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Attorney General’s Office nets $36K in Snohomish charity scam crackdown

The Attorney General’s Office will recover roughly $36,200 from a Snohomish couple who claimed to be collecting funds for charity but instead pocketed more than half of the money.

The Attorney General’s Office filed a consumer protection complaint against Knowledge for Kids (K4K), which also does business as “Kures for Kids,” and its owners/operators, a married couple, Michael and Amy Gannon, in December.

The complaint alleged the Gannons used numerous deceptive practices to entice consumers to donate money to their charity, including claiming that they would provide direct support for the families of kids with disabilities and dispense funds to other charities.

Although K4K raised roughly $70,000 from the public, only about $2,100 went to other charities, and K4K provided no direct support to families of children with disabilities.  Instead, $36,200 went into the Gannons’ pockets, and the rest covered expenses such as paying commercial fundraisers.

In a stipulated judgment filed in court this week, the court ordered K4K and the Gannons to pay:

•         $36,200 in consumer restitution to the Attorney General’s Office; and

•         $91,500 in penalties, costs and reasonable attorneys’ fees—suspended as long as all of the defendants comply with the terms of the stipulated judgment.

 

The recovered funds will be used to benefit the public.

 

As part of the agreement, the Gannons were required to dissolve K4K. They are also prohibited from:

•         Forming any new charities or commercial fundraising organizations;

•         Working for any charitable organization in any capacity requiring the handling of money or fundraising;  or

•         Serving as fundraising counsel or consultants.

 

“People put their trust in charities and abusing that trust is serious business,” said Attorney General Bob Ferguson. “The Attorney General’s Office will investigate and hold accountable anyone who claims to be raising money for charity, but then pockets the funds.”

Overview of the Gannons’ business practices

The Gannons founded the charitable organization Knowledge 4 Kids, or Kures 4 Kids (K4K) in 2012. They served in various leadership roles including president and secretary.  They claimed to raise money to support families of children with disabilities and to support other charitable organizations. The couple raised roughly $70,000 from the time they founded the organization until December 2013.

K4K asked for donations at tables set up inside or outside grocery stores and other retail establishments. AGO investigators observed K4K solicitors telling potential donors they were volunteers even though they were paid a rate of $10 per hour. After collecting money, the solicitors told the AGO they met the Gannons to count the money. The solicitors said they were then paid in cash from the donations.

Multiple violations of the Consumer Protection Act

The AGO alleged and the stipulated judgment states that K4K committed multiple violations of the Washington State Consumer Protection and

Charitable Solicitation Acts:

o   Misrepresenting paid solicitors are volunteers;

o   Misrepresenting the “support” K4K said it provided to other charitable organizations;

o   Failure to register K4K’s contracts with commercial fundraisers;

o   Failure to include required disclosures in brochures and on-line solicitations; and

o   Failure to maintain and produce financial records.

 

Assistant Attorneys General Ben Roesch and Sarah Shifley were leads on this case.

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