IN THE CIRCUIT COURT OF PULASKI COUNTY, ARKANSAS DIVISION. STATE OF ARKANSAS ex rel. DUSTIN McDANIEL, ATTORNEY GENERAL. v. Case No.

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1 IN THE CIRCUIT COURT OF PULASKI COUNTY, ARKANSAS DIVISION ELECTRONICALLY FILED 2013-Dec-05 11:22:34 60CV C06D03 : 16 Pages STATE OF ARKANSAS ex rel. DUSTIN McDANIEL, ATTORNEY GENERAL PLAINTIFF v. Case No. 60 CV CHILDREN OF VETERANS FOUNDATION; GIVE BACK TO FREEDOM, LLC; DONNA RENFROE; and RANDY TAYLOR DEFENDANTS COMPLAINT COMES NOW the State of Arkansas ex rel. Dustin McDaniel, Attorney General and for its Complaint against the Children of Veterans Foundation, Give Back to Freedom, LLC, Donna Renfroe, and Randy Taylor, states and alleges as follows: I. Introduction 1. This civil action is brought by the Attorney General to redress and restrain violations of the Arkansas Deceptive Trade Practices Act, (hereinafter the DTPA ), ARK. CODE ANN through 115, and the provisions of the Arkansas code concerning oversight and registration of charitable organizations soliciting in the State of Arkansas ( the Registration Statutes ) as codified in through The State seeks an injunction, an order of restitution, the imposition of civil penalties, and the forfeiture of licenses and permits to conduct business, including the solicitation of donations, in the State of Arkansas to be entered by this Court against the Defendants for the violations of the DTPA and the Registration Statutes outlined herein. 1

2 II. Parties 3. Plaintiff is the State of Arkansas ex rel. Dustin McDaniel, Attorney General of Arkansas ( the Plaintiff or the State ). Pursuant to ARK. CODE ANN , the State may seek civil enforcement of the DTPA. 4. Defendant Children of Veterans Foundation ( COV ) is an Arizona-based nonprofit organization, recognized as a public charity, and exempt from taxation pursuant to Section 501(c)(3) of the Internal Revenue Code. Its physical address is N. 19 th Ave., Suite 2, Phoenix, Arizona Its current board of directors consists only of Donna Renfroe and Randy Taylor. 5. Separate Defendant COV, upon information and belief, is not related to the Arkansas-based corporation of the same name based in Magnolia, AR. 6. Defendant Give Back to Freedom, LLC, ( GBTF ) is an Arizona-based Limited Liability Company whose sole shareholder is Defendant Randy Taylor ( Taylor ). 7. Defendant Taylor is a resident of the State of Arizona who resides at N. 74 th Lane, Glendale, AZ 85308, and, as stated above, is the sole shareholder of Defendant GBTF, and is a director of Defendant COV. 8. Defendant Donna Renfroe ( Renfroe ) is a resident of the State of Arizona who resides at 7539 N. Mountain View Road, Peoria, AZ 85345, and is a director and chairman of Defendant COV. 9. At all times relevant to the circumstances alleged in the Complaint, Defendants Renfroe and Taylor operated, controlled, and directed the business activities of COV and GBTF, thus causing, personally participating in, and ratifying those acts and practices of Defendant COV and GBTF described in this Complaint. Renfroe and Taylor are controlling persons within the meaning of ARK. CODE ANN (d). As such, they are personally liable for not only their personal acts in violation of Arkansas law, but for the actions of COV and GBTF. 2

3 III. Jurisdiction and Venue 10. This Court has jurisdiction over this matter pursuant to ARK. CODE ANN and the common law of the State of Arkansas. Venue is proper pursuant to ARK. CODE ANN , ARK. CODE ANN , and the common law of the State of Arkansas. 11. Defendants solicited donations from consumers within the state of Arkansas. The Defendants directly solicited individual consumers and businesses located within the State of Arkansas. Defendants have thus transacted business in the State of Arkansas. IV. Factual Allegations 12. No later than September, 2013, the Defendants began soliciting donations from Arkansas consumers for charitable purposes. At the time the solicitation began and continuing through the date of this filing, the Defendants failed to register with the Attorney General s Office as required by the Registration statutes. 13. The method of solicitation included the placement of collection bins in multiple parking lots in Northwest Arkansas. At this time, over ten separate locations have been reported to the Attorney General s Office. 14. The collection bins are located in large parking lots close to large shopping or dining locations. Generally, they have been placed far from the entrance to the shopping location with the front of the box facing toward the establishment and the back of the box facing a roadway so that the box is easily seen by passersby. 15. The bins purport to collect used clothing and shoes to support the Children of Veterans Foundation. On the front, the boxes exhort consumers to GIVE BACK TO THOSE WHO PROTECT OUR FREEDOM! See Picture of Box attached as Exhibit A. 3

