Minnesota AG says charity has misled vehicle donors in state, elsewhere

The "Wheels for Wishes" advertisements seemed clear about who would get the money raised from donated vehicles, stating "Donate Your Car. Benefiting Make-A-Wish Minnesota.''

But the wishes of kids with cancer weren't driving the arrangement, says Minnesota's attorney general.

Instead, Make-A-Wish charities here and nationally received about 20 percent of the revenue from donated cars, said Lori Swanson at a news conference Wednesday. The bulk was kept by the nonprofit overseeing the donations, the Minnesota-based Car Donation Foundation, and two for-profit companies owned by the group's founders, said Swanson.

She also charged the foundation with misleading advertising.

A spokesman defended the Car Donation Foundation, saying the business has high marketing and operational costs.

The car foundation is the largest such charity nationally, Swanson said, reporting $108 million in gross revenue from 2011 to 2014. That includes $3.9 million in Minnesota.

"When people donate their cars, they have the right to know who they are donating to and where the money is going,'' said Swanson, who has sent her findings to the Internal Revenue Service, which audited the foundation in 2013.

Jane Gould, interim CEO of Make-A-Wish Minnesota, endorsed Swanson's inquiry.

"Transparency and stewardship are of the utmost importance," Gould said in a statement, "particularly when it comes to the funds and resources that are so generously donated to us. We respect the Office of the Minnesota Attorney General and we are fully supportive of its investigation."

Erica Schaps, a sixth-grade teacher in Oakdale, was among those who donated a vehicle, believing it would help fund a child's last trip to Disneyland or other special wish.

"I don't know how you can sleep at night, taking money from children who have cancer,'' said Schaps, at the news conference.

The Car Donation Foundation operated under the public name of Wheels For Wishes, according to Swanson. Its car donations were nearly exclusively from people who believed they were helping Make-A-Wish charities.

That includes nearly 22,000 vehicles donated nationally from 2011 to 2014, and 1,400 from Minnesotans.

It advertises nationally for donations of used vehicles, then sells or scraps them, making payments to local Make-A-Wish chapters.

The foundation was started by William Bigley and Randy Heiligman, said Swanson. Its advertising and fundraising arm is the for-profit National Fundraising Management of Hopkins, which also is owned by Bigley and Heiligman.

Its scrap yard and auction house in Minnesota is Metro Metals Corp., another for-profit owned by Bigley and Heiligman. Metro Metals was successfully sued in civil court this year for knowingly recycling metal from stolen cars.

Bigley and Heiligman would not be available for comment, said Chris Duffy of the St. Paul public relations firm Goff Public. Duffy challenged the attorney general's allegations.

"National Fundraising Management provides great value to donors and our charity partner, Car Donation Foundation," Duffy said in a written statement. "The attorney general's compliance report fails to recognize the significant marketing, operational and compliance costs involved in any car donation program, which Car Donation Foundation pays National Fundraising Management to assume."

Swanson said the advertisements were misleading "because they did not disclose that Car Donation Foundation — rather than Make-A-Wish — was the recipient of the donated vehicles.''

"Solicitations instead featured [the] 'Wheels for Wishes' name in conjunction with the Make-A-Wish name, as depicted in newspaper and Internet ads,'' she said.

Minnesota law prohibits charitable organizations from using names or symbols closely related to another charity "so as to confuse the public about the recipient of the donation" and requires a charity to disclose its name in solicitations, Swanson said.

The advertisements also implied that tax deductions were available, but that was only true for those who itemize their deductions, she said.

In 2014, the Car Donation Foundation was placed on the "Scrooge List" of the South Carolina secretary of state and the "Worst Charity List" of the Oregon attorney general.

The foundation's revenue more than doubled in four years, from $14.4 million in 2011 to $37.3 million in 2014, according to Swanson.

The attorney general lacks authority to file charges against the nonprofits. But she has asked Make-A-Wish and the Car Donation Foundation to take steps to address the misleading advertisements and other issues. They must file a report to her office within 30 days documenting the changes.

The situation still angers Schaps, a teacher who has seen two students struggle with cancer. Said Schaps: "I truly thought I was giving a kid a trip to Disneyland.''

Jean Hopfensperger • 612- 673 4511

Paul Walsh • 612-673-4482