On Oct. 29, it was reported that two groups who were accused of being involved in a used clothing scam in New York agreed to pay approximately $750,000 in restitution. The charity that was found to be at fault was Thrift Land USA, which will be required to disclose that it is a for-profit charity in the future.
The 59-year-old man allegedly behind the scam owned a firm that set up more than 1,100 collection bins throughout different parts of New York. The clothing that was collected between 2013 and 2014 were then sold to buyers in other countries, including Jordan and Mexico, earning roughly $10 million. Two charities then earned a small portion for the use of their logo and name. The man's firm and the two charities involved were both required to pay a fine.
These fake clothing collection bins have reportedly become a major problem for New York's low income areas and vacant lots. In fiscal year 2014 alone, more than 2,080 fake clothing donation bins were removed by the sanitation department. A spokesperson for a charity involved in the scam stated that the group was unaware of the amount that the man's firm was making by selling the clothing.
When a charity or a company is accused of fraud, the repercussions can be severe. A criminal defense attorney may argue that the organization or company was not intending to defraud anyone or was unknowingly involved in the crime. This defense may be bolstered through documentation of the company's finances and statements.
Source: New York Daily News, "Two groups, who reeled in over $10 million, agree to pay $750G fine for 'deceptive and illegal' clothing bin scam: Attorney General", Chelsia Rose Marcius, Oct. 29, 2015