4 16. The rear of the boxes state, in full, PROUD TO SUPPORT: Children of Veterans 501(c)(3) FOUNDATION, and gives the website See Exhibit B. This is all the information that can be seen from the roadway by passersby. See Exhibit C. 17. The sides of the boxes have a recycle symbol, along with the Children of Veterans logo, labeling the containers as a Used Clothing Collection Container. See Exhibit D. 18. The box, taken as a whole, gives the impression that donations will be used for the benefit of children of veterans, or for veterans themselves. There is a further explanation of what the donations will be used for in fine print on the boxes directly underneath the claim that the donations Give Back To Those Who Protect Our Freedom. It states, each collection site is owned by Give Back to Freedom, LLC, a for-profit company. Items received at this location will be sold by Give Back to Freedom, LLC. See Exhibit E. The disclaimer is not viewable from the road and is not readable from the front of the box if you are driving through the parking lot where the box is located. It is only readable if you are standing close to the box. 19. The containers mislead consumers into believing that their donations of used clothing and shoes will be used to assist and support children of veterans when in fact, the donations are converted to the personal benefit and financial gain of the Defendants. 20. The actual use of the donated items to support a for-profit organization is not consistent with the intent of the donors. Further, based upon other reports to the Attorney General s Office, the containers are diverting donations from legitimate charitable organizations. 21. Taylor is listed as the sole proprietor of Give Back to Freedom, LLC, an Arizonabased limited liability company. 22. Taylor, since June 20, 2012, has been a member of the board of directors of Children of Veterans. 4

5 23. Renfroe and Taylor have used their positions with Children of Veterans to improperly divert goods and/or funds meant to aid veterans. Rather than help veterans, these funds have been used to personally enrich themselves. 24. Neither COV nor GBTF are registered with either the Arkansas Secretary of State or the Arkansas Attorney General as required by Arkansas law. V. Violations of Law 25. For each violation of law set forth below, the Plaintiff incorporates Paragraphs 1 through 28 by reference. A) The Defendants Made Misrepresentations in the Course of Soliciting Donations 26. Arkansas law defines a charitable organization as any person who is or holds himself or herself out to be established for the benefit of law enforcement personnel, fire fighters, or other persons who protect the public safety; or who in any manner employs a charitable appeal as the basis of any solicitation or an appeal which has a tendency to suggest there is a charitable purpose to any solicitation. ARK. CODE ANN (1). 27. Defendant COV is a charitable organization pursuant to Arkansas law. 28. Based upon Arkansas law, Give Back to Freedom, LLC, holds itself out to be established to benefit soldiers, veterans, and those who protect our freedom. In its name and solicitations it holds itself out to be created for the benefit of persons who protect our safety. As such, Give Back to Freedom, LLC, is a charitable organization pursuant to Arkansas Code Annotated (1)(A)(iii) and (B). 29. Arkansas law defines a paid solicitor as a person who: (1) for compensation performs for a charitable organization any service in connection with which contributions are solicited by the person or by any other person he or she employees, procures, or engages to solicit 5

6 for compensation; or (ii) at any time has custody or control of contributions. ARK. CODE ANN (A)(9). 30. The State claims, both concurrently with, and in the alternative to, Paragraph 24 that Give Back to Freedom, LLC is a paid solicitor. 31. Defendants Give Back to Freedom, LLC, and Randy Taylor, personally and as shareholder of Give Back to Freedom, LLC, conduct solicitations as defined by ARK. CODE ANN (13)(A). The Defendants made requests, either directly or indirectly, for contributions on the plea or representation that the contribution would be used for a charitable purpose. The bins used to solicit donations are currently in place in the State of Arkansas. 32. It is a violation of ARK. CODE ANN (9) for any person to fail to substantially comply with the requirements set forth in ARK. CODE ANN through 416. As provided by ARK. CODE ANN , each violation of the Registration Statutes, ARK. CODE ANN through 416 is deemed to be a per se violation of the DTPA. 33. The bins used by the Defendants to solicit donations state that donations will be used to give back to those who protect our freedom, and imply that donations will be used either for the sole benefit of veterans or soldiers, or in large part to do so. The State contends that the sale of goods obtained through the collection bins for the benefit of a private, for-profit company, is misleading and deceptive, and thus is in violation of the Arkansas Charitable Registration Statutes and the Arkansas Deceptive Trade Practices Act. This is a violation of ARK. CODE ANN (1), and is thus a per se violation of the DTPA. B) COV and GBTF Failed to Make Disclosures Required by Law 34. ARK. CODE ANN (a) requires a person, when soliciting or requesting contributions to disclose to each party who is solicited the identity of the person responsible for soliciting the funds and whether any compensation is received for those services. 6

