Less than 5 percent of donations go to charities, 50 percent to Gannons
SEATTLE — The Washington state Attorney General’s Office (AGO) has filed a Consumer Protection Act complaint and will seek a temporary restraining order against Knowledge 4 Kids, otherwise known as Kures 4 Kids, and its operators, Michael and Amy Gannon.
The AGO alleges the Mill Creek couple uses numerous deceptive practices to entice consumers to donate money. Despite giving the impression donations will help children, the Gannons apply only a small percentage of donations to a charitable purpose. The rest goes into the Gannons’ pockets and other expenses such as paying employees.
Charitable donations typically increase during the holidays. The AGO is asking for an immediate restraining order to prevent the Gannons from scamming consumers during this peak giving time.
“This is the third time the Gannons have been involved in deceptive business practices,” said Washington State Attorney General Bob Ferguson. “We’ll keep pursuing them until they stop scamming consumers.”
Overview of the Gannons’ business practices
The Gannons founded and lead the charitable organization Knowledge 4 Kids, or Kures 4 Kids (K4K). They claim to raise money to support families of children with disabilities and to support other charitable organizations.
K4K asks 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 are paid a rate of $10 per hour. After collecting money, the solicitors meet the Gannons to count the money. The solicitors are then paid in cash from the donations.
Multiple violations of the Consumer Protection Act
The AGO alleges the Gannons committed multiple violations of the Washington State Consumer Protection and Charitable Solicitation Acts:
o Creating the false impression that most or all money will be used to assist families of children with disabilities;
o Misrepresenting paid solicitors are volunteers; and
o Misrepresenting their relationship with various charitable organizations they claim to raise money for.
• Failure to register:
o Failure to register as a commercial fundraiser with the Secretary of State;
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 financial records.
The AGO is seeking civil penalties and other relief. Many donations were made in cash, making it difficult to return money to donors. To the extent recovered funds cannot be returned to donors, they will be used to benefit the public through efforts such as preventative outreach campaigns.
Assistant Attorneys General Ben Roesch and Sarah Shifley are leads on this case.
Third time Gannons connected with deceptive business practices
In 2009, the Department of Financial Institutions filed charges against Michael Gannon, Joseph Searles and others. They were involved with First Columbia Mortgage Corporation, which was investigated for imposing unreasonable fees, and for failing to make required disclosures. In 2011, Gannon, Searles and others settled the charges without admitting guilt.
In February 2013, the AGO sued Joseph and Rena Searles for violations of the Consumer Protection Act regarding their charitable organization, Autism Awareness United. The Gannons allegedly helped run scams associated with this charity before starting similarly deceptive operations at K4K.
Don’t get scammed: Charity donation tips
The AGO recommend consumers consider these tips before donating:
• Don’t give in to pressure. Tell the solicitor you want to take time to make your decision. And remember, it is always OK not to donate.
• Ask for written material about the charity to take home and research to see if their donations help other charities as they claim.
• Ask the solicitor if he or she is registered with the Office of Secretary of State.
• Don’t be fooled by a name. Some use similar sounding names that closely resemble respected, well-established charities.
If you’ve been the victim of a consumer scam, file a complaint with the AGO by calling 1.800.551.4636 or visit http://www.atg.wa.gov/FileAComplaint.aspx. After filing a complaint, the AGO contacts the business to explain the complaint in order to help resolve the dispute. The complaint resolution process is free.
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