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Fraudulent Organizations Posing as Charitable Nonprofits Ordered Dissolved
July 01, 2021
LANSING - Michigan Attorney General Dana Nessel along with the Michigan Department of Licensing and Regulatory Affairs (LARA) Director Orlene Hawks successfully obtained an order dissolving 10 fraudulent entities for failing to comply with state nonprofit and charity laws. The entities have names similar to those of legitimate nonprofits, like the American Cancer Society, American Cancer Foundation, United Way and the American Red Cross, but appear to serve no charitable or commercial purpose.
Last year, the Department of Attorney General identified Ian Richard Hosang, Claudia Stephen, and Lincoln Palsey as involved with the fraudulent entities American Cancer Foundation (ACF) of Detroit, ACF of Grand Rapids, ACF of Lansing and ACF of Michigan; American Cancer Society (ACS) of Detroit and ACS of Michigan; American Red Cross (ARC) of Detroit and ARC of Michigan; United Way of Detroit and United Way of Michigan.
In January 2020, LARA's Corporations Division referred the ACS of Michigan and ACS of Detroit to the Attorney General's office for potential dissolution proceedings after discovering the organizations were not part of the national entity. During that review, the Department of Attorney General discovered the other involved fraudulent entities.
The Department of Attorney General found no evidence that any donations were made to these organizations.
Last week, Ingham County Circuit Court Judge Clinton Canady III sided with the state in an order that:
- holds that the defendants engaged in fraud;
- permanently enjoins defendants from forming a Michigan Nonprofit Corporation or from seeking a Certificate of Authority to transact business in Michigan on behalf of a foreign nonprofit entity;
- permanently enjoins defendants from serving as an Officer, Director, or Resident Agent for a nonprofit corporation formed or transacting business in Michigan; and
- dissolves the 10 fraudulent entities identified in the complaint.
"I'm pleased by this outcome, which goes to ensuring Michiganders looking to support important causes don't have to worry about fraudulent entities that take advantage of generous individuals," Nessel said. "We remain committed to protecting charitable interests in this great state and I encourage people to research charities through our website to determine legitimacy before donating."
The Department of Attorney General offers a search engine online that allows people to search for:
- a registered charity, public safety organization (police or fire group), or professional fundraiser by name, EIN, or Attorney General file number; and
- a list of charities by purpose, geographical area, or combination of factors.
The Department of Attorney General also offers tips for evaluating a charity.
"Thanks to the swift action of LARA's Corporations Division in identifying these fraudulent charities and the successful intervention of the Attorney General's office, no more Michigan citizens will be vulnerable to these individuals and organizations," Hawks said. "Consumers should research any individual or organization thoroughly before giving a charitable organization their hard-earned money and promptly report suspected fraud to the Department of Attorney General's Office."
These entities were all incorporated in Michigan in 2018 by Hosang, who is identified as the resident agent and incorporator. Stephen and Palsey were identified as officers and directors for some of the entities. However, neither Hosang nor the other defendants reside in Michigan; all have New York addresses.
The entities themselves also appeared to have fraudulent information connected to them and no legitimate charitable or commercial purpose. None of the entities were registered with the Attorney General's Charitable Trust Division as required by law. They also were not registered as charitable organizations with the state, and had no physical office locations, no web presence, and no phone numbers.
Moreover, none of the board members live in Michigan.
LARA's Corporations Division dissolved all 10 entities on June 25. Under the Michigan Nonprofit Corporation Act, consumers may determine if a business entity is on file with LARA's Corporations Division or contacting the Corporations Division at (517) 241-6470 or via email. They may also obtain certificates of fact or certificates of good standing online.