Couple expected to repay donations in charity scam

  • Mon Jun 30th, 2014 4:44pm
  • News

By Diana Hefley Herald Writer

SNOHOMISH — A husband and wife accused of running a bogus charity are expected to pay back the nearly $40,000 that they pocketed in donations intended for disabled children and their families.

Michael and Amy Gannon, of Snohomish, also were required to close down their charity, Kures for Kids, as part of an agreement with the State Attorney General’s Office.

State officials last year filed a consumer protection complaint against the Gannons, alleging that the couple was using deceptive practices to drum up donations.

The charity, also known as Knowledge for Kids, raised about $70,000 between 2012 and 2013. Only about $2,100 went to other charities and K4K didn’t provide any direct support to families with disabled children.

The Gannons were accused of pocketing about $36,200 and the rest was spent on covering expenses, including paying commercial fundraisers.

In a stipulated judgement filed late last week, the Gannons were ordered to pay the attorney general’s office the money they took. If they don’t comply with the terms of the judgement, they will be ordered to pay $91,500 in penalties and attorneys fees.

The Gannons are banned from forming any new charities or commercial fundraising organizations. They also are prohibited from handling any money for any other charities or acting as fundraising consultants.

The couple’s charity used to set up donation tables inside and outside grocery stores and other businesses. State investigators overheard K4K solicitors telling potential donors that they were volunteers. They actually were being paid about $10 per hour. The solicitors told officials that they were paid in cash from the donations.

The state alleged that the Gannons failed to register as a commercial fundraiser. They also failed to maintain financial records or include required disclosures in brochures and online solicitations, according to court records.

This wasn’t the first time that the Gannons came to the attention of state authorities.

In 2009, Michael Gannon was investigated by the Department of Financial Institutions for deceptive business practices associated with a mortgage company.

The department filed charges against Michael Gannon, Joseph Searles and others for allegedly imposing unreasonable fees and not making required disclosures. The defendants settled in 2011 without admitting any guilt.

The state Attorney General’s Office sued Joseph and Rena Searles for violating the Consumer Protection Act regarding their charitable organization, Autism Awareness United. Michael Gannon worked as the manager.

Under an agreement with the state, the Searles agreed to dissolve the organization and not solicit charitable donations in Washington. With the collapse of that charity, investigators say the Gannons began operating on behalf of Kures 4 Kids.

It was registered with the Washington Secretary of State, but it didn’t have non-profit status with the Internal Revenue Service, according to court papers.

Diana Hefley: 425-339-3463, hefley@heraldnet.com.