Wednesday, May 2, 2018

New York: AG Shuts Down Telemarketer, Settles Breach of Fiduciary Duties Case

Attorny_General_Eric_T_SchneidermanNew York Attorney General Eric  T. Schneiderman's Charities Bureau has been busy. Two recent activities are of particular note:

  • Charitable Solicitation: Following up on its 2016 closure of a sham veterans charity, the AG's office announced a settlement that closed the charity's telemarketing company, Menacola Marketing, Inc. In the settlement agreement, the company agreed its solicitations on behalf of the veterans charity contained "numerous material misrepresentations," that the company had ignored several "red flags" regarding the professional fundraiser who facilitated its work for the charity, and had "repeatedly made misrepresentations" in filings with the Charities Bureau. 
  • Fiduciary Duties: Completing its investigation of Yisroel Schulman, the former President and Attorney-in-Charge of the New York Legal Assistance Group, Inc. (NYLAG), the AG's office announced a settlement in which Mr. Schulman admitted violating his fiduciary duties of loyalty, care, and obedience, admitted breaching his duties under the New York version of the Uniform Prudent Management of Institutional Funds Act, agreed to a five-year ban on future service as a director or officer of a nonprofit operating in New York, and agreed to pay $150,000 to NYLAG. In the settlement agreement, Mr. Schulman admitted this his recommendation to NYLAG's Board that it transfer NYLAG's multi-million dollar reserve fund to a donor advised fund at charity FJC was "neither prudent nor consistent with [his] duty to ensure that NYLAG's assets were administered for its benefit," in large part because that transfer surrendered NYLAG's legal ownership and control over those funds. Mr. Schulman also admitted that he also violated his fiduciary duty to safeguard NYLAG's assets when he "lost track" of another account that had received NYLAG charitable funds totalling approximately $600,000. The agreement also provides extensive detail about the a variety of misrepresentations relating to these NYLAG's funds and misuse of NYLAG's funds, including for the personal benefit of Mr. Schulman.

Lloyd Mayer

https://lawprofessors.typepad.com/nonprofit/2018/05/new-york-ag-shuts-down-telemarketer-settles-breach-of-fiduciary-duties-case-and-issue-fundraising-re.html

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