This is the fourth installment in Steve and Amber Mostyn’s four part series that uncovers common types of scams that occur after a natural disaster.
Did you know that 70 percent of Americans donate money without ever checking to find out where their money goes? Fraudsters have been known to take advantage of this trend, particularly when natural disasters strike, and to capitalize on chaos in order to steal well-intended disaster relief donations by posing as charitable organizations. Many times, these fraudulent charities have operated under fake names to mimic well-established charities, such as the American Red Cross, making it difficult for donors to tell the difference between real relief efforts and fake ones.
Certainly, people should have done their research before donating to the charity John Sandberg and Christina Terraccino were running. The state of New Jersey sued the couple in 2012, alleging that they were operating an unregistered non-profit organization, misled investors, and made false claims when they solicited donations. The couple’s charity was called the Hurricane Sandy Relief Fund, similar to a credible organization called the Hurricane Sandy New Jersey Relief Fund, and solicited donations they said would be used to aid Hurricane Sandy victims. After learning of Sandberg and Terraccino’s scheme, the state accused the couple of pocketing $13,000 in donations and falsely advertising the charity as a non-profit organized registered with the Internal Revenue Service. Ultimately, the case was settled when the couple agreed to shut down the website, not start any new charities for a period of two years, and stop fundraising for Sandy victims. Most importantly, the settlement required them to give the $334,000 they had collected in donations to charities that were actually helping Hurricane Sandy victims.
However, Sandberg and Terraccino were not the first scam artists to take advantage of donors’ open hearts and pockets during times of crisis. One of the first Internet charity frauds was perpetrated after Hurricane Katrina in 2006. Gary S. Kraser of Sunny Isles Beach raised $39,000 by falsely claiming that donations made on his site, www.airkatrina.com, helped fund evacuation flights for Louisiana Katrina victims. The materially false statements on Air Katrina claimed all donations received were used to pay for jet fuel costs associated with hurricane relief flights to Louisiana, and that one said flight even evacuated a seventeen-month-old infant in need of critical medical care. Ultimately, Kraser pled guilty in 2006 to wire fraud relating to the false statements he made on the site.
The bottom line? No matter how heart wrenching a tragedy is, be sure to research organizations before donating or sharing personal information. The AARP warns donors to keep an eye out for websites that have been set up by scammers to acquire personal information, even if you recognize the name of an organization. Furthermore, be careful when providing any information via e-mail, telephone, door-to door collections or on a website. Even if you recognize the name of an organization, be very wary of unsolicited communications asking for donations, and research any organization to which you give thoroughly to avoid compromising yourself.