New Jersey Division of Consumer Affairs Charges Purported Charity With Fraud for Allegedly Using
Tax-Exempt Status to Purchase, Export Dozens
of Luxury Cars
NEWARK – Attorney General Paula T. Dow and the State Division of Consumer Affairs have filed suit against an allegedly fraudulent charity that claimed to help children battling cancer, but is accused of abusing its tax-exempt status to buy millions of dollars' worth of luxury cars without paying sales tax, and then exporting the cars while not paying one dime to help cancer patients.
According to the State's six-count civil Complaint filed in Monmouth County, Patrick J. Caffrey, of Keansburg, is the president of Matawan-based Tri County Charity Center, while Carl F. Monto, of Beachwood, has held himself out to be Tri County's corporate secretary. Using false identities and fraudulent driver's licenses, Monto allegedly purchased vehicles on behalf of Tri County with Caffrey's approval, misusing the purported charity's 501(c)(3) tax exempt status in order to evade paying sales tax. Additionally, Monto and his wife, Denise Monto, both allegedly served as presidents of I Buy Cars For You, an unlicensed motor vehicle dealership that they operated out of their home. The State's lawsuit charges Caffrey, the Montos, Tri County, and I Buy Cars For You with violations of New Jersey's Consumer Fraud Act, Charities Registration and Investigation Act, and Charities Regulations.
Caffrey, Carl Monto and Tri County are accused of portraying Tri County as a charity in order to evade paying sales tax. Caffrey and Tri County are also accused of providing false information to the Division of Consumer Affairs about the purported charity's purpose, finances, and assets. Carl and Denise Monto, and I Buy Cars For You, are accused of acting as an unlicensed motor vehicle dealership without an established place of business.
According to the Complaint, Caffrey established Tri County in 2005 and has operated the purported charity under various names including "ITHURTS2BFABULOUS Foundation," "Charity Out Reach Center," and "Tri State Charity Center." After achieving 501(c)(3) federal tax exempt status in 2008, Tri County purchased a total of 61 luxury and other motor vehicles, for a total of more than $2.3 million in 2009 and 2010 alone. The organization has allegedly purchased 25 motor vehicles so far this year.
As stated in the lawsuit, Tri County did not pay sales tax on the purchase of any of the 61 vehicles. Rather, each purchase was conducted using an Exempt Organization Certificate provided by the New Jersey Division of Taxation based on Tri County's federal 501(c)(3) status. The certificates bear language stating the purported charity is exempt from New Jersey Sales and Use Tax for "all purchases (except energy and utility service), if the purchase is directly related to the organization's purposes and made with organization (not personal) funds."
"We allege these defendants set up their so-called cancer charity in order to deceive the government and consumers, and to evade the sales tax while purchasing millions of dollars worth of luxury cars," Attorney General Dow said. "Scams that abuse the tax-exempt status granted to a charity don't just harm taxpayers, they tarnish the image of good charities that legitimately help those in need."
The State further alleges that in the organization's charity registration with the Division of Consumer Affairs, Tri County misrepresented that its purpose was to "supply needed funds to families or individuals battling cancer," and that donations "assist the Children's Hospital of Memorial Sloan-Kettering."
A now-defunct website for the organization, at www.charityoutreachcenter.org, featured the image of a small child wearing surgical scrubs and stated, "100 percent of your donations supply funding to Memorial Sloan-Kettering Cancer Center," and "Children Need Your Help!" The website invited donors to send in their donations by mail, or to call "Karl Mondo," one of the aliases allegedly used by Carl F. Monto.
The State maintains that, in contrast with the organization's philanthropic claims, Tri County has never had a relationship with or given money to Memorial Sloan-Kettering.
"Scheming to deceive consumers out of hard-earned donation dollars is despicable conduct, particularly in this economy when every dollar counts," said Thomas R. Calcagni, Director of the New Jersey Division of Consumer Affairs. "Consumers rightfully expect their donations to help legitimate charities fulfill their mission and we regulate the charities industry to guard against donor fraud. Our new Charities Fraud Unit is continuing its pursuit of crooked charities as we continue to urge potential donors to be wary of charity-related scams."
The State also alleges that although charities are required to report their financial activities and assets annually to the Division of Consumer Affairs, Tri County repeatedly failed to disclose to the Division its vehicles and the funds with which they were purchased.
On several occasions when purchasing vehicles, Carl Monto allegedly signed a declaration stating the purported charity "will be using this vehicle to transport people and equipment related to company business."
