In Giving to Charity, Let the Donor Beware

Con men and aggressive businessmen are taking advantage of the fact that charities in the United States are protected under the First Amendment and the laws regulating what has to happen to the money, ABCNEWS found as part of a yearlong investigation.

At a rodeo in Dillon, Mont., a 4-year-old boy named Aaron who is suffering from sickle cell anemia got his wish to be a cowboy for a day. Aaron received the 50,000th wish granted by the Make-a-Wish Foundation, which has raised millions of dollars to give sick and dying children a day where they don't have to think about being sick. Yet, because of the Make-A-Wish Foundation's success at raising money and doing good, it is now attracting the inevitable copycats and con men.

"It's got to be millions of dollars, millions of dollars that are going to organizations that are pretending to be the Make-A-Wish foundation," said Paula Van Ness, the foundation's president and CEO. "People see it as an easy opportunity to make a buck. And to make a buck off a child with a serious illness is unconscionable to me."

Kid Wish USA was one such foundation that was "promising they're granting the last wishes of terminally ill children and they're not granting any," said federal prosecutor Mike Snipes.

Snipes calls it one of the most callous β€” but easily done β€” frauds he's ever seen.

"They just would take pictures of children from other brochures from legitimate charities," said Snipes, "[and] put them in their brochures."

But not one wish was granted to one child. Instead, prosecutors found millions of dollars in donations went to Michael Manzer, 65, and his cohorts, who set up the charity in New York and other states.

When ABCNEWS tried to talk with Manzer, the people who came to court with him were hardly charitable. Instead, ABCNEWS correspondent Brian Ross was greeted with a right to the jaw, and a double head slam against the wall, knocking him dizzy and bloodying his nose.

Manzer was convicted on mail fraud and money laundering charges and was sent to prison. But it is one of the few questionable charities to result in criminal charges, prosecutors say.

In the Name of Charity

Under the law, if Manzer had used just a little of the money to grant one child one wish, he might never have been prosecuted or convicted and the charity might have been considered legitimate. Manzer's group had made small donations to hospitals and other organizations but had never granted a wish to a sick child, which was the stated purpose of the organization.

Prosecutors across the United States told ABCNEWS that the real scandal with charities is not what's illegal, but what's legal β€” and what people can get away with in the name of charity.

"They can get away with giving 1 percent to the cause," said Daniel Borochoff, head of the American Institute of Philanthropy.

Borochoff said the protection charities get under the First Amendment has resulted in a nationwide plague of newly established charities, doing little good but considered legitimate.

Under the First Amendment, charitable solicitations are protected as speech because a significant component of these appeals is "persuasive, informative or political in nature," according to the Charity Navigator, a watchdog organization.

"It's far too easy for anybody to set up a charity, get tax-exempt status with the IRS, do very little of anything charitable and get away with it," Borochoff told ABCNEWS.

It’s Easy to Do

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