A Message From Dixie

Today’s post is brought to you by Dixie.  I think it’s important information for everybody to have as we settle into a holding pattern.  She explains things much better than I can.  Any questions, please just drop them in the comments and she’ll get to them as she can.  This is really important information, so please take the time to read it carefully and spread the word if you choose.  Thank you to Dixie for putting this together!

I’ve promised many times to try to do a walk through of previous cases of charitable organization rescue fraud in order to better explain what the offices, etc. are looking for in regards to making an organization accountable for their actions.

I apologize for the delay in doing so—many of you are in touch with me on a personal basis, some aren’t, but suffice it to say that I haven’t been able to be online much at all these last few months for personal health reasons. I can’t say that it is going to change anytime soon, but what I DO promise is that not one of us have ever stopped what we are continuing to do in regards to making Michelle Knuttila, as well as her accomplices (better referred to as her BOD) known and accountable to the Attorney General, