The New York State Attorney General has reached a nearly $25 million settlement with one of the nation's biggest direct-mail companies. AC360's Drew Griffin has been reporting on the national charity Quadriga Art and the veterans foundation since the fall of 2010, broadcasting a series of reports that showed the charity sending practically all of the millions it raised back to Quadriga as payment for the direct-mail campaign. Almost none of the cash left over went to veterans, the CNN investigation found. Griffin has the exclusive details.
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Update: Drew Griffin clarified his remarks about donations:
More than a dozen U.S. charities claim they sent millions of dollars worth of medical supplies to Guatemala. Drew Griffin traveled there searching for those supplies. Tonight he follows the money trail. Drew is working with our partners at The Tampa Bay Times and The Center for Investigative Reporting to get answers.
Over the past couple of years, CNN Investigative Correspondent Drew Griffin has been checking on charities that say they want to help those in need, but in reality spend most of their money elsewhere. Tonight, the California Attorney General’s Office is announcing a big cash settlement from one of those charities.
It’s called Help Hospital Veterans, which claims to help America’s wounded warriors. The charity says it helps raise the morale of hospitalized veterans, by giving them craft kits, designed to challenge their minds and help pass the time while they recover. But last summer, California’s Attorney General’s Office filed civil penalties against Help Hospital Veterans, seeking more than $4 million for misrepresentation in soliciting. The state says the charity paid excessive salaries, perks and conducted illegal deals with donated money, according to the complaint.
“It is a shell game,” Brian Nelson, Special Assistant to California’s Attorney General, told our Drew Griffin in August 2012.
According to one of the charity’s filings, the president of Help Hospital Veterans, Michael Lynch got a $389,000 salary and there’s more. In its complaint, California authorities said money donated to the charity also paid for two country clubs near Lynch’s home. The price tag: $80,000.
Donated funds also paid for a condominium near Washington, D.C. for the use of charity executives. And according to the complaint, while Help Hospital Veterans raked in $65 million in two years, according to tax returns, the charity misled the IRS and its donors about where the funds actually go. $44 million went to fundraising and the charity said it spent $16 million on those craft kits, but the California attorney general’s office questioned the charity’s accounting.
And that bring us today and the settlement. Watch Drew’s update for the latest developments.
Watch Drew's original investigation:
The Kids Wish Network is firing back at AC360. The charity is the focus of a pair of reports this week by Drew Griffin, who found that less than 3 percent of the $127 million the charity has raised actually went to the children it purports to be helping. Along with the Center for Investigative Reporting and the Tampa Bay Times, Drew identified Kids Wish Network as the absolute worst charity when it comes to how little of each dollar raised actually helps the people they claim to care about. Kids Wish Network wouldn’t talk to us on camera but now they’ve posted a letter on their website, bashing our reporting and trying to discredit one of Drew’s sources. Drew takes us through the numbers that he crunched and shows us the math.
This week, AC360 featured Drew Griffin's reports on the Kids Wish Network. They were produced in partnership with the Center for Investigative Reporting and the Tampa Bay Times. They found the charity raised some $127 million in donations over the past decade, but spent precious little—less than three per cent in cash—to help dying children.
The Tampa Bay TImes has a full breakdown on the Kids Wish Network's finances including their tax returns.
The Kids Wish Network responded on Twitter:
Anderson responded to the Kids Wish Network's tweet:
A former employee of the Kids Wish Network charity says that when it comes to pictures of seriously ill children charity executives wanted to promote on websites and in brochures, the sicker the better.
Speaking to CNN in silhouette because he feared reprisals, a man who worked at the Tampa-area charity for nearly a year says he was told that a photograph he had chosen of an ill child, in effect, looked too healthy. When CNN's Drew Griffin asked him to elaborate, he said, "they want what will make them the most money."
That's just one example from the second of a two part CNN investigation into Kids Wish Network, a charity that according to tax returns has taken in $127 million in donations over the past decade, but spent precious little—less than three per cent in cash—to help dying children.
This was part of a months long investigation with the Center for Investigative Reporting and the Tampa Bay Times. You can also watch part 1 of this report on-line.
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Kids Wish Network was the subject a months long investigation published in June by the Center for Investigative Reporting and the Tampa Bay Times. CNN joined that investigation as it was nearing its conclusion. That investigation labeled Kids Wish as America's "worst" charity and from the available evidence, it's not hard to see why.
CNN's Drew Griffin talked to three ex employees of Kids Wish—two who didn't want their names or identities disclosed. And one who did. The one who told us her story on the record is a woman named Meanda DuBay, who worked for the charity as something called a "wish coordinator" for about six months from mid-2011 until January 3, 2012 when she was fired. She was fired, she says, because she took her concerns and complaint about Kids Wish to the charity's board of directors. Meanda DuBay was fired, he says, about 45 minutes after hitting "send" on emails to board members outlining her assertions.
Kids Wish Network has filed a civil defamation lawsuit against her but along with that, convinced the FBI to raid her house, confiscate her computers and conduct a full blown investigation for several months, all based on the charity's claim that Mrs. DuBay stole confidential electronic information. The FBI ended its investigation with no charges filed and returned all of the seized computers belonging to her and her husband.
It's a story about millions of charitable dollars flowing into a charity that says it helps dying kids.
The offer stills stands. Anderson is challenging the leaders of three so-called cancer charities to come on AC360 and answer questions about their donations and fundraising or they can talk on camera to our investigative correspondent Drew Griffin.
Just last week, Drew reported on The Breast Cancer Society, Children’s Cancer Fund and Cancer Fund of America. After his story aired, Anderson issued the challenge to the executives of each one to talk to us directly. So far, none have taken us up on the challenge. But two of the three have spoken out elsewhere and their comments are raising new questions.
The Breast Cancer Society run by James Reynolds Jr. responded to our report online. The headline on their web site read, “What is the truth about Breast Cancer Society that you won’t hear on CNN’s Anderson Cooper show.” In the posting, they claim 75 percent, not 2 percent of their own donations go to charity. But it’s not true. The Breast Cancer Society took in $13 million in 2011 and according to its own tax filings, just 2.4% of that money went to cancer patients.
Editor's note: Watch Drew Griffin's report on several cancer charities that have raised millions of dollars. He investigates how that money is being used. Tune in to AC360° at 8 and 10 p.m. ET.
For more than a year, my colleague, producer David Fitzpatrick, and I have been crisscrossing the country exposing corrupt charities. We’ve found there is no shortage of greedy scam artists who will ask for your heartfelt donations, only to squander your money or keep it as their own.
We’ve had doors slammed in our face by so-called veterans’ charities. They raise money in the name of our country’s military heroes; yet in some cases, hardly any money reaches veterans in need.
We’ve exposed the gifts in kind trick, where well-intentioned people give donations to a charity group, and then the organization sends leftover junk, hand-me-downs or giveaways to the needy. They pretend it’s somehow proof of their “charitable work.”
Editor's note: For a list of legitimate charities and other ways to help Sandy victims from CNN's Impact Your World team, check outCNN.com/Impact
As the Northeast digs out from a second major storm in little more than a week, experts say Internet scam artists are preying on generous Americans who want to donate to the victims of Superstorm Sandy.
According to a Maryland-based Internet watchdog company, more than 1,000 Internet domain sites with the words "Sandy" or "relief" were registered either as the storm was approaching the Caribbean last week or, in some cases, even before the hurricane hit.
"We have no idea who these people are," Johannes Ulrich, president of SANS Security told CNN from his home in Jacksonville, Florida. "And what we notice is that they do register hundreds of these domains, in part, trying to trick people who go to these domains and then donate the money.