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A fundraiser for some of America’s worst charities has agreed to a $25 million settlement with New York regulators to resolve allegations that the company misled potential donors and failed to disclose conflicts of interest.
It is the largest settlement ever reached in the U.S. on deceptive fundraising allegations, according to the New York attorney general.
As part of the settlement, Quadriga Art and its affiliates will forgive a $13.8 million debt that a charity client incurred from direct mail campaigns and pay $9.7 million in damages.
In a statement, Mark Schulhof, CEO of Quadriga, apologized. “We mailed too much, and too quickly, for a young charity. We made mistakes that permitted donors to believe that greater programs were in operation before they could be fully realized,” he said. “We deeply apologize for our actions and for any adverse impact they may have had on our industry. We have taken steps to ensure that this situation will never occur again, and initiated reforms based on lessons learned that will be applied toward every aspect of our business, every day.”
Quadriga and its affiliates have worked with at least five charities named in a series by the Tampa Bay Times and The Center for Investigative Reporting that ranked America’s 50 worst charities based on the money they spent hiring professional solicitors.
The New York attorney general’s investigation focused on Quadriga’s fundraising practices with one of the largest veterans-related charities in the county, the Disabled Veterans National Foundation based in Washington. A CNN investigation found that almost none of the more than $50 million that had been donated to the charity had gone to help veterans. The charity was not on the Times/CIR list.
In a statement, the charity’s recently appointed CEO thanked the attorney general’s office. “DVNF will be a stronger and better organization as a result of their work,” said Joseph VanFonda, a retired Marine.
As part of the settlement, the charity is continuing to reform its fundraising practices and will replace all of its founding directors.