Jury sides with California in charity fraud case

| November 28, 2018 | 0 Comments

A jury has awarded the State of California $8.8 million in a case against a family accused of fraudulently soliciting charitable donations they said would assist wounded veterans as well as abused and neglected horses, California Attorney General Xavier Becerra announced Monday.

Instead of using the money to help the veterans and their families and any horses, the accused used donations to enrich themselves, Becerra said in a lawsuit he filed, claiming that California donors had been defrauded.

The accused are Matthew G. Gregory and his spouse, Danella J. Gregory, their adult children, Matthew J. Gregory and Gina D. Gregory, and their business, Gregory Motorsports.

“These unscrupulous con artists exploited the generosity of Americans by falsely claiming to help our country’s wounded warriors and their families. Instead, they used our charitable donations for personal gain,” Becerra said in his announcement.

The jury found that the defendants, as directors of Wounded Warriors Support Group and Central Coast Equine Rescue and Retirement, breached their fiduciary duty to act in the best interest of the two charities, the announcement said.

Wounded Warrior Support Group, a nonprofit that purportedly supported military veterans and their families, is in Carmel-by-the-Sea and engaged in fundraising and raffle activities in Alameda County and throughout the State of California, his statement said.

One such raffle involved selling tickets to those who thought they had a chance to win a 1965 Shelby Cobra.

It is not connected to the Wounded Warrior Project, a legitimate nonprofit organization that helps wounded, ill and injured veterans. Nor is this this first time scammers have operated under names similar to the legitimate organization.

In Indiana and Ohio, an organization calling itself the Wounded Warrior Fund was the subject of a three-year investigation by both the United States Secret Service and area sheriff’s detectives. In March, three people entered guilty pleas in that case after investigators said they made cold calls for donations and used the money for drugs, gambling and other personal expenditures.

Also related to the Gregorys’ case is another so-called charity, the Central Coast Equine Rescue and Retirement, another nonprofit with a described mission of rescuing abused and unwanted horses and to educate the public on the horses’ care and neglect. This organization operated out of both Livermore and Carmel-by-the Sea.

Becerra’s statement said the jury failed to use donated funds for charitable purposes for which the donations were sought.

His complaint claimed the defendants instead used the donated proceeds on personal expenditures, including shopping at Victoria’s Secret, paying off personal credit card debt, traveling, dining, buying dressage equipment, admittance to traffic school and other personal expenses.

The jury also found that the defendants conducted misleading and deceptive fundraising by running illegal charity raffles throughout California; that they filed false reports with the Attorney General’s Office; that they violated the Attorney General’s Cease and Desist Orders; that they engaged in self-dealing transactions; that they gave improper loans to directors; and that they operated the two charities without keeping corporate records and minutes.

In addition, the jury found that non-director defendants aided and abetted the directors in their unlawful acts to advance their own interests and financial gain, the statement said.

The jury found the defendants acted illegally 3,430 times, and it awarded multiple damages to the state, the statement said.

Against Matthew G. Gregory, the jury awarded California $1.35 million for breach of fiduciary duty; $1.35 million for deceptive and misleading solicitations; $641,528 for self-dealing transactions; and $500,000 for unjust enrichment.

Against Danella J. Gregory, the jury awarded California $500,000 for unjust enrichment.

Against Matthew J. Gregory, the jury awarded the state $1.35 million for breach of fiduciary duty; $1.35 million for deceptive and misleading solicitations; and $562,782 for unjust enrichment.

Against Gina D. Gregory, the jury awarded the state $251,129 for aiding and abetting a breach of duty; $2,700 for deceptive and misleading solicitation; and $751,129 for unjust enrichment.

Against Gregory Motorsports, the jury awarded the state $146,000 for aiding and abetting a breach of duty.

In addition, the court issued a separate judgment for the involuntary dissolution of both charities.

It also issued an order permanently prohibiting the individual defendants from operating or serving on the board of any California charity and from soliciting charitable donations or having charitable raffles.

“A jury of their peers has justly slapped down the Gregory family and their corrupt enterprise. But there are more sham charities out there plotting to defraud us,” Becerra said. “That’s why the California Department of Justice has ramped up its investigation and enforcement against suspect charities. We intend to hold them accountable before they prey on you.”

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