[co-author: Stephanie Kozol]*
On October 25, Pennsylvania Attorney General (AG) Michelle Henry announced a court order requiring the pastor and founder of Peniel Christian Fellowship International to pay $305,704 in restitution for allegedly misusing ministry funds for personal expenses. The AG took action alleging that charitable donations to the church were diverted into the pastor’s personal accounts to pay for rent, vehicles, and other private expenses.
This recent enforcement action in Pennsylvania highlights how AGs intervene to protect public trust and prevent financial misconduct. State AGs play a critical role in ensuring charitable funds are used appropriately, holding organizations accountable when donations are mismanaged or abused.
Broader Efforts: Multistate Action Against Cancer Recovery Charity
While Pennsylvania’s case is a stark and recent example of AG oversight, collaborative efforts between states also play a vital role in addressing fraud. In March 2024, 10 AGs joined the Federal Trade Commission (FTC) in filing a complaint against the operators of Women’s Cancer Fund, previously known as Cancer Recovery Foundation International.
The complaint, filed in U.S. District Court for the Southern District of Texas, accuses the charity of misleading donors by claiming their contributions would assist women undergoing cancer treatment. However, only $200,000 of the $18 million raised from 2017 to 2022 reached patients, while the organization’s leaders received more than $750,000 in payments.
A bipartisan coalition of 10 state AGs worked with the FTC to seek donor refunds, civil penalties, and injunctive relief. This case underscores the multistate collaboration when it comes to perceived fraudulent charitable practices. The coalition consisted of state AGs from California, Florida, Maryland, Massachusetts, North Carolina, Oklahoma, Oregon, Texas, Virginia, and Wisconsin.
The Role of AGs in Regulating Nonprofits
Both the Pennsylvania and Women’s Cancer Fund matters highlight the authority that AGs hold to regulate charities. Their oversight spans several areas:
* Nonprofit Corporations: AGs monitor nonprofits for compliance with fiduciary duties, pursuing directors for legal violations and dissolving organizations when necessary.
* Charitable Trusts: AGs protect charitable assets held in trust, ensuring they align with donors’ intended purposes.
* Charitable Solicitations: AGs are empowered to identify and stop deceptive fundraising practices through civil and criminal enforcement actions.
* Charity Registrations: Many states require charities and fundraisers to register, enabling AGs to monitor financial activities and prevent violations.
* Health Care Conversions: AGs oversee the conversion of nonprofit health care entities to for-profit status to preserve charitable assets.
Why It Matters
The recent actions demonstrate the role of AGS in safeguarding charitable assets and protecting donor trust in such organizations. For nonprofits, understanding the regulatory scope of state AGs is crucial to maintaining transparency and compliance. Companies operating in this space are wise to ensure strict compliance with jurisdiction-specific requirements such as filing and reporting obligations, and ensure that general business practices do not run afoul of local practices.
*Senior Government Relations Manager
