Wednesday, December 26, 2018

Prosecution of crowd-funding scam near Philadelphia raises questions about dubious cash grabs involving Missouri lawyers Jason Kander and David Shuler

Jason and Diana Kander
Crowdfunding scams have become a regular topic for our reporting at Legal Schnauzer, and such a story even was in the news over the Christmas holiday. We have reported on two such incidents where we currently live (in Missouri) -- both involving lawyers, surprise, surprise -- with no signs that authorities have taken note. Recent events in the Philadelphia area, however, suggest using sites like GoFundMe (GFM) and Kickstarter to fraudulently relieve donors of their money might not be such a hot idea.

How far will crowdfunding go? Donald Trump supporters have started several sites to raise money for a border wall with Mexico, and one such site reportedly has raised more than $14 million. That's a long way from the $5 billion Trump is seeking from Congress, but where will that crowdfunding cash actually go? The possibilities for fraud seem endless.

Authorities near Philadelphia have made it clear they will go after those who perpetrate such scams. We intend to notify the appropriate Web sites and law-enforcement authorities about stories of which we are aware in Missouri. We will keep you posted about determinations law-and-order types in the Midwest make on these matters.

Folks in and around Mount Holly, New Jersey, have reason to know crowd-funding scams are taken seriously in their neck of the woods. That's where a couple -- Johnny Bobbitt and Katelyn McClure -- allegedly schemed with a homeless veteran from Philadelphia, Mark D'Amico, to scam donors out of more than $400,000GoFundMe announced on Christmas Day that it has refunded everyone who contributed to the campaign. From a report at Associated Press:

GoFundMe spokesman Bobby Whithorne said Tuesday that "all donors who contributed to this GoFundMe campaign have been fully refunded" and the organization is cooperating fully with law enforcement. . . .

Whithorne said campaigns involving misuse "make up less than one tenth of one percent" of all GoFundMe campaigns, but such behavior "is unacceptable" and "has consequences."

"We have a zero tolerance policy for fraudulent behavior," he said. "If fraud occurs, donors get refunded and we work with law enforcement officials to recover the money."

What about consequences in the Philadelphia case? Here is more from AP:

Burlington County prosecutors allege in a criminal complaint that Johnny Bobbitt conspired with Katelyn McClure and her boyfriend at the time, Mark D'Amico, to concoct a feel-good story about Bobbitt giving McClure his last $20 when her car ran out of gas. They raised $400,000, which authorities say was spent on luxury items and casino trips.

What about apparently underhanded crowdfunding cases in Missouri? One involves former secretary of state and U.S. Senate candidate Jason Kander and his wife -- New York Times best-selling author Diana Kander. From an October 2016 post about information released from a watchdog group in a 127-page, heavily research document called The Kander Memo:

Beginning in spring 2014, evidence shows the Kanders operated an Internet "crowdfunding" effort to raise online charitable donations. But the memo alleges the Kanders used the money, more than $31,000, to buy new-author Diana Kander's way onto The New York Times bestseller list. In fact, promotes Ms. Kander's book, All In Startup: Launching a New Idea When Everything Is On the Line, as part of the prestigious New York Times lists, and the book is promoted as such at the author's Web site,

How did this benefit the Kanders and Jason Kander's U.S. Senate campaign. From The Kander Memo:

The success of the Kander scheme has: (1) Provided the Kanders with a ruse to represent to the American public and Missouri voters that Diana Kander is "a New York Times Bestselling Author," when the truth is the Kanders used a deceptive scheme to raise money from the public in order to help Diana Kander buy her way onto those prestigious bestseller lists; (2) Empowered Diana Kander to break into the lucrative U.S. "Public-Speakers Circuit" so she can now pocket substantial speaker fees as a purported "New York Times Bestselling Author"; and (3) Enabled the Kanders to use the public contributions they collected from their Internet "crowdfunding" campaign in order to make the Kanders look . . . more prestigious and more accomplished, and to help Jason Kander win election to the United States Senate.

Jason Kander lost his U.S. Senate race to incumbent Roy Blunt, but questions remain about the Kanders' deceptive use of crowd-funding. From our earlier post:

According to The Kander Memo, the book effort likely violated solicitation-registration and felony anti-fraud statutes in every U.S. jurisdiction -- federal and state. It also likely violated statutes in all 50 states that make it a crime to commit, or attempt to commit, theft by deceit. From the memo:

[This] is not only an audacious and shameless scheme, it is a patently criminal scheme . . . a "50-state crime spree."

