NEW YORK (Reuters) - A Tennessee charity created to send care packages to military personnel deployed overseas, and featured by media including NBC Nightly News and the Fox Business Network, has agreed to shut down to resolve a probe by 16 U.S. states into its fundraising.
The settlement announced on Thursday resolved claims that Operation Troop Aid Inc engaged in improper practices in a long-running venture with Harris Jewelry, a nationwide chain based in Hauppauge, New York that purported to donate funds raised through its “Operation Teddy Bear” promotion.
Operation Troop Aid’s founder, 21-year Navy veteran Mark Woods, accepted a ban on serving as an employee or fiduciary of nonprofits, and making solicitations on their behalf. A $10,000 civil fine was imposed. New York and Tennessee led the probe.
A lawyer for the defendants did not immediately respond to requests for comment. Woods could not immediately be located.
The settlement arose from “Operation Donate With Honor,” a crackdown by the Federal Trade Commission and the National Association of State Charity Officials on entities suspected of falsely claiming to help servicemembers and veterans.
More than 100 enforcement actions were announced on Thursday.
In one, the now-closed Help the Vets Inc, which took in $20.4 million from 2014 to 2017 by promising to help wounded and disabled veterans, agreed to pay its remaining $72,122 of assets to legitimate veterans’ charities.
Harris pledged in “Operation Teddy Bear” to donate money to Operation Troop Aid from sales of teddy bears dressed in military uniforms, with donations based on the bears’ size. Each used the other’s logo in the promotion.
But in agreeing to settle, Operation Troop Aid admitted that it failed to ensure that Harris made the advertised donations, or that donated money was used for charitable purposes.
It also admitted to having had no written agreement for the venture, which ran from at least 2012 through 2017.
Operation Troop Aid and Woods “acknowledge that they engaged in unfair, false, misleading, or deceptive solicitation and business practices,” the settlement agreement said.
“Too often, co-ventures are little more than thinly-veiled marketing operations,” New York Attorney General Barbara Underwood said in a statement. “Charities must not sell out their status for questionable gains.”
Harris was not part of the settlement agreement.
In a statement, Harris said it was disappointed to learn about the allegations, and that it has since January sent money from Operation Teddy Bear to another charity that supports servicemembers.
Reporting by Jonathan Stempel in New York; editing by Marguerita Choy and James Dalgleish