Sham charity spent less than 1% of $46M raised on breast cancer screenings
An alleged sham charity has been fined after amassing millions in ill-gotten gains and investing less than 1% of the proceeds on breast cancer screenings targeted toward the less fortunate.
Between 2017 and 2022, Kars-R-Us.com collected more than $45.5 million through vehicle donations on behalf of the United Breast Cancer Foundation. However, the charity only spent about 0.28% (or $126,815) of this total on mammograms, instead pocketing a large portion, according to the California Department of Justice.
Kars-R-Us.com and operators Michael Irwin and Lisa Frank have been ordered to pay a fine of nearly $4 million, which is partially suspended because of their inability to cover the full balance. Authorities also have permanently banned Irwin—president and co-owner until his 2022 retirement—from fundraising or making misrepresentations around the marketing of products or services.
“Instead of using the funds to help those in need of breast cancer screenings, Kars engaged in a deceptive cancer charity fundraising scheme—a scheme that deliberately misled the public, exploited compassion and diverted charitable donations to enrich themselves,” Attorney General Rob Bonta said in a statement Sept. 25. “At the California Department of Justice, we will continue to hold bad actors accountable for their unlawful behavior, protect donors and support honest charitable work.”
Approximately $34.9 million of the funds raised (or nearly 77%) went directly to Kars-R-Us.com, its operators and vendors, rather than screenings. The charity solicited vehicle donations through national and local ads across TV, radio and the web. Commercials were run in both English and Spanish, with the latter targeting Latino-concentrated markets across Arizona, California, Florida, New Mexico and Texas. Altogether, over 84,000 “well-intentioned” individuals donated their vehicles to Kars, authorities estimated.
“Defendants drafted and designed these ads to tug at donors heartstrings and to maximize contributions with little regard for truthfulness or accuracy of the claims they made on behalf of [the United Breast Cancer Foundation],” the complaint, filed in a Central California U.S. District Court, states.
Along with the fine, Lisa Frank, Kars-R-Us.com’s current president and sole owner since January 2023, is prohibited from making misrepresentations about fundraising or in the marketing of products and services. Kars, its employees and any others actively engaged with the company must do the same.
The complaint also questions the practices of the New York-based United Breast Cancer Foundation. Between 2017 and 2022, it raised approximately $174.4 million in total revenue. However, the foundation only spent about 0.23%, or $393,644, of that figure on breast imaging services, according to IRS filings. Despite this, Kars purportedly ignored warning signs its charity partner was misappropriating funds. For instance, during the period in question, the foundation had spent substantially more on salary and benefits for CEO Audrey Stephanie Mastroianni than it did on breast cancer screenings. In 2022, Charity Watch issued a report giving the UBCF an “F” grade, finding it only had spent 7% of revenue on screening programs.
“Such reports should certainly have raised red flags that warranted inquiry by defendants into UBCF’s practices and the claims that defendants were making on behalf of UBCF,” the complaint states, noting that about 70% to 90% of Kars’ total revenues each year came from the foundation.
The California attorney general joined the Federal Trade Commission (FTC) and AGs from 19 states and agencies in filing the judgement. Their lawsuit is seeking a permanent injunction to prevent future violations of the FTC Act, along with refunds of monies paid and “disgorgement of ill-gotten gains,” attorneys fees and other relief.
The defendants neither admit nor deny any of the allegations, according to the judgment document.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.