Animal rescue charity with star-studded support has ‘troubling’ financial practices, experts say
Four years after the Animal Hope & Wellness Foundation’s launch in 2012, donations to the charity skyrocketed, fueled by the well-publicized efforts of founder Marc Ching to rescue dogs and cats from Asian meat markets.
Contributions to the Sherman Oaks-based foundation ballooned from about $110,000 in 2015 to nearly $4 million over the next two years. And as the money rolled in, much of it rolled out — in cash.
In early June 2016, $25,000 in cash was withdrawn from the foundation. Five days later, a $40,000 withdrawal was made. Then came one for $12,000 and another for $25,000. Altogether, from January 2016 to March 2018, cash withdrawals totaled more than $350,000, a Times investigation has found.
According to interviews and an examination of the organization’s financial records, the cash outlays are among a number of spending practices and fundraising methods employed by the foundation that nonprofit watchdogs say are troubling for a charity.
Most of those practices and methods were the subject of an anonymous complaint that former foundation director Valarie Ianniello said she filed early last year with the California attorney general’s office. Ianniello told The Times she was fired in 2018 after repeatedly complaining about the lack of financial controls at the charity.
The complaint, a copy of which was reviewed by The Times, raised concerns about the cash withdrawals and purchases the foundation made from Ching’s for-profit pet nutrition business, the Petstaurant. The charity’s tax returns show it paid the Petstaurant at least $59,000 for food and other products.
Activist Marc Ching, whose work won support from Joaquin Phoenix, Matt Damon and other celebrities, denies paying butchers in Asia to harm dogs.
In her complaint, Ianniello also alleged that Ching lost nearly $250,000 of the foundation’s money on an investment in a for-profit pet food company that soon went bankrupt and that he appealed to donors using deceptive solicitations.
Ianniello said she never received a response to the complaint, which included her name and phone number along with those of other current and former employees. In December, the attorney general’s office declined to discuss Ianniello’s allegations with The Times. Days later, the office notified the foundation that it would conduct an audit.
In emails to The Times, and through statements by the foundation’s attorneys, the organization said Ching never misused funds and has contributed hundreds of thousands of dollars in goods, services and cash to the charity since 2014. The foundation also said Ching did not mislead donors and has never taken a salary.
“While Mr. Ching admittedly could have done a better job early on keeping receipts and financial records to be in compliance with the statutes governing non-profits, the notion that he is … personally making money off the foundation is a fallacy,” attorney Russell M. Selmont wrote.
The charity’s bookkeeper, Meredith Freeman, said that Ching used the cash on his international trips and that some expenses are accounted for in receipts. The foundation would not provide additional details or documentation.
Speaking as chair of the foundation’s board of directors, Dr. Barbara Gitlitz, a Los Angeles oncologist, said vendors at some of Ching’s destinations did not accept credit cards and did not always give receipts.
Ianniello, who was executive director when most of the cash withdrawals were made, said she never saw receipts for how that cash was spent.
In a subsequent statement to The Times, Selmont said the foundation conducted an “independent investigation” and concluded “no AHWF money was stolen, embezzled or otherwise improperly used for non-AHWF benefits or purposes.”
In reference to the attorney general’s office, Selmont said, “Our review of the DOJ audit is consistent with this belief and we are confident that there is no evidence of any financial wrongdoing.
“The money spent by Mr. Ching and the AHWF for trips to Asia has been documented and we have conferred with guides and resources in Asia who have corroborated Mr. Ching’s and the Foundation’s documentation of monies and use of funds spent on rescue, related projects, and other operations.”
Selmont did not respond to The Times’ request for a copy of the audit and for more information about the foundation’s investigation, including who conducted it.
Ianniello joined the foundation as a volunteer in early 2016. She said that within a year, she was named executive director, paid a salary and given access to the charity’s bank account, although Ching still controlled the outlays.
Despite opposition to the dog meat trade, local governments often don’t enforce laws in some rural areas of Indonesia where consuming dogs endures, activists say.
Ianniello showed The Times numerous text exchanges in which she challenged Ching over spending, including for thousands of dollars in food from his store. She also provided emails in which she urges the bookkeeper to review a range of expenses by Ching.
In a text, Ianniello said, Ching told her a $2,500 payment from the foundation to a Petstaurant worker had been for the man’s help in finding Pepper, Ching’s lost puppy.
“And really I am sure supporters would be fine with that,” he wrote. “:)”
“but she’s your dog,” Ianniello wrote back.
Elena Roberto, the foundation’s current executive director, said in an email that Ching gave the organization discounts on the products from the Petstaurant, which sits around the corner from the charity’s office. Ianniello said it wasn’t until she insisted that Ching began to give the discounts.
The foundation said Ianniello, not Ching, directed the charity to buy from the Petstaurant. The foundation’s tax documents show the organization bought nearly $19,000 in products from Ching’s business in 2015, the year before Ianniello joined the charity.
Daniel Borochoff, the founder of CharityWatch, a Chicago nonprofit organization that rates charities for sound financial practices, said that a foundation purchasing products from its chief executive is “problematic” and that it should seek competitive bids before doing so.
Ching’s foundation did not respond directly to a Times query on whether it sought competitive bids. Ianniello said she knew of no such effort.
After learning that Ianniello was speaking to The Times, the foundation filed a lawsuit against her, alleging she took money and property from the organization and violated a separation agreement she signed when she was fired. The lawsuit contended that Ianniello kept the signed agreement as well, so the foundation had no copy.
Ianniello said she never signed the agreement.
Freeman, the foundation’s bookkeeper, told The Times she knew of no evidence that Ianniello stole from the organization or engaged in any other kind of dishonest behavior.
In her complaint to the attorney general, Ianniello alleged that, in an effort to draw more donations, the foundation exaggerated its efforts on social media and used videos that had “been staged and/or falsely described.”
State law prohibits charities from engaging in deceptive fundraising practices.
Ianniello told The Times that a foundation initiative to microchip 100,000 pet dogs in China as a way to protect them from the meat trade was soon abandoned after just a handful of dogs were microchipped. Even so, she said, Ching continued to promote the campaign in social media posts.
In a May 2017 text exchange, Ianniello told Ching she had a problem with him “lying” to his supporters about the existence of the microchip program.
“It feels wrong,” she wrote.
Ianniello said Ching staged a video on the foundation’s Facebook page in which a foundation employee finds a microchip in a dog recently rescued from the meat trade in China.
She said Ching told her ahead of time that he was going to inject the chip in the dog before recording the video. Later, in a text exchange with Ianniello, Ching asked her, “does the micro chip part look fake.”
In an email to The Times, Selmont, the foundation’s attorney, said, “Separate and apart from the money the Foundation sought to raise for that program, Mr. Ching himself directed a few dogs in China be implanted with microchips and made a subsequent social media post attempting to raise money for those rescued dogs’ medical care.” He added that “this was not done with the intent to deceive the public.”
The Facebook video was paired with a donation tab and a caption claiming four rescued dogs had microchips. The post said the foundation would try to reunite them with their families.
A donation tracker accompanying the video said the post generated nearly $29,000 in contributions.
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