Nationwide Charity Scheme Uncovered: Millions Raised with Minimal Donations Reaching Cancer Screenings

Maryland Attorney General Anthony G. Brown and Secretary of State Susan C. Lee have joined forces with 18 other state agencies and the Federal Trade Commission (FTC) to halt a widespread deceptive charity fundraising operation. The scheme, operated by Kars-R-Us, Inc. and its principals Michael Irwin and Lisa Frank, allegedly misled donors nationwide into believing their contributions were significantly benefiting breast cancer screenings. However, investigations reveal that only a minuscule fraction of the millions raised actually supported these critical health services.

The complaint filed by the FTC and the participating states outlines how Kars-R-Us solicited vehicle donations, advertising that these contributions would enable the United Breast Cancer Foundation, Inc. (UBCF) to “save lives” through free and low-cost breast cancer screenings. Despite raising over $45 million between 2017 and 2022, the complaint alleges that a mere $126,815, or approximately 0.28% of the total, was allocated to actual breast cancer screenings. The majority of the funds, an estimated $34.9 million, allegedly went towards the operations of Kars-R-Us, its operators, and vendors. A substantial portion of the remaining funds were reportedly used for purposes other than direct aid, including significant compensation for UBCF’s CEO.

The scale of the deception is considerable, with the complaint indicating that Kars-R-Us’s deceptive advertising tactics, which included national and local television, radio, and online ads in both English and Spanish, convinced more than 84,000 individuals to donate vehicles. In Maryland alone, approximately 1,624 vehicles were donated to Kars-R-Us between 2018 and 2022, representing an estimated charitable contribution value of $1,045,520.00. The operators are accused of knowing or should have known that their claims about the use of donations were deceptive or unsubstantiated.

Under a proposed settlement order, Kars-R-Us and its operators face significant penalties and restrictions. Michael Irwin, identified as Kars’s president and co-owner until 2022, is permanently banned from engaging in any fundraising activities. Lisa Frank, the current president and sole owner, is prohibited from making misrepresentations in connection with fundraising or the marketing and sale of other products and services. Kars-R-Us and its associates are also barred from making deceptive claims in fundraising and marketing efforts, and the company and Frank are required to substantiate their claims.

In addition to these operational restrictions, Kars-R-Us, Irwin, and Frank are subject to a monetary judgment totaling $3,882,091. However, this judgment is partially suspended due to their declared inability to pay the full amount. The full judgment could become immediately enforceable if it is determined that the defendants misrepresented their financial status to the FTC and state partners.

The collaborative effort to address this alleged fraud involved a broad coalition of state agencies, including the Attorneys General of Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, New York, North Carolina, Oklahoma, Oregon, Utah, Virginia, West Virginia, and Wisconsin. Additionally, the Secretaries of State of North Carolina and South Carolina, along with the Utah Division of Consumer Protection, participated in the action.

For Maryland residents who are concerned about charitable giving, the Office of the Secretary of State registers and regulates all organizations soliciting charitable contributions within the state. In conjunction with the Maryland Attorney General’s Office, the Secretary of State works to ensure that donations made by Marylanders are directed to legitimate charitable organizations and are used for their intended purposes. Residents can verify a charity’s registration status by consulting the SoS-Public Registry. Suspected violations of charitable giving laws can be reported by calling 410-974-5534. Further information on charities and consumer protection resources, such as the Maryland Attorney General’s Office Consumer Protection Division publication “Consumer’s Edge Charitable Giving Tips,” are available.

Article by Mel Anara, based upon information from a press release by the Maryland Office of the Attorney General and the Maryland Secretary of State.

---