SALT LAKE CITY — The state of Utah and the Federal Trade Commission say they have filed an agreement in federal court with Kars-R-Us.com and its operators, who are accused of having devised a national charity fraud scheme with more than $45.5 million in revenue.
According to the Utah Division of Consumer Protection, from 2017 to 2022, Utahns donated 935 vehicles and $365,671 to Kars. Nationally, more than 84,000 people donated their vehicles to Kars.
The Utah Attorney General was joined by 18 other states in the lawsuit.
Prosecutors claim that Kars and its operators, Michael Irwin and Lisa Frank, solicited charitable donations for the United Breast Cancer Foundation, Inc. (UBCF), a charity that claimed to assist individuals affected by breast cancer.
"Kars falsely represented that vehicle donations would enable UBCF to 'save lives' by providing free and low-cost breast cancer screenings," the Division of Consumer Protection wrote. It is alleged that of the money that was raised, only $126,815, or 0.28% of the total raised, was used to provide actual health screenings.
The state relays that between 2017 and 2022, Kars raised more than $45,5 million through the scheme nationally. According to the complaint, $34.9 million of the raised funds went to pay Kars, its operators, and its vendors.
The fraction of funds left for UBCF was largely used for other purposes, including a generous compensation to UBCF's CEO, the complaint alleges.
Under the proposed agreement, Irwin, Frank, and Kars face a total monetary judgment of $3,882,091, which is largely suspended based on their inability to pay the full amount. However, if Kars, Frank, and Irwin are found to have lied to the FTC and state partners about their financial status, the full judgment will be immediately payable.
Also in the agreement is a permanent ban on Irwin from fundraising or helping others fundraise. Going forward, there are also guardrails in place to prevent Frank, Kars, and its employees from making misrepresentations while fundraising, including requiring them to substantiate any fundraising claim.
