NEW YORK, NY – December 15, 2009 – (RealEstateRama) — Attorney General Andrew M. Cuomo today announced his office has obtained an interim court order shutting down the New York City-based not-for-profit group United Homeless Organization, Inc. (“UHO”). The court order requires UHO to immediately halt all charitable solicitations from the public by any means and freezes UHO’s assets, including bank accounts and vehicles.
Last month Attorney General Cuomo filed a lawsuit against UHO, its founder and president Stephen Riley, and its director Myra Walker, alleging that Riley and Walker used the organization to dupe the public into donating cash to fund services for the homeless, when the money was instead used for personal expenses.
“Today’s court order prevents UHO from further exploiting the trust and good will of New Yorkers,” said Attorney General Cuomo. “But this organization’s bad behavior shouldn’t undermine the public’s willingness to donate to legitimate charities. As my office continues to aggressively monitor the activities of UHO and other charities, New Yorkers should feel even more confident in giving this holiday season.”
According to the lawsuit filed in New York Supreme Court, New York County, Riley and Walker had UHO workers set up tables across the city with plastic jugs to collect cash donations, telling sympathetic passersby that donated funds would be used for services for the homeless. However, Cuomo’s investigation revealed that money collected went directly to Riley and Walker, was kept by the people working for UHO, or was used to continue the fraud, instead of funding charitable programs or services. The lawsuit charges Riley, Walker, and UHO with engaging in a scheme to defraud and violating New York State’s not-for-profit and charitable solicitation laws.
The order was issued by Justice Barbara R. Kapnick of New York Supreme Court. The next court date is scheduled for January 11, 2010.
Attorney General Cuomo’s lawsuit charged that UHO:
– Uses donations for personal expenses
According to Cuomo’s lawsuit, UHO employees (also called “table workers” or “members”) pay Riley and Walker a fixed daily fee for the right to use the UHO tables, jugs, aprons, and other paraphernalia. After paying the fee, the workers then pocket any daily cash donations they receive. In turn, Riley and Walker use the fees collected from workers for their own living and travel expenses, while claiming in annual reports to the Attorney General’s office that they received no income from UHO. In addition, Riley has misappropriated UHO assets, including four UHO vehicles that he transferred to his own name.
– Solicits donations with false and misleading solicitations
UHO workers encourage donations with false and misleading statements that the funds will “help the homeless,” “feed the homeless,” and otherwise go to “charities and different churches” or to support pantries, shelters, and detox centers. In fact, Cuomo’s investigation revealed that UHO does not operate any shelters, soup kitchens, or food pantries. It does not purchase food, clothing, or other essential items for distribution to the homeless, or provide social workers or any social services to assist the homeless or fund other charities’ efforts on behalf of the homeless. The Attorney General’s investigation also found that Riley and Walker failed to secure a public solicitation license for UHO. Despite this, workers are given UHO’s incorporation receipt to display at their tables to mislead the public into believing it is a permit.
– Fails to maintain records of money collected and paid out
UHO fails to maintain any records of the hundreds of thousands of dollars of funds collected and pocketed by UHO workers at the tables. In addition, more than fifty percent of the cash withdrawn from UHO’s bank account in 2007 and 2008 lacked any documentation explaining the purpose for which the funds were spent. Since UHO failed to properly book its revenues and expenses, it filed false and misleading financial reports with the Attorney General’s office.
– Has no governance or financial oversight
UHO is operated by Riley and Walker without any board or financial oversight, which New York State law requires of all charities. Riley and Walker are the only directors on UHO’s board, despite legal requirements that New York State not-for-profits have three directors. UHO has not held an election for directors since its incorporation in 1993.
The lawsuit also charged UHO, Riley, and Walker with engaging in a scheme to defraud in connection with charitable solicitations and making false filings with the Attorney General. The lawsuit further charged Riley and Walker with violations of New York’s Not-For-Profit Corporation Law for breaches of fiduciary duty in connection with UHO’s governance, and for wasting and misappropriating UHO’s assets. In addition, the lawsuit charged Walker and Riley with failing to properly administer charitable assets.
The case is being handled by Assistant Attorneys General Patricia Northrop and Carolyn Ellis, Chief of the Charities Bureau Jason Lilien, and Senior Trial Counsel for Social Justice Kathryn Diaz.