What about the second story of dubious crowdfunding in Missouri? It involves my brother, Missouri lawyer David Shuler. We first reported on it in an Oct. 3, 2017, post titled "My lawyer-brother and his wife, owners of more than $1 million in real estate, seek funds to help cover costs of therapy for their son with Hurler syndrome":

A Missouri couple who own more than $1 million in real estate have established a GoFundMe (GFM) site seeking money for their disabled son's therapy.

The couple are Gina Hayes and David Neal Shuler, my sister-in-law and lawyer/brother. Is it proper for a couple of such wealth to seek crowd-sourcing funds, especially for their own family needs -- which public records indicate they clearly can pay on their own? I'm hardly an expert on the rules, regulations, and etiquette of crowd-sourcing, so I have a few questions:

Gina and David Shuler
 * Is GFM meant to directly assist people who own more than $1 million in real estate -- and that doesn't reach their total net worth, which likely includes cash, savings, investments, personal property, real property in other counties or states (the $1 million is just in Greene County, MO), and other assets. Gina and David Shuler might be millionaires several times over. Are they supposed to be directly benefiting from GFM?

* Could this be unlawful, even fraud? I'm familiar with a site called GoFraudMe, which apparently researches possible incidents of crowd-sourcing fraud. Is this something GoFraudMe should look into?

Here is perhaps the central question in the Shuler situation:

Most of the cases of fraud that I've read about involve a precipitating event that did not really occur. For example, someone claims to need funds to recover from a house fire, but the fire did not happen. Is it fraud for a couple to seek money for an issue they clearly can cover on their own -- probably with no hardship whatsoever on the family?

The issue for Gina and David Shuler is real. Their 15-year-old son, Jack, has Hurler syndrome, a vicious metabolic disease, which can effect almost every organ system of the body. . . .

The GFM page, of course, makes no mention that Jack's parents are millionaires. Should it? Should a campaign like this even be on GoFundMe?

We will let officials with GFM and law enforcement ponder those questions. By satute, Missouri has an offense called "stealing by deceit." Facts of the Shuler case suggest it might come under that statute, with the key questions: Does this constitute deceit? Is it deceit to advertise that you need money when you really don't -- even though the cause in question (an illness) is real?

This is from a followup post, titled "David and Gina Shuler, who own more than $1.161 million in Missouri real estate, are seeking financial assistance for their son's therapy on GoFundMe": The post includes a listing of the Shulers' real-estate holdings, and the list might not be complete:

Is it OK for wealthy people to seek crowd-sourcing funds for their own family needs, which public records indicate they easily could pay for themselves . . . ?

Different people might answer the question in different ways. But the individual who tipped me off to the story -- I call that person a Source Close to the Situation (SCTS) -- had strong feelings on the matter, and they were not favorable to Gina and David. Said SCTS:

Here's my bitch of the day. Gina and David are on gofundme raising money for rehab for Jack. Now i feel sympathy for Jack, but gina and david don't need any sort of financial assistance. what does david make a year? $250,000??? or more. Gina probably made $100,000 before she retired [as an air-traffic controller]. my god they live in Millwood in a house appraised at $634,000. disgusting.

people like them don't deserve any help with medical bills when so many are suffering with no help. outrageous. arrogant. privileged.

I added my two cents on the issue:

It didn't take me long to decide I agreed with SCTS. In fact, I could even add a few descriptive terms to describe David and Gina's actions -- "shameless," "tasteless," "conniving," "self-centered," "attention-seeking."

My understanding is that David and Gina have not let much cramp their style. They have taken vacations to California, Utah, and various parts of Europe, family members have told me.

How wealthy are these folks who claim on GFM to need money? As SCTS notes, they live in Millwood, a golf-course/tennis club community southeast of Springfield, MO. Their residence, 3825 San Poppi Ct., is listed as being in Ozark, MO. Greene County property records show the residence is appraised at $621,300, so SCTS was almost right on the nose.

That figure, however, does not reflect the house's actual market value. It has 4 bedrooms. 4.5 baths, 5,557 square feet, and Zillow puts the market value at $718, 345.

The residence is only the beginning of Gina and David Shuler's real-estate holdings. They own seven properties in Greene County, Missouri, totaling more than $1 million. The exact appraised total is $1,161,500. A reasonable estimate of the market value is $1.3 million.

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