New York, NY - July 19, 2018 - Attorney General Barbara D. Underwood announced today, in conjunction with the federal and state enforcement initiative “Operation Donate with Honor,” a settlement with Operation Troop Aid Inc., a Tennessee-based military charity, for engaging in a deceptive marketing campaign and failing to properly oversee donations made from a commercial co-venture with a nationwide retailer. Today’s settlement is a result of a multistate investigation co-led by New York and Tennessee.
“Charities have a fundamental responsibility when it comes to partnerships that use their charitable name and status,” said Attorney General Underwood. “Too often, co-ventures are little more than thinly-veiled marketing operations. Charities must not sell out their status for questionable gains.”
The settlement resolves the states’ findings that Operation Troop Aid Inc. (“Operation Troop Aid”) – a Tennessee-based charity whose stated mission is to send care packages to deployed servicemembers – participated in an unlawful commercial co-venture with nationwide retailer, Harris Originals of NY, Inc. (“Harris Jewelry”) and its related stores. Operation Troop Aid allowed Harris Jewelry to use the charity’s name in Harris Jewelry’s so-called “Operation Teddy Bear,” in which Harris Jewelry advertised that it would donate a specific amount of money to Operation Troop Aid when consumers purchased its teddy bears dressed in military uniforms, based on a bear’s size. The investigation found, and Operation Troop Aid admitted, that it failed to ensure that Harris Jewelry was donating the full amount it advertised to the public. During the period of the co-venture, Harris Jewelry sent Operation Troop Aid checks without documentation outlining how the donated amount was calculated, and at times provided different information to consumers as to the amount of money donated. Harris Jewelry used Operation Troop Aid’s logo and its relationship with the charity prominently in advertising and promotional materials in-store and online, and Operation Troop Aid displayed Harris Jewelry’s logo on care packages sent overseas to deployed servicemembers.
In the settlement agreement, Operation Troop Aid acknowledged that it did not have a written agreement with Harris Jewelry, that it failed to oversee the co-venture with Harris Jewelry and that there was insufficient oversight of its operations and records. Operation Troop Aid also acknowledged that it failed to ensure that donated money was used for its stated charitable purpose, and that it made other purportedly charitable expenditures directly to individuals at the sole discretion of its chief executive, with no application or assessment process or action by its Board.
As part of the settlement, Operation Troop Aid will cease operating and wind down its operation; Operation Troop Aid’s chief executive Mark Woods is also barred from serving as a fiduciary or soliciting for any nonprofit. The agreement will also assess civil penalties and requires Operation Troop Aid to continue providing assistance, as needed, in the States’ continued investigation.
The investigation was conducted by lead states New York and Tennessee, executive committee states Nevada, North Carolina, and Washington, and participating states California, Delaware, Georgia, Hawaii, Idaho, Illinois, Kansas, Louisiana, Maryland, Pennsylvania, and Virginia.
The case is being handled for New York by Assistant Attorney General in Charge Deanna R. Nelson and Assistant Attorney General Alicia M. Lendon, both of the Attorney General's Watertown Regional Office. Support was provided by Volunteer Attorney Ivie Iyamu, Investigator Chad Shelmidine, and Legal Assistant Eric Taub. The Watertown Regional Office is a part of the Division of Regional Offices, which is led by Executive Deputy Attorney General for Regional Affairs Marty Mack.