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 $400,000.  GoFundMe 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, amazon.com 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, dianakander.com.

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.

From Dawn Wells, of Gilligan's Island fame, to oily Missouri politician Jason Kander, crowdfunding has proven to be useful for good and evil purposes

Dawn Wells

Crowdfunding Web sites have produced some of the most heart-warming stories of the past eight years or so. They also have produced some of the most outraging stories. We have seen examples of both kinds of stories in recent days -- and they remind us of at least one instance where political opportunists used a crowdfunding site in an abusive and dishonest fashion.

At its essence, Legal Schnauzer is a site about the human tendency to lie, cheat, and steal -- especially in matters of law and politics. So, these stories about the good and evil crowdfunding sites can generate catch our attention. We obviously are not alone in our focus on human deceit; is it any wonder that a prominent political blog is called Crooks and Liars?

On the heart-warming side is a story about Dawn Wells, who played Mary Ann in the hit TV series Gilligan's Island. From a report at Yahoo!

As we learned from former Cosby Show actor Geoffrey Owens, who people tried to shame after they learned he was working at Trader Joe’s, just because someone appeared in a hit TV show doesn’t mean they’re set for life. Dawn Wells, who played Mary Ann on Gilligan’s Island (an iconic character on an iconic show), is broke after a “life-threatening surgery” and is soliciting donations to get herself back on her feet via GoFundMe.

Gilligan’s Island star Dawn Wells . . . has fallen on hard times due to unexpected health issues and is getting money from a crowdfunding campaign. “I don’t know how this happened,” she wrote on Facebook. “I thought I was taking all the proper steps to ensure my golden years. Now, here I am, no family, no husband, no kids, and no money.”

In the 24 hours since news broke that Wells — who had an “unexpected accident that required hospitalization for two months” and needed “a very long time” after that “to rest and heal,” according to her makeup artist friend Dugg Kirkpatrick, who started the campaign — was in need, the fundraiser has collected over $50,000 toward the $180,000 goal. (The campaign was launched on Aug. 27.) The most recent campaign update says Wells found an apartment “in a fab retirement village” in Glendale, Calif. The actress has since spoken out about the “outpouring” — and opened up a little about what got her there.

Wells, 79, described herself as “amazed at the kindness and affection,” in a post on Facebook. “A dear dear friend of mine with a big heart was trying to help me with some common issues we all understand and some must face.” He created the fundraiser “with the love [and] emotion” of “someone protecting their child” after she told him in a recent conversation, “‘I don’t know how this happened. I thought I was taking all the proper steps to ensure my golden years. Now, here I am, no family, no husband, no kids, and no money.'”

Wells, who was married to talent agent Larry Rosen for five years in the ’60s — during her Gilligan’s Island run — ended by saying she’s “grateful that God has given me so many friends and fans who care, or it would all be too … overwhelming.” She also added that her outlook is “positive” and she looks forward to connecting with her generous fans “in my travels.”

As of Sunday (9/9), the Wells campaign had raised $180,091, passing its goal of $180,000. Even in the age of Trump, that kind of makes you feel good.

Dawn Wells, as Mary Ann, on
"Gilligan's Island"

This makes you feel not so good.  A New Jersey couple had raised money via GoFundMe to help a homeless veteran, but now they face charges that they kept a sizable portion of the funds for themselves. From a repor at Huffington Post:

Authorities executed a search warrant to swarm the home of the South Jersey couple a homeless man has accused of withholding close to a half-million dollars in GoFundMe cash.

As first reported by Philadelphia’s WPVI-TV, investigators were seen raiding Kate McClure and Mark D’Amico’s home in Bordentown Thursday morning. Authorities were reportedly seen removing bags of items from the residence. A black BMW was also reportedly towed.

The Burlington County Prosecutors Office has since confirmed the search was related to allegations levied against the couple by a homeless vet.

“Due to the enormous public interest in this matter, I am confirming that a search warrant was executed early this morning by the Burlington County Prosecutor’s Office and the Florence Township Police Department at the residence of Mark D’Amico and Katelyn McClure in connection with a criminal investigation into the Johnny Bobbitt matter.