7 35. The collection bins fail to make such a disclosure, instead providing a statement that is ambiguous, vague, and unclear as to the ultimate destination of donations. 36. The collection bins state that This collection site is owned by Give Back to Freedom, LLC, a for-profit company. Items received at this location will be sold by Give Back to Freedom, LLC. 37. Based upon this disclosure alone, it is impossible to determine the role that Give Back to Freedom, LLC plays with respect to fundraising for COV. 38. This failure to adequately disclose the relationship between GBTF and COV is in violation of Arkansas law, and a per se deceptive trade practice. C) Both Children of Veterans Foundation and Give Back to Freedom, LLC Failed to Register with the Attorney General Prior to Soliciting Donations in the State of Arkansas 39. ARK. CODE ANN requires that any charitable organization register with the Attorney General prior to soliciting donations in the State of Arkansas. Both COV and GBTF failed to register as required. ARK. CODE ANN (9) provides that it is a violation of Arkansas law to fail to substantially comply with the requirements set forth in , et seq. Each solicitation in violation of this statute is a per se violation of the DTPA. VI. Prayer for Relief 40. ARK. CODE ANN provides that any violations of the Registration Statutes are deemed to constitute an unfair and deceptive trade act or practice, as defined by the DTPA, and that all remedies, penalties, and authority granted under the DTPA shall be available to the Attorney General for the enforcement of the Registration Statutes. 7

8 41. Pursuant to ARK. CODE ANN (a)(1), the Attorney General may bring a civil action to seek to prevent persons from engaging in the use or employment of prohibited practices. 42. Likewise, pursuant to ARK. CODE ANN (a)(2)(A), the Attorney General may bring a civil action to seek to restore to any purchaser who has suffered any ascertainable loss by reason of the use or employment of the prohibited practices any moneys or real or personal property which may have been acquired by means of any practices declared to be unlawful, together with other damages sustained. 43. Pursuant to ARK. CODE ANN (a)(3), any person who violates the provisions of the Arkansas Deceptive Trade Practices Act may be assessed a civil penalty of up to $10,000 per violation. 44. Pursuant to ARK. CODE ANN (b), upon petition of the Attorney General, the court may order the suspension or forfeiture of franchises, corporate charters, or other licenses or permits or authorization to do business in the State of Arkansas. 45. In addition, under the provisions of ARK. CODE ANN (e), any person who violates the provisions of the DTPA shall be liable to the Office of the Attorney General for all costs and fees, including, but not limited to, expert witness fees and attorney s fees, incurred by the Office of the Attorney General in the prosecution of such actions. 46. A person is an individual, organization, group, association, partnership, corporation, or any combination thereof. See ARK. CODE ANN (4) and (11). 47. Children of Veterans Foundation, Give Back to Freedom, LLC, Donna Renfroe, and Randy Taylor are each a person who has engaged in unconscionable, false, or deceptive acts in business, commerce as set forth above, and have made misrepresentations in the course of soliciting donations for a charitable purpose in the State of Arkansas. 8

9 48. Plaintiff will exercise its right to a trial by jury. 49. The total recovery sought by the Plaintiff for restitution, disgorgement, and civil penalties is in an amount in excess of that required for federal court jurisdiction in diversity of citizenship cases. WHEREFORE, the above premises considered, the State of Arkansas ex rel. Dustin McDaniel, Attorney General, respectfully requests that this Honorable Court: (A) Issue such orders, pursuant to ARK. CODE ANN and (a)(1), as the Court may deem necessary to prevent the use or employment by the Defendants of the practices described herein which are violations of the DTPA and Registration Statutes; (B) Issue an order, pursuant to ARK. CODE ANN (a)(2)(A), requiring Defendants to pay consumer restitution to those Arkansas consumers affected by the activities outlined herein; in addition, or in the alternative, enter an order requiring Defendants to disgorge all sums obtained from Arkansas consumers by methods prohibited by Arkansas law; (C) Impose civil penalties pursuant to ARK. CODE ANN (a)(3), to be paid to the State by the Defendants in the amount of $10, per violation of the DTPA proved at trial of this matter; (D) Pursuant to ARK. CODE ANN (b), order the suspension or forfeiture of franchises, corporate charters, or other licenses or permits to do business in this state currently enjoyed by any of the Defendants; (E) Issue an order, pursuant to ARK. CODE ANN (e), requiring Defendants to pay the State s costs in this investigation and litigation, including, but not limited to, attorney s fees and costs; and 9

10 (F) For all other just and proper relief to whichh the Plaintiff may be entitled. Respectfully Submitted, DUSTIN McDANIEL Attorney General By: Kevin Wells, Ark. Bar No Assistant Attorney General 323 Center Street, Suite 500 Little Rock, AR Facsimile: (501) Telephone: (501)

11 Exhibit A

12 Exhibit B

13 Exhibit C

14 Exhibit D

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16 Exhibit E