BALTIMORE, MD—A massive, nationwide vehicle donation scheme that allegedly defrauded tens of thousands of donors by promising to fund breast cancer screenings has been shut down through a coordinated legal action involving the Federal Trade Commission (FTC) and 22 state agencies from 19 states, including Maryland.
Maryland Attorney General Anthony G. Brown and Secretary of State Susan C. Lee have announced that a proposed settlement (PDF) has been reached with Kars-R-Us, Inc. (Kars) and its operators, Michael Irwin and Lisa Frank, following allegations that the company raised over $45 million for the United Breast Cancer Foundation, Inc. (UBCF) but only directed a minute fraction of that money toward its core promise: free and low-cost breast cancer screenings.
According to the complaint (PDF), Kars, through national and local advertising, solicited over 84,000 vehicle donations by claiming the contributions would allow UBCF to “save lives” through screenings. In reality, investigators allege that Kars used only $126,815, or a staggering 0.28% of the more than $45 million raised between 2017 and 2022, for breast cancer screenings.
Attorney General Brown condemned the practice, particularly its impact on Maryland residents. “Marylanders donated their vehicles to Kars-R-Us thinking they would help save lives, but instead they were mostly just helping the company profit,” said Attorney General Brown. Between 2018 and 2022, Marylanders donated approximately 1,624 vehicles, amounting to an estimated $1,045,520.00 in contributions.
Secretary of State Lee echoed the commitment to protecting donor intentions. “The generosity of Marylanders should be encouraged and protected,” she said. “Our office is committed to safeguarding the charitable intent of Maryland’s donors and ending schemes that target Maryland’s citizens.”
Profits Over Patients
The FTC and state complaints allege that Kars, its operators, and vendors received $34.9 million of the total funds raised. Furthermore, the small portion of funds that did reach the UBCF was “largely used for other purposes, including generous compensation to UBCF’s CEO,” the complaint claims. Kars and its operators, Michael Irwin and Lisa Frank, were accused of knowing, or having reason to know, that their claims about the donations’ use were deceptive or lacked substantiation.
Settlement Imposes Fundraising Ban and Penalties
Under the terms of the proposed settlement, the operators face severe restrictions on future fundraising activities:
- Permanent Ban: Michael Irwin, Kars’s president and co-owner until 2022, is permanently banned from all fundraising or providing fundraising services, and is prohibited from making misrepresentations in the marketing or sale of any product or service.
- Restrictions: Lisa Frank, Kars’s current president and sole owner, and the company itself are prohibited from making misrepresentations related to fundraising and must substantiate all future fundraising and marketing claims.
Kars, Irwin, and Frank face a total monetary judgment of $3,882,091. This judgment is partially suspended based on their documented inability to pay the full amount, but the full sum will become immediately payable if the defendants are found to have lied about their financial status to the FTC and state partners.
Maryland was one of 19 states to join the federal action, alongside the attorneys general of Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, New York, North Carolina, Oklahoma, Oregon, Utah, Virginia, West Virginia, and Wisconsin, as well as several state secretaries of state.
The Maryland Secretary of State’s Office registers and regulates charitable organizations in the state. Residents can verify a charity’s registration status via the SoS-Public Registry and report suspected violations by calling 410-974-5534.
Photo by Sora Shimazaki from Pexels
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