The move comes one day after Superior Court Judge Paula Dow ordered the couple to appear in court next week with a full accounting of the funds they collected for Bobbitt.

Bobbitt filed a lawsuit against the couple last month. Philadelphia attorney Chris Fallon, who is representing Bobbitt, has alleged the couple spent a large portion of the donations on gambling, lavish trips, shopping sprees and a BMW.

As for the use of crowdfunding for shady political purposes, we turn to former Missouri Secretary of State Jason Kander. A Democrat, Kander lost a 2016 U.S. Senate run against GOP incumbent Roy Blunt. But like many members of the political-grifters class, Kander isn't going quietly into the good night. He has announced a run for mayor of Kansas City, and that brings his dubious use of crowdfunding back into the picture. From an Andrew Kreig report at the Justice-Integrity Project:

Missouri’s Democratic U.S. Senate nominee has orchestrated deceptive campaign finance and organizational practices, according to allegations filed anonymously before seven federal and state oversight bodies.

Jason Kander . . . and his allies allegedly devised a secret agenda behind a state referendum plan ostensibly to help children with increased tax on tobacco products, for example.

But the “Raise Your Hands 4 Kids” ballot referendum was concocted as a sweetheart deal for the tobacco companies, according to the 127-page memo, and also as an organizing tool in Republican-dominated rural Missouri for what pollsters say is surprisingly strong Senate race by Kander. Alleged manipulation of Tthe New York Times best-seller list and crowd-funding for charitable purposes are among the other allegations.

Allegations involving The New York Times best-seller list and crowdfuding involve Diana Kander, Jason's wife. Reports Kreig, citing a letter filed with government oversight agencies:

Highly summarized, since 2014, the Kanders have perpetrated at least two ostensibly criminal schemes. First, in Spring 2014, compelling evidence shows that the Kanders operated a fraudulent Internet "crowdfunding" scheme to raise and collect online public charitable donations, money which the Kanders then used in an insider scheme to help buy new-author Diana Kander's way onto The New York Times bestseller list — so future U.S. Senate candidate Jason Kander would look good if his wife was (supposedly) "a New York Times Bestselling Author."

Jason and Diana Kander

 Secondly, since at least November 2014, compelling evidence suggests that Jason Kander has exercised actual and demonstrable behind-the-scenes control of a Missouri nonprofit "public benefit" (charitable) corporation, called "Raise Your Hand For Kids" ("RYH4K'J. Kander and close accomplices then directed this charitable "Kids" corporation to serve as an advocacy group to promote a ballot initiative campaign in Missouri called "Raise Your Hands For Kids" ("RYH4K").

Then, U.S. Senate candidate Jason Kander and close accomplices collected, on behalf of RYH4K, more than $5 million in corporate and individual contributions — including $2 million-plus in individual public donations from Missourians who were solicited to donate money to help the "Kids."

Then, because RYH4K is in fact a "candidate controlled" ballot measure committee ("CCBMC'J, controlled by U.S. Senate candidate Jason Kander, this allowed U.S. Senate candidate Jason Kander, and accomplices, to treat RYH4K's $5 million-plus in corporate contributions and individual donations as candidate Kander's $5 million political "slush fund" to use as Kander deems best to further his political candidacy, and personal ambition, to win election and capture a U.S. Senate seat.

Here are details about Diana Kander's use of crowdfunding to become a "best-selling author:

Among additional allegations, the memo alleges that Diana Kander achieved her status as a “best-selling author” and paid speaker [largely] by raising funds in a deceptive manner in part via crowd-funding site Indiegogo, and then paying experts to game the best-seller system. 

Those methods have long raised concerns elsewhere, as indicated by such 2013 stories as The Mystery of the Book Sales Spike: How Are Some Authors Landing On Best-Seller Lists? They’re Buying Their Way by Wall Street Journal reporter Jeffrey Trachtenberg and Here’s How You Buy Your Way Onto The New York Times Bestseller List, by Forbes writer Jeff Bercovici.

We are pleased to see that Dawn Wells is recovering from a rough patch in her life. As for those who would use crowdfunding for fraudulent purposes, we can think of a warm spot where perhaps they should spend eternity.