|NEWARK – A Superior Court Judge has approved a Final Consent Judgment and Settlement Agreement that designated a new Organization Administrator to distribute all remaining contributions made to the Hurricane Sandy Relief Foundation (HSRF), and then to dissolve the organization. The agreement also bars the former principals from ever again running a charitable organization related to Sandy and from serving in a leadership position in any charitable organization in the state for a minimum of two years.
The State in its filed Complaint alleged that HSRF and its two principals unlawfully misled the public by diverting donated funds into their personal accounts, misled donors with false claims about the ways donations would be used, falsely claimed that donations were tax-deductible, and otherwise deceived the public in violation of New Jersey’s charity registration and consumer protection laws.
Under the terms of the Final Consent Judgment and Settlement Agreement approved by Judge Robert P. Contillo in Bergen County, the Organization Administrator will immediately take control of HSRF’s financial accounts, and distribute all contributions made to date within five months to registered charitable organizations providing relief to Sandy victims. Within one month after such distribution, the Organization Administrator will arrange for the shutdown of the HSRF website as well as the dissolution of HSRF.
Under the terms of the settlement, HSRF can no longer be engaged in the solicitation of contributions in New Jersey. In addition, HSRF’s principals, John Sandberg and Christina Terraccino, also agreed not to engage in any further solicitation of contributions in New Jersey for Superstorm Sandy relief, including through the use any of the dozens of internet domain names related to storm relief that Sandberg registered immediately prior to the storm.
Further, Sandberg, 31, and Terraccino, 27, residents of Sparta, are barred for at least two years from serving in a leadership position with any charitable organization operating in New Jersey. After such time, either may make a written request to the Division of Consumer Affairs to serve in such a capacity for a registered charitable organization, which must be accompanied by a certification under oath that there has been no material violation of the settlement terms. Upon such application, the Division will decide in its discretion whether that application should be granted.
“Charities are required to operate in an open and transparent manner, to ensure the public maintains its trust that donations are used as intended. Annual registration, which requires financial disclosure, is the foundation of accountability to the public. We will act, as we did in this case, whenever we believe our charities laws and regulations have been violated,” Acting Attorney General John J. Hoffman said.
On February 21, 2013, the State alleged by Complaint and Order to Show Cause that HSRF, Sandberg and Terraccino violated New Jersey’s Charitable Registration and Investigations Act, Charities Regulations and the Consumer Fraud Act, among other things, by soliciting donations for Superstorm Sandy relief without being registered as a charitable organization with the Division nor being recognized by the Internal Revenue Service as a 501(c)(3) tax-exempt organization. On February 28, 2013 and upon the consent of counsel for the parties, the Court issued temporary restraints, including a ban on further solicitation of donations, and required the transfer of all monetary donations collected to date into the escrow account of the attorneys for HSRF, including $13,596.53 that Sandberg and Terraccino allegedly transferred to their personal accounts. Under the Court’s order, all supplies and gift cards donated to HSRF were donated to The Salvation Army.
The Final Consent Judgment and Settlement Agreement includes a settlement amount of $79,195.18, representing the State’s attorneys’ fees and investigative costs. The settlement amount will be suspended and automatically vacated at the end of four (4) years, as long as Sandberg and/or Terraccino comply with the settlement terms. In the event there is any material failure by Sandberg and/or Terraccino to comply, the State may seek entry of judgment for the settlement amount against them personally. Defendants entered into this settlement without any admission of liability.
Sandberg and Terraccino represented in the Final Consent Judgment and Settlement Agreement that other than the $1,650.00 distributed prior to the filing of the action, all monetary contributions were transferred into their attorneys’ escrow account. They further represented that other than the $13,596.53 which the Court ordered transferred to the attorneys’ escrow account, no other contributions were applied to their expenses. Sandberg and Terraccino also represented that they are not in possession of any in-kind contributions received by or on behalf of HSRF.
The Division believes about $334,000 will be available for distribution, based on information previously provided by the defendants.
Eric Kanefsky, Director of the New Jersey Division of Consumer Affairs, noted that the Division’s staff has registered two dozen new charitable organizations that have a stated purpose of aiding Superstorm Sandy victims since the storm hit New Jersey at the end of October 2012. Another ten organizations have submitted registration forms that are being processed.
“The Division has been working with organizations that want to help Sandy victims, to assist them in becoming registered and operating in a legal and transparent manner,” Director Kanefsky said. “We’ve made registering these organizations a priority, as we stay focused on helping those who remain affected by Sandy’s devastation. Once they are registered, we will closely monitor their activities to make sure they are operating in accordance with the State’s charitable and consumer protection laws.”
Chief Investigator Laurie Goodman, of the Division of Consumer Affairs’ Office of Consumer Protection, conducted this investigation. Deputy Attorney General Lorraine K. Rak, Chief of the Consumer Fraud Prosecution Section in the Division of Law, and Deputy Attorney General Kourtney J. A. Knop, represented the State in this action.
The Division of Consumer Affairs, through its "Investigate Before You Donate" campaign, encourages New Jersey consumers to learn as much as possible about any charity before deciding to make a donation.
- Find out whether the charity is registered in New Jersey, or is exempt from having to register. (Certain religious and educational organizations, and charities whose annual income includes less than $10,000 in public contributions and fundraising, are exempt from having to register with the State.)
- Find out how much the charity spent during recent fiscal years on program costs, management costs, and fundraising.
- Learn about the charity's stated mission.
Consumers may obtain information about a charity in several ways. They can ask the charity itself (reputable charities encourage you to do so), or visit the charity's website.
Consumers can also obtain this information from the New Jersey Division of Consumer Affairs. Visit the Division's Charities Registration page; call the Division's Charities Hotline at 973-504-6215 during regular business hours; or use the Division's free "New Jersey Charity Search" smartphone app.
Consumers who believe they have been cheated or scammed by a business, or suspect any other form of consumer abuse, can file a complaint with the New Jersey Division of Consumer Affairs by visiting its website or by calling 1-800-242-5846 (toll free within New Jersey) or 973-504-6200.
Follow the Division of Consumer Affairs on Facebook, and check our online calendar of upcoming Consumer Outreach events.