken action against other schemes as part of “Operation Donate with Honor,” a nationwide law enforcement and education initiative to stop veterans-related charity fraud. FTC investigations (CIDs) and defense law firm Hinch Newman reports that regulators nationwide have joined this initiative, which has been in the works for months. Hinch Newman also reports that state attorneys general had recently been issuing civil investigative demands for weeks, leading up to the FTC’s announcement.
Contact Hinch Newman at 212-756-8777 if you have any questions the recent charity-based regulatory sweep, or if you or your company have been served with process or received a civil investigative demand. Following the author on LinkedIn.
Hinch Newman is a regulatory litigation, investigations and compliance law firm.
Informational purposes only. Not legal advice. Always seek the advice of an attorney. Previous case results do not guarantee similar future result. Hinch Newman LLP | 40 Wall St., 35th Floor, New York, NY 10005 | (212) 756-8777.
Brooklyn District Attorney Drops Charges Against Mother Who Had Child Ripped Away by Police
A video showing NYPD officers violently removing a woman’s one-year-old child from her arms has sparked national outrage — even after NYPD and the Brooklyn DA informed us that they would be not pursuing charges. Additionally, NYPD Commissioner O’Neill has informed the public he is personally looking into the case..
Nyesha Ferguos posted the video to her Facebook page on Friday. It shows 23-year-old Jazmine Headly clinging to her son, Damone, and telling officers they are hurting him as they attempt to yank the child away from her. One officer waves a yellow stun gun at the outraged crowd, which includes children, several of whom are filming on their cell phones.
When she refused to stand, security called the police. The situation quickly escalated. Brooklyn Borough President Eric Adams told CBS2 News that “a Taser was used” and that HRA peace officers tried to remove Headley because of what they described as “disorderly conduct towards others and for obstructing the hallway.”
Did Alexander Acosta Allow Famous Pedophiles to Go Free?
Secretary of Labor Alexander Acosta is under fire again for a plea deal for sex offender Jeffrey Epstein in 2008, when Acosta was U.S. attorney in Miami.
Acosta was reportedly under consideration to become attorney general, CNN reported earlier this month. Matthew Whitaker has been serving as acting AG, appointed by President Donald Trump after Jeff Sessions was fired Nov. 7.
However, because of a Miami Herald report on the plea deal, he is now out of the running for the post.
Epstein – a multimillionaire financier who counted Trump, former President Bill Clinton and Prince Andrew, Duke of York, among his friends – was accused of sexually abusing dozens of girls as far back as 2001 in what the Herald classified in its expose as a “large, cult-like network.”
Sources close to the president told the Herald Acosta is out of the running for the AG position.
Acosta approved a non-prosecution agreement for Epstein, which allowed him to serve only 18 months in prison.
Epstein pleaded guilty to two state charges of prostitution solicitation. The terms of the deal prevent him and his associates from facing federal charges, the Miami Herald said, which could have sent him to jail for life. He was required to register as a sex offender and pay restitution to dozens of victims.
Trump Signals He Will Support Marijuana Legalization
Following the forced resignation of US Attorney General Jeff Sessions, stock in marijuana rebounded. And now, President Donald Trump says it is likely the psychedelic herb will be decriminalized during his term in office.
The LA Times reports that President declared that he would “likely” support a congressional effort to end the federal ban on pot. The move would signify a significant change in the legal cannabis industry, as well as end the threat of a Justice Department crackdown.
A bill to decriminalize the herb is presently being pushed by a bipartisan coalition. It would allow for states to go forward with the legalization process without the threat of federal prosecution.
Trump made his comments to a group of reporters before boarding a helicopter to attend the G-7 Summit on Friday. He expressed support for the bill, which was proposed by the bipartisan group the day before.
“I support Sen. Gardner,” Trump said, referencing one of the bill’s main sponsors, Sen. Cory Gardner (R-Colo.). “I know exactly what he’s doing. We’re looking at it. But I probably will end up supporting that, yes.”
So far, Washington D.C. and nine US states have legalized the legal consumption of marijuana for adults. Additionally, 20 US states permit marijuana for medical use.
Once cannabis is decriminalized at a federal level, many of the restrictions and roadblocks preventing established businesses from conducting affairs in states where it is legal will disappear. For instance, as Gardner explained at a recent news conference, “If you are in the marijuana business … you can’t get a bank loan or set up a bank account because of concern over the conflict between state and federal law.”
“We need to fix this. It is time we take this industry out of the shadows, bring these dollars out of the shadows,” he concluded.
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