Attorney General sues Mill Creek couple for alleged charity scam


SEATTLEThe Washington State Attorney General’s Office has filed a Consumer Protection Act complaint and will seek a temporary restraining order against Knowledge 4 Kids, otherwise known as Kures 4 Kids, and its operators, Michael and Amy Gannon.

The AGO alleges the Mill Creek couple uses numerous deceptive practices to entice consumers to donate money. Despite giving the impression donations will help children, the AGO says the Gannons gave less than 10 percent of donations to a charitable purpose. The rest allegedly goes into the Gannons’ pockets and other expenses such as paying employees.

The Gannons refused to respond to the allegations Wednesday.

Charitable donations typically increase during the holidays. The AGO is asking for an immediate restraining order to prevent the Gannons from scamming consumers during this peak giving time.

“This is the third time the Gannons have been involved in deceptive business practices,” said Washington State Attorney General Bob Ferguson. “We’ll keep pursuing them until they stop scamming consumers.”

The Gannons founded and lead the charitable organization Knowledge 4 Kids, or Kures 4 Kids (K4K) within the last year. They claim to raise money to support families of children with disabilities and to support other charitable organizations.  Ferguson believes the Gannons pocketed at least $35,000 in the last several months.

K4K asks for donations at tables set up inside or outside grocery stores and other retail establishments. AGO investigators observed K4K solicitors telling potential donors they were volunteers even though they are paid a rate of $10 per hour. After collecting money, the solicitors meet the Gannons to count the money. The solicitors are then paid in cash from the donations, the AGO said.

These allegeations were also outlined in the AGO report:

Multiple violations of the Consumer Protection Act

The AGO alleges the Gannons committed multiple violations of the Washington State Consumer Protection and Charitable Solicitation Acts:

• Misrepresentations:

o Creating the false impression that most or all money will be used to assist families of children with disabilities;
o Misrepresenting paid solicitors are volunteers; and
o Misrepresenting their relationship with various charitable organizations they claim to raise money for.

• Failure to register:

o Failure to register as a commercial fundraiser with the Secretary of State;
o Failure to register K4K’s contracts with commercial fundraisers;
o Failure to include required disclosures in brochures and on-line solicitations; and
o Failure to maintain financial records.

In 2009, the Department of Financial Institutions filed charges against Michael Gannon, Joseph Searles and others. They were involved with First Columbia Mortgage Corporation, which was investigated for imposing unreasonable fees, and for failing to make required disclosures.  In 2011, Gannon, Searles and others settled the charges without admitting guilt.

In February 2013, the AGO sued Joseph and Rena Searles for violations of the Consumer Protection Act regarding their charitable organization, Autism Awareness United. The Gannons allegedly helped run scams associated with this charity before starting similarly deceptive operations at K4K.