Los Angeles vehicle donation charity People’s Choice Charity has been ordered to shut down and pay at least $30,000 in penalties, California Attorney General Xavier Becerra and Los Angeles County District Attorney Jackie Lacey announced Monday.
People’s Choice Charities advertised that when people donated their vehicles through the company, 100 percent of the proceeds from the sale of cars would be given to charities selected by the donors, according to a joint statement from Becerra’s and Lacey’s offices.
But, a December 2015 lawsuit filed by Lacey and then-state Attorney General Kamala Harris alleged that 97 percent of the sale proceeds went towards administrative costs, including advertising, towing and car repairs.
An attorney representing People’s Choice Charities said the company denied the allegations and accused the prosecutors of “governmental overreach.”
The stipulated final judgment places a permanent injunction on Gary Stone, the nonprofit’s president, barring him from serving as a director, officer, trustee or employee of any California charitable organization. The order also permanently bans Stone from doing contract work with charities, holding any management or supervisory position or engaging in fundraising activities.
People’s Choice Charities was also ordered to pay $30,000 to set up a fund with the California Community Foundation to support charitable programs for the benefit of children. A payment of $870,000 was stayed but may be enforced if the nonprofit violates the injunction.
“This settlement should serve as a warning to any other organization that takes advantage of the kindness of consumers,” District Attorney Lacey said. “Donations generated through deceptive advertising take valuable resources away from legitimate charities.”
Speaking on behalf of the company, attorney David. S. Eisen of the law firm Wilson Elser Moskowitz Edelman & Dicker said in an emailed statement that Stone has denied the allegations “and he certainly did not do anything to betray the public trust.”
“This was a classic case of governmental overreach, in which an individual in a small business who was doing the best he could was faced with a Hobson’s choice: paying to litigate for the foreseeable future, or stop the charitable work that he loved,” Eisen said in the statement. “The government got its way but, in Mr. Stone’s view, the public loses when these sorts of baseless lawsuits are filed. The very small amount of money actually paid to resolve this case strongly suggests that the overheated rhetoric in the District Attorney’s statement does not match the actual evidence in the litigation.”
Public policy and energy reporter Howard Fine can be reached at firstname.lastname@example.org. Follow him on Twitter @howardafine.