A company that operates more than 1,100 clothing donation bins throughout New York is going to pay a $700,000 fine to settle claims that it misled people into believing that the items collected in the bins would go to charity when in fact it resold them, prosecutors announced on Thursday.
Thrift Land USA of Yonkers Inc placed bins labeled with the names and logos of Big Brothers Big Sisters of Rockland County and I Love Our Youth Inc throughout the New York metropolitan area, leading the public to believe that donated clothing would benefit the two charities.
Instead Thrift Land, a for-profit company, made about $10m by reselling the clothing and gave the charities $100-$200 for the use of their names, plus a small monthly fee.
“Duping members of the public into thinking that they are making a charitable donation, when in fact they are enriching a for-profit corporation, is both deceptive and illegal,” attorney general Eric Schneiderman said in a statement. “When a for-profit company masquerades as a charity, my office will hold it and its owners accountable.”
An investigation by the state attorney general’s office found that Thrift Land generated at least $5.6m in revenue in 2013 and $4.4m in 2012 by selling donated clothing to companies that would resell the clothing to buyers in Mexico, Jordan and other countries.
As part of the settlement, Thrift Land and its owner will pay $50,000 in penalties and costs and $650,000 to the New York Community Trust and the Westchester Community Foundation so the “charitable intent of the people who placed clothing in its bins will be fulfilled”, according to a statement from the attorney general’s office. The company is also required to attach disclaimers on its bins clearly stating that donations will not benefit a charity.
An attorney for Thrift Land could not be reached for comment.
The investigation also found that I Love Our Youth Inc permitted Thrift Land to use its name to solicit funds from the public even after the charity’s state registration and federal tax attempt status had been revoked. Hosea James Givan II, chairman of the charity, was found to have used charitable funds for personal expenses. Givan has paid $50,000 in penalties and costs and also agreed to shut down the organization.
Givan told CNNMoney that his problem was lack of proper record keeping, rather than malicious intent.
“As an organization we were negligent in not documenting every receipt, but it didn’t mean that we were doing anything illegal or unethical,” Givan said. “Honestly, man, we were victims too in this situation. We didn’t make any money. No one in our organization was living lavishly from this. I’m in debt. I’m fairly highly regarded in my circles, and this is embarrassing for me.”
Big Brothers Big Sisters of Rockland County, which failed to adequately oversee the manner in which Thrift Land was using its name on the clothing bins, is required to better supervise its charitable solicitations as part of the settlement.
Deceptive used-clothing bins in New York are a growing problem. In 2014 the New York Times reported that several bins were placed illegally throughout the city, blocking sidewalks and attracting litter and graffiti.
