Image Credit: Copyright ©2017 R. Stevens / CREST (CC BY-SA 4.0)

August 7, 2018; Tacoma Weekly News

Yesterday, Washington State Attorney General Bob Ferguson announced he had filed a lawsuit seeking to close six soundalike nonprofit organizations established by former stockbroker Ian Richard Hosang, who is known to have Mafia ties. The names of the six may sound kind of familiar: American Cancer Society of Seattle, American Cancer Society of Washington, American Red Cross of Seattle, American Red Cross of Washington, United Way of Seattle, and United Way of Washington. All, of course, bear an uncomfortable resemblance to the names of real, reputable nonprofits, and some are identical to them. Ferguson believes they may have been established to hide illegal activity, because none have been used for fundraising.

Eight other states, including Florida, Wisconsin, and Ohio, have experienced the same problem, even down to the names being used.

“I’m deeply concerned that a convicted money launderer created these sham nonprofits using the names of legitimate, internationally recognized organizations,” said Ferguson. “If you donated to any of these nonprofits, please contact my office.”

Hosang, who does not reside in the state of Washington, is alleged in the suit to have violated the Consumer Protection Act and the Nonprofit Corporations Act.

Nonprofit corporations operating in Washington must have a legitimate address along with records of finances and associates and must provide the benefits, service or education as stated in their purpose or mission statement. Hosang’s organizations failed all of these requirements, violating the Nonprofit Corporations Act.

Each of the faux organizations received its mail at a UPS Store in Seattle which, at Hosang’s direction, forwarded all correspondence to a P.O. Box in Brooklyn. Apparently Hosang likes to stay close to home; he has been connected to the Gambino crime family in New York and did a dozen years in federal prison for money laundering. Here is a report on that 1999 case:

Ian Richard Hosang pleaded guilty in March to federal conspiracy and money laundering charges in a stock manipulation case in which, prosecutors said, he and some associates had beaten a rival stockbroker and hung him from his feet out the ninth-story window of a Manhattan office building.

Hosang established the first of the Washington-based faux nonprofits, the American Cancer Society of Washington, in late 2016, founding the rest over a two-day period in February 2018.

This may look to some like merely a bizarre and distracting story, but there’s some meaning in it for legitimate nonprofits. As with the long tradition of using veteran’s programs to commit fraud on a grateful public, this kind of activity in the sector detracts from the confidence people have in nonprofits. It will make them think twice… and perhaps pause long enough not to give at all. We do not know what Hosang’s intent was with these entities that mimicked some of the highest name brands in the country, but one can assume it likely included fraud, and fraud in our ranks erodes our sectoral—and in this case, organizational—reputations, and that is deadly serious.

One last point: The recent collective activism of charity offices and attorneys general across the country, and their collaborative stance with organizations like the Federal Trade Commission, is something for which we need to thank them loudly and more often, because we need their vigilance and protection.—Ruth McCambridge