Carl Monto also allegedly used false identities and altered driver's licenses to purchase more than half of the vehicles acquired by Tri State. According to the Complaint, Monto's actual driver's license, which identifies him as "Carl F. Monto," was suspended in June 2010. He allegedly misrepresented his identity in many of the purchases by identifying himself as "Carl Mondo," "Karl Mondo," and "Carl Mont" on purchase contracts and other documents.
As outlined in the Complaint, a letter from Caffrey to auto dealers used yet another variation of Monto's name when it stated, "Please be advised that Karl Monto has full authority to conduct business on behalf (of) Charity Out Reach Center, Inc. for the purpose of Purchasing, Motor Vehicle Titles, Renewals, replacements, and registrations."
Rather than using the purchased vehicles for charitable purposes as required to qualify for sales tax exemption, Tri County allegedly exported many of the vehicles soon after purchase. Between April 2010 and July 2011, a total of 32 of the vehicles purchased by Tri State were exported within a few months of their purchase, to destinations including Canada, China, Finland, Georgia, Germany, Lithuania, South Korea, and Sweden.
The State also alleges that I Buy Cars For You, a limited liability company operating out of the Beachwood home of Carl and Denise Monto, acts and advertises itself as a motor vehicle dealership in violation of state law.
As stated in the Complaint, I Buy Cars For You maintains a website, www.ibuycarsforyoullc.com, in which it offers to locate, sell, and export new cars, trucks, motorcycles, ATVs, watercraft, and snowmobiles to consumers in New Jersey and worldwide. The site features a roster of manufacturers including Aston Martin, Lamborghini, Maserati, and Rolls Royce and states, "If you require a vehicle you don't see below, we will accommodate."
The website includes links to read the homepage in several languages. It also includes a prominent link titled, "Russian Page," which describes the company's services in Russian along with the English instruction to "Contact Carl Monto Today. For The Deal You Deserve."
Under state law, motor vehicle dealerships must obtain a license from the New Jersey Motor Vehicle Commission, and must service and display motor vehicles in a permanent building with not less than 1,000 square feet of floor space. Although advertising the sale of motor vehicles, I Buy Cars For You allegedly has neither an MVC license nor an established place of business.
The State's lawsuit against the defendants seeks full restitution for any affected consumers, as well as civil penalties for multiple violations of the Consumer Fraud Act and related regulations. The Consumer Fraud Act provides for civil penalties of up to $10,000 for the first violation, and up to $20,000 for each subsequent violation. In addition to seeking its attorney's fees and investigative costs, the State is further asking the Court to permanently enjoin Caffrey from ever registering or operating a charitable organization within the State, and to revoke Tri County's registration as a charity.
"We're asking the Court to shut down this organization – permanently," said Calcagni.
Calcagni thanked the New Jersey Motor Vehicle Commission for its role in alerting the Division to Tri County's alleged activities, and for its important assistance in the investigation.
"This case is a prime example of the important role that state government partnerships play in protecting the citizens of this state," said Motor Vehicle Commission Chairman and Chief Administrator Raymond P. Martinez. "Working regularly with the law enforcement community and the Division of Consumer Affairs, the MVC has made great strides in weeding out attempts to commit all types of fraud and abuse."
As part of its "Investigate Before You Donate" campaign, the Division is urging consumers to obtain important information about a charity, including whether it is registered with the State and how it spends donation dollars, before agreeing to give money. Consumers can turn to the Division of Consumer Affairs' Directory of Registered Charities, at www.NJConsumerAffairs.gov/charity/chardir.htm, for information on the income and expenses reported by each charity registered to solicit funds in the State. To obtain more detailed financial information by requesting a charity's annual filing information, consumers can call the Division's Charities Registration hotline, 973-504-6215, from 9 am to 4 pm on weekdays.
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 State Division of Consumer Affairs by visiting its website, www.NJConsumerAffairs.gov, or by calling 1-800-242-5846 (toll free within New Jersey) or 973-504-6200.
Follow the Division of Consumer Affairs on Facebook at http://www.facebook.com/pages/NJ-Division-of-Consumer-Affairs/112957465445651, and check our online calendar of upcoming Consumer Outreach events at www.NJConsumerAffairs.gov/outreach/.
The Division of Consumer Affairs' Office of Consumer Protection conducted the Tri County investigation. Deputy Attorney General Alina Wells is representing the State in this action.