LOS ANGELES (CNS) — A Los Angeles-based car donation charity accused of soliciting vehicle donations using false and misleading advertising has agreed to pay up to $900,000 and permanently close as a result of a fraud probe.
In December 2015, the state attorney general and Los Angeles County district attorney filed a lawsuit against the People’s Choice Charities. At the time of the filing, the lawsuit alleged the organization promised 100 percent of the proceeds from the sale of cars would be given to charities selected by donors. However, an estimated 97 percent of funds were purportedly used toward administrative costs, including advertising, towing and car repairs.
“Any time charities lie to consumers, they breach the public’s trust,” Attorney General Xavier Becerra said. “I won’t stand for that. As the chief law enforcement officer of California, I will vigorously investigate and prosecute any charity that deceives and exploits the goodwill of generous Americans.”
The stipulated final judgment places a permanent injunction on Gary Stone, the nonprofit’s president, barring him from serving as a director, officer, trustee or employee of any California charitable organization.
Moreover, Stone is perm-anently enjoined from doing contract work with charities, holding any management or supervisory position, or engaging in fundraising activities. People’s Choice Charities will also be dissolved.
“This settlement should serve as a warning to any other organization that takes advantage of the kindness of consumers,” said District Attorney Jackie Lacey. “Donations generated through deceptive advertising take valuable resources away from legitimate charities.”
The settlement provides for a monetary judgment of $900,000 — $30,000 of which will be paid to the California Community Foundation for the benefit of children. The payment of the remaining judgment is stayed but may be enforced if Stone violates the permanent injunction against him, authorities said.