October 29, 10

NEWS / Essex County Resident Charged In Bogus Car Donation Scheme

NEWARK – The Office of the Attorney General and the Division of Consumer Affairs have filed suit against a Cedar Grove resident, charging him with soliciting vehicle donations by falsely posing as a charity and misrepresenting the value of vehicles to donors seeking tax deductions.

Filed in State Superior Court in Essex County, the four-count complaint charges Steven Ashley with violating the State’s Charitable Registration and Investigations Act and Consumer Fraud Act.

According to the complaint, undercover investigators from the Division of Consumer Affairs in mid-2009 twice responded to advertisements soliciting charitable car donations for Ray of Hope – a New York-registered charity whose stated purpose was “to provide medical, educational and cultural assistance and benefits to children and the disabled.” In both instances, Ashley misrepresented that he was soliciting car donations for the benefit of Ray of Hope when, in fact, the donated cars were to benefit his own North Carolina used car dealership. As stated in the lawsuit, Ashley also told the investigators that they would receive cash plus a vacation trip, as well as a tax deduction in excess of the value of the vehicle.

In addition to concealing the true purpose of the solicited vehicle donations, Ashley allegedly failed to disclose to the investigators certain IRS requirements relating to the amount that a donor is able to deduct. The IRS requires a written appraisal of the donated vehicle for a tax deduction. Also, the value of the cash and vacation given to the donor would need to be reported to the IRS and would reduce the amount of the tax deduction. According to the complaint, Ashley unlawfully withheld those material facts.

“Charitable donors and legitimate charities were both harmed by Mr. Ashley’s alleged actions,” Attorney General Paula T. Dow said. “Ashley dangled the lure of a large tax write-off, which donors in reality could not obtain, and other enticements to generate vehicle donations.”

Ashley used an alias and a North Carolina dealer license plate when he arrived to take possession of the vehicle being donated by an undercover New Jersey Consumer Affairs investigator in July. Investigators later observed another vehicle with North Carolina dealer plates in the driveway of Ashley’s Cedar Grove home.

When asked under oath what happened to the cars he acquired from donors, and why he used North Carolina dealer plates, Ashley invoked his right against self-incrimination and refused to answer the questions.

“In these times, consumers are regularly bombarded by mailings, ads, and billboards – all asking them to make tax-deductible donations. Unfortunately, some of those are for illegitimate charities that exist only to bilk the public,” said Thomas R. Calcagni, Acting Director of the Division of Consumer Affairs. “We will vigorously pursue any fraud operator that deliberately misrepresents fundraising intentions or solicits charitable funds for phony causes.”

As explained in the complaint, Ray of Hope, also known as the International Foundation for Children and the Disabled, never employed Ashley. Irina Shvartser, an official with Ray of Hope, stated that while Ashley had at one point donated his time to the organization to assess the condition of vehicles, he had no connection to Ray of Hope as of March 2008.

Ray of Hope was an unregistered charity when it operated in New Jersey between 2005 and 2009. Under terms of a Consent Order issued last month, Shvartser is barred from soliciting donations in New Jersey for the next five years. She also paid to the state $17,500 in civil penalties and investigative costs.

As the holiday season approaches, consumers who are considering donating are reminded to make sure that the organization they are giving to is a legitimate charity. The Division of Consumer Affairs maintains a list of all charities registered to solicit and accept donations in New Jersey. That list can be accessed online at www.njconsumeraffairs.gov/charity/chardir.htm

Deputy Attorney General Joshua T. Rabinowitz of the Consumer Fraud Prosecution Section is representing the state in this matter. The investigation was handled by Investigators Patrick Mullan and Michelle Davis of the Division of Consumer Affairs.

http://www.nj.gov/oag/newsreleases10/pr20101029a.html