NEWARK – A Superior Court Judge has approved a final consent judgment and settlement agreement that designated a new organization administrator to distribute all remaining contributions made to the Hurricane Sandy Relief Foundation (HSRF), and then to dissolve the organization. The agreement also bars the former principals from ever again running a charitable organization related to Sandy and from serving in a leadership position in any charitable organization in the state for a minimum of two years.
The state in its filed complaint alleged that HSRF and its two principals unlawfully misled the public by diverting donated funds into their personal accounts, misled donors with false claims about the ways donations would be used, falsely claimed that donations were tax-deductible, and otherwise deceived the public in violation of New Jersey’s charity registration and consumer protection laws.
Under the terms of the settlement agreement approved by Judge Robert P. Contillo in Bergen County, the organization administrator will immediately take control of HSRF’s financial accounts, and distribute all contributions made to date within five months to registered charitable organizations providing relief to Sandy victims. Within one month after such distribution, the organization administrator will arrange for the shutdown of the HSRF website as well as the dissolution of HSRF.
Under the terms of the settlement, HSRF can no longer be engaged in the solicitation of contributions in New Jersey. In addition, HSRF’s principals, John Sandberg and Christina Terraccino, also agreed not to engage in any further solicitation of contributions in New Jersey for Superstorm Sandy relief, including through the use any of the dozens of internet domain names related to storm relief that Sandberg registered immediately prior to the storm.
Further, Sandberg, 31, and Terraccino, 27, residents of Sparta, are barred for at least two years from serving in a leadership position with any charitable organization operating in New Jersey. After such time, either may make a written request to the Division of Consumer Affairs to serve in such a capacity for a registered charitable organization, which must be accompanied by a certification under oath that there has been no material violation of the settlement terms. Upon such application, the Division will decide in its discretion whether that application should be granted.
“Charities are required to operate in an open and transparent manner, to ensure the public maintains its trust that donations are used as intended. Annual registration, which requires financial disclosure, is the foundation of accountability to the public. We will act, as we did in this case, whenever we believe our charities laws and regulations have been violated,” Acting Attorney General John J. Hoffman said.
On Feb. 21, the state alleged by complaint and order to show cause that HSRF, Sandberg and Terraccino violated New Jersey’s Charitable Registration and Investigations Act, Charities Regulations and the Consumer Fraud Act, among other things, by soliciting donations for Superstorm Sandy relief without being registered as a charitable organization with the Division nor being recognized by the Internal Revenue Service as a 501(c)(3) tax-exempt organization.
On Feb. 28, and upon the consent of counsel for the parties, the court issued temporary restraints, including a ban on further solicitation of donations, and required the transfer of all monetary donations collected to date into the escrow account of the attorneys for HSRF, including $13,596.53 that Sandberg and Terraccino allegedly transferred to their personal accounts. Under the court’s order, all supplies and gift cards donated to HSRF were donated to The Salvation Army.
The final consent judgment and settlement agreement includes a settlement amount of $79,195.18, representing the state’s attorneys’ fees and investigative costs. The settlement amount will be suspended and automatically vacated at the end of four years, as long as Sandberg and/or Terraccino comply with the settlement terms. In the event there is any material failure by Sandberg and/or Terraccino to comply, the state may seek entry of judgment for the settlement amount against them personally. Defendants entered into this settlement without any admission of liability.
Sandberg and Terraccino represented in the final consent judgment and settlement agreement that other than the $1,650.00 distributed prior to the filing of the action, all monetary contributions were transferred into their attorneys’ escrow account. They further represented that other than the $13,596.53 which the court ordered transferred to the attorneys’ escrow account, no other contributions were applied to their expenses. Sandberg and Terraccino also represented that they are not in possession of any in-kind contributions received by or on behalf of HSRF.
The division believes about $334,000 will be available for distribution, based on information previously provided by the defendants.
Connect with NJTODAY.NET
Join NJTODAY.NET's free Email List to receive occasional updates delivered right to your email address!