NEWARK – Attorney General Jeffrey S. Chiesa and the New Jersey Division of Consumer Affairs have filed suit against the operators of a purported Superstorm Sandy charity, alleging the defendants unlawfully misled the public by diverting donated funds into their personal accounts, misleading donors with false claims about the ways donations would be used, falsely claiming that donations are tax-deductible, and otherwise deceiving the public in violation of New Jersey’s charity registration and consumer protection laws.
“New Jersey’s law keeps charities honest, by requiring them to register with the State and provide clear, truthful information when soliciting donations from the public,” Chiesa said. “This organization told the State it does not pay its executives, but our investigators found a paper trail reflecting thousands of dollars being transferred into the individual defendants’ personal bank accounts. Meanwhile, less than one percent of the money they raised, has allegedly been paid out to help victims of Sandy. New Jersey and the Attorney General’s Office have fought hard against alleged scammers in the wake of Sandy, and we will not permit profiteers to deceive the public with deceptive appeals for charitable donations.”
Since Superstorm Sandy devastated parts of New Jersey, the Hurricane Sandy Relief Foundation (HSRF) and its operators, John Sandberg and Christina Terraccino, have solicited donations through a website in which HSRF falsely claims to be a 501(c)(3) tax-exempt organization and represents that “(a)ll of our donations go towards food, clothing, supplies, aid in rescue and cleanup efforts, and the future rebuilding of communities and lives destroyed by Hurricane Sandy.” As of last month, the organization had raised more than $631,000 in monetary donations from at least 1,999 persons – but has disbursed less than one percent of that amount to Sandy-related causes, according to records obtained by the State.
The State’s lawsuit, filed in Bergen County Superior Court by the Division of Law, accuses the defendants of multiple violations of New Jersey’s Charitable Registration and Investigation (CRI) Act, Charities Regulations, Consumer Fraud Act, and Nonprofit Corporation Act. The State asks the Court to order the defendants to stop soliciting donations, shut down their website, disgorge and repay all funds and property acquired by violating the law, and pay full civil penalties for every violation, among other relief. Under the CRI Act and Consumer Fraud Act, a first violation is subject to a civil penalty of up to $10,000, and subsequent violations are subject to penalties of up to $20,000. Every solicitation of donations made while an organization is not registered, and/or made through false or misleading statements, is considered a separate violation.
“The Division of Consumer Affairs identified certain red flags about this purported charity in late December, and immediately commenced an investigative inquiry. Shortly thereafter, we reached out to this group, told them to provide extensive documentation about their fundraising and activities, and met with HSRF’s operators at our headquarters in Newark to address the myriad concerns we had about their activities,” Acting Director Kanefsky said. “After a thorough investigation revealed multiple and ongoing violations of state law, we are now taking action to ensure that all of the money donated is used properly, in a manner consistent with the representations made to the public.”