National Illness Prevention Charity Agrees to Dissolve in Settlement with Michigan AG
Jan 07, 2019
“This group has been scamming people for years, preying on the generosity of Michigan’s donors and inflating the numbers on their financial statements,” said the Attorney General of Michigan (OAG) in a September 25th, 2018 press release announcing allegations against the National Emergency Medicine Association (NEMA) for “operating a fundraising scheme to defraud the public.” In response to the OAG’s allegations of deceptive solicitations, NEMA has agreed to cease operations and dissolve as part of a settlement announced by the OAG on December 13th, 2018.
In a Notice of Intended Action issued in September 2018, the OAG alleged that NEMA was deceiving the public by raising money to provide grants for medical research and medical equipment, and otherwise to fight diseases such as Alzheimer’s, stroke, and heart disease. As part of the OAG’s investigation, NEMA produced responses that “revealed numerous violations,” according to the OAG. For example, the OAG describes that the charity’s responses revealed that NEMA: had not made research or equipment grants in over 15 years; used funds raised almost exclusively to continue funding NEMA’s sweepstakes fundraising campaigns; and inaccurately reported its sweepstakes fundraising campaigns as an “educational” charitable program (i.e., as program “joint costs”). Furthermore, the OAG notes: “Even though almost all NEMA’s funds raised are used to fund additional sweepstakes mailings, there has not been a sweepstakes winner since 2013.”
NEMA was based in Edgewood, MD and raised funds under names that included: National Alzheimer’s Council, National Heart Council, and National Stroke Council. The charity reported collecting approximately $1.4 million in contributions in 2016, according to its most recent available tax filing. NEMA has a history of “F” ratings by CharityWatch, including for its 2016 fiscal year when NEMA spent less than 1% of its cash budget on programs and had a $94 cost to raise every $100 in funds, based on CharityWatch’s analysis.
In addition to requiring NEMA’s shut down, the settlement prohibits NEMA’s President, Kelly Herzog, from serving as an officer, director, trustee, or other fiduciary of a charity. The OAG states in its press release: “Despite making minimal charitable grants and having almost no meaningful charitable programs (and few sweepstakes winners), during the years 2006 to 2016, NEMA’s President Kelly Herzog received total compensation and benefits of $1,786,826, an average of $162,438 per year.” Civil penalties of $192,655 against NEMA and $127,950 against Herzog will be suspended if both enter bankruptcy as they intend to do, according to the OAG.