Charity Fraud Making Huge Rip-Offs in O.C.

Charity fraud has become a multimillion-dollar business in Orange County, boosted by an affluent population and a hodgepodge of outdated and unenforced laws that have left consumers to fend for themselves, charity and law enforcement officials say.

The Orange County district attorney’s office estimates that at least $25,000 a day--more than $9 million a year--is being skimmed from county residents through fraudulent telephone solicitations alone. Millions of dollars more are diverted for non-charitable purposes through door-to-door or street-corner solicitations.

County officials say about 1,200 to 1,500 legitimate charities operate here. But there could be hundreds more operating without licenses. Nowhere is there a single agency--public or private--to which the wary consumer can turn for information or advice.

“Do you call the sheriff, the city police, the district attorney, the Better Business Bureau? All are difficult to get through to, and none will have in hand the regulations,” said Bonnie Gillman, coordinator of Charities for Truth in Giving, a consortium of local agencies established to promote public awareness of charity fraud.

Gillman and others say the county’s disorganized handling of solicitation scams has made it a center for charity fraud. A total of 29 city ordinances, and the absence of a single repository for complaints also hamper efforts to fight scam operators.

“It’s a mishmash. No one checks, nobody cares, there’s no penalty whether you’re a good group or a bad group,” said Gay Geiser-Sandoval, a former deputy district attorney who prosecuted charity fraud cases and now specializes in the field as a private lawyer.

Total registered charities in California number about 55,000, but authorities estimate that another 4,000 to 5,000 are operating outside the law. The number of registered charities are growing by nearly 350 a month, said Deputy Atty. Gen. Belinda Johns. She noted that even among registered charities, there is no requirement that a minimal portion of donations go to actual charitable purposes.

It is an indication of the seriousness of the problem that some of the county’s most prominent charities are leading the fight against fraud. All say their causes suffer when consumers are ripped off.

“We’ve got some credibility because we’ve been here for so many years, but there are still a lot of people who don’t know us,” said Susan Davidson, director of the Adam Walsh Child Resource Center.

Because of the extensiveness of the problem, “when a (fund-raising) letter goes out, people who are apt to question whether it’s a good group or a bad group say, ‘I’m not sure,’ and throw it in the trash,” Davidson added.

While nearly everyone now agrees some course of action is needed, there is less consensus on what that course should be.

Despite a 1989 Orange County Grand Jury report that called for countywide cooperation and more stringent regulations, the county and cities have done little to thwart fraudulent operators, many officials say. They believe that the scope of the problem now demands some action.

“This is something that cannot be swept under the rug any more; it has to be addressed,” said Supervisor Harriett M. Wieder, who has long supported tightening the county’s 30-year-old solicitation ordinance. “Ten years ago, it wasn’t deemed cost-effective to do anything about it. But timing is always important and I think now is the right time” for the Board of Supervisors to re-examine the problem.

The grand jury found that consumers were confused about regulations and that little cooperation existed between cities and the county.

It made several recommendations, calling for an expansion of the ability of county officials to audit the financial reports of charities and investigate their actions, a requirement that the public be provided with the financial statements of solicitors and that a centralized computer network of charities be established under the joint direction of city and county government.

Wieder says the recommendations were rejected because county officials did not want to spend any money. Charity officials estimated that it would cost a minimum of $100,000 to establish a computer network that would serve as a clearinghouse for information.

Now, Charities for Truth in Giving is working on a model ordinance with the hope of getting all 29 cities and the county to adopt it. The group also wants to establish a charity information office that would include voluntary registration of agencies and a consumer hot line.

In addition, the county is being urged to help form some sort of a regional agency to monitor charities. That effort is spearheaded by Robert Burn, manager of the Public Social Services Department for the city of Los Angeles.

County officials are also considering scrapping the county’s own solicitation law altogether. That ordinance covers only unincorporated areas but has served as a model for many cities.

“That’s one of the things that we are looking at,” said Forrest Story, who, as county human resource development manager, oversees implementation of the ordinance. “Right now, we ask groups for the same papers that the state requires and the question is: Does it make sense to have that duplication?”

But Story also conceded that the current ordinance has little teeth and could be made more effective.

“If we want an ordinance that lets us know if a charity is reputable, then it doesn’t do that,” Story admitted. “If we want an ordinance that has meaning to it, (then ours) needs to be beefed up. As it stands now its effectiveness is questionable.”

Charity officials say the 29 solicitation ordinances established by city governments are just as feckless--mostly because there are no real provisions for enforcing them.

One charity official who is a member of Charities for Truth in Giving said that some agencies were surprised to learn that each city had a solicitation ordinance on the book. Many had never been asked to comply with them.

Sonja Detert, community program coordinator for the Orangewood Children’s Home, said the shelter for abused children is frequently the subject of spurious fund-raising schemes.

“They say they are putting on a circus, and they claim that (Orangewood) will get 85% to 95% of the profits,” Detert said. “People will get hooked if they mention children . . . and they can be very intimidating.”

Another widespread telemarketing pitch purports to represent police or firefighters associations. Prospective donors are warned to donate “or the next time you dial 911 you’ll have to wait a long time.”

Geiser-Sandoval said elderly residents are especially susceptible to schemes. During one investigation of a fraudulent telemarketer, subpoenaed records revealed thousands of checks with Leisure World addresses.

“They got the sophisticated and the unsophisticated alike,” Geiser-Sandoval said.

The situation, say Geiser-Sandoval and others, has made Orange County an alluring target for charity scams, especially as Los Angeles toughens its policing of fund-raising groups.

Charities that wish to do business in Los Angeles must register with the city, obtain an identification card for each solicitor and report how much money is obtained at each fund-raising event. The city has assigned seven staff members from the Public Social Services Department, which oversees the ordinance, to follow up and audit reports.

By comparison, Orange County’s solicitation ordinance is overseen by one staff person, who also has other duties. The ordinance was previously administered by the public information office. When that office was eliminated in a recent round of budget cuts, it became a function of the personnel department.

“All of the people have left L.A. and set up shop in Orange County,” said Maureen Williams, director of public relations at Children’s Hospital of Orange County.

But some charity officials say that even when those fraudulent charities are caught, not much happens.

“I have to say the district attorney’s office has been very uncooperative in our attempts to have them work with us,” Gillman said.

Charity officials say that in the last two years, they can document only one instance of a fraudulent operator being prosecuted.

Peter Holsenbeck, a deputy district attorney in charge of major fraud cases, said he had no information on how many prosecutions of charity fraud his office has conducted. However, he said he knew of none that was pending.

“I don’t think the specific issue of prosecuting charity fraud has come up,” Holsenbeck said. “We evaluate cases as they come in, one at a time.”

Geiser-Sandoval said she would urge prosecutors to be more aggressive in pursuing charity fraud cases.

“I would love for them to do more,” she said, but added: “I don’t want to criticize because it’s a difficult thing to pursue without the time or resources. It’s up to the community to say and the district attorney to commit resources to try to get the problem under hand.”

Charity officials say it may be time for the community to re-evaluate its priorities.

“We want to be able to exert a little more pressure with the (Board of) Supervisors and the district attorney, but we’ve also got to say to the consumer maybe it will take some of your money to fix the problem, and if it means not issuing a ticket to a jaywalker, we’ll do it,” Davidson said.

Check List for Giving

Here are some ways to make sure your gift is going to a legitimate charitable cause:

1.) Be wary of organizations that want to send someone over to pick up your check within the next couple of hours or days. Hold onto your money until you have had time to confirm the legitimacy of an agency.

2.) Before you respond to a telephone solicitation you have the right to ask for:

* The name and address of the charitable organization that is to benefit.

* A telephone number where you may get additional information.

* The actual percentage of the contribution to be received by the charity or the anticipated fund-raising expenses.

* Something in writing--literature, letter or reply envelope.

* The organization’s tax-exempt status and number.

3.) If a solicitor hesitates to give any of the above, you have the right to say no. A legitimate fund-raising appeal can always wait until the next business day.

4.) The above information is required by the Charitable Solicitation Act, Business and Profession Code Section 17510. If a solicitor refuses to give you information, write a letter to:

Consumer Protection Unit

Orange County District Attorney’s Office

P.O. Box 808

Santa Ana, Calif. 92702

(714) 834-3600

5.) The group Orange County Charities for Truth in Giving, established in 1988 to promote public awareness about illicit fund-raising activities, has devised a report form for solicitations that cause suspicion. The forms are available through the Orange County Ronald McDonald House by calling (714) 639-3600 or writing to the Ronald McDonald House at 383 S. Batavia St., Orange, Calif. 92668.

Sourc e: Charities for Truth in Giving.