OLYMPIA — The Attorney General’s Office today announced a lawsuit against a Seattle-based company offering campaign and non-profit fundraising services, alleging Blue Utopia failed to send all the donations it collected to its clients, and used new donations to cover old debts to other campaigns. The lawsuit alleges these are unfair and deceptive practices in violation of state law. The office has identified at least two affected campaigns in Washington so far.
Today, the Attorney General’s Office obtained a temporary restraining order, requiring the company to provide donations to its clients in a timely fashion and in the proper amounts.
Attorney General Bob Ferguson recused himself from the case, meaning he has no involvement in the legal decision-making related to the matter.
The lawsuit, filed in King County Superior Court, accuses Trace Anderson and his company, Blue Utopia, of unfair and deceptive practices, thereby violating the Washington Consumer Protection Act.
Political campaigns and nonprofits use Blue Utopia to collect, process and manage online fundraising. They pay a monthly subscription fee, and Blue Utopia takes a percentage of all donations processed through its service. The company then sends the net donations on to the candidates or nonprofits in batches on a weekly basis.
As early as 2013, the lawsuit alleges, Blue Utopia failed to send the weekly donation batches, delayed payment, or failed to pay out net donations from multiple donors to its clients, including at least two Washington political campaigns.
The Attorney General’s Office investigation found that the bank Blue Utopia used to process its transactions began charging a higher rate, and the company failed to notice and raise its fees accordingly. To cover the losses, it began diverting donated funds from its campaign clients.
Blue Utopia was using new donations in order to make payments owed to its clients for past donations from different donors. Thus, some donor funds never made it to the campaign to which they donated.
People making donations through Blue Utopia, and Blue Utopia clients, expected the donations to be processed and sent on to the intended candidates or nonprofits. Diverting them to another purpose, the lawsuit alleges, is an unfair or deceptive practice in violation of Washington state law.
The complaint asks the court to order Anderson and Blue Utopia to stop their deceptive practices, provide restitution to affected clients, and impose civil penalties of up to $2,000 per violation.
Once the defendants are served, they have 20 days to respond to the complaint.
Assistant Attorneys General Tiffany Lee and Kate Barach are handling the case.
The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Visit www.atg.wa.gov to learn more.
Brionna Aho, Interim Communications Director, (360) 753-2727; firstname.lastname@example.org