Mill Creek couple accused of running scam charity

MILL CREEK — A judge on Wednesday ordered a Mill Creek couple to stop collecting donations for a Snohomish County-based children’s charity that is under investigation for using deceptive practices in violation of the Consumer Protection Act.

Michael and Amy Gannon run Knowledge 4 Kids, also known as Kures 4 Kids, a charity that claims to raise money to support the families of children with disabilities.

The State Attorney General’s Office alleges that less than 5 percent of the money collected by the couple actually goes to charities benefitting children. The rest goes to the Gannons and operation costs, such as paying employees.

The office also alleges that the Gannons are repeat offenders.

“This is the third time the Gannons have been involved in deceptive business practices. We’ll keep pursuing them until they stop scamming consumers,” state Attorney General Bob Ferguson said in a press release.

A call to the organization was not returned Wednesday.

The charity primarily sets up tables outside grocery stores and other retail businesses and collects donations from passersby. They also solicit donations from their web site.

Investigators say the storefront solicitors claim to be volunteers even though they are paid $10 per hour to drum up money. The solicitors pass the donations to the Gannons, who pay their employees in cash from the money collected for kids, according to court records.

Ferguson and his office allege that the Gannons misrepresent their relationship with other charities and create the false impression that most of the money raised goes to help families and children. The agency claims to donate money to Washington Autism Alliance, The Arc of Island and Skagit, Boys and Girls Club of Washington, YMCA and others. Records, however, show that the Gannons’ charity doesn’t have contracts with any of these non-profits, the attorney general says.

The office also alleges that the Gannons failed to register as commercial fundraisers and failed to maintain financial records.

Michael Gannon came to the attention of authorities in 2009 for deceptive business practices associated with a mortgage company. The Department of Financial Institutions 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.

Earlier this year 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. That charity is registered with the Washington Secretary of State, but it has not sought non-profit status with the Internal Revenue Service, according to court papers.

Authorities allege that between October 2012 and June the organization recorded about $35,000 in donation revenue. Financial records show that it spent less than $3,500 on program costs. Michael Gannon was paid $18,600 during the same time period, according to the state’s motion for a temporary restraining order.

The Attorney General’s Office is seeking civil penalties.

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

Consumer protection

For more information about the Consumer Protection Act and how to avoid being scammed, visit the state Attorney General’s web site at www.atg.wa.gov.

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