Fake WV Charity Scam Nets Millions for 7 Defendants

September 23, 2016; Herald-Mail

Seven Martinsburg, WV residents, accused of operating a fraudulent charity, were charged with 53 counts of federal offenses from mail fraud and money laundering to aiding and abetting an illegal gambling business. All those charged were released by a federal magistrate and are under travel restrictions until they are arraigned on Wednesday.

The potential fines and prison sentences are serious:

The defendants face up to twenty years in prison and a fine up to $250,000 for each mail fraud count; up to twenty years in prison and a fine up to $500,000 for the money laundering conspiracy count; up to twenty years in prison and a fine up to $500,000 for each money laundering count; up to ten years in prison and a fine up to $250,000 for each monetary transactions count; and up to five years in prison and a fine up to $250,000 for the gambling count.

Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.

The fraudulent charity was called Kids Against Drugs WV, Inc., and operated under the name Big Bucks Bingo in Martinsburg. We say “fraudulent” not only because the term was used in the press release announcing the federal indictment, but also because we could find no record of the organization on the IRS website, the GuideStar website, the NCCS website, or the West Virginia Secretary of State’s website. Prosecutors have issued seizure warrants against the fraudulent charity and two LLCs to freeze all assets and recover any proceeds of illegal activity.

Between 2007 and 2014, the group reportedly received more than 90 percent of revenues after gambling winnings were paid to customers, totaling about $7 million. According to news reports, the organization was supposed to benefit the local humane society and the local chapter of the Fraternal Order of Police. The charities were surprised to find out that the bingo operation was generating far more than the $1,000 or so a month they believed was the case.

The investigation of Big Bucks Bingo began shortly after an accountant with the fraternal police organization noticed that their state license to hold the games had been revoked, [U.S. Attorney William J.] Ihlenfeld and [Assistant U.S. Attorney Paul] Camilletti said.

Camilletti said the prosecutors’ investigation found that the charities were unaware that state law was being violated in how the bingo games and raffles were held and didn’t know the gross proceeds were as high as they were.

A recent opinion piece on the Clarksburg, WV Exponent Telegram’s website calls out the egregious and potentially criminal behavior of the seven defendants, “because every time someone reads or hears of abuse by a purported charity or nonprofit, or officials of such agencies, it makes would-be philanthropists think twice before handing over money.” The paper’s stand is especially significant because there is an apparently unrelated Big Bucks Bingo located in the town, a more-than-two-hour drive from the location implicated in the federal indictment.

Multiple people and companies were in a position to use a fake charity to enrich themselves. The charities may or may not have performed their due diligence and oversight duties; it’s too soon to know whether the boards of the humane society and police group were inattentive or actively deceived. Oversight like renewing gaming licenses can take time before becoming known, and federal investigators need a reason to open an inquiry. Regardless, the result is allegedly illegal activities involving millions of dollars that, quite literally, are now a federal case. Even though Kids Against Drugs WV is a fake charity, charity in general and two local nonprofits in particular suffer reputation damage and the actual or potential loss of community support.—Michael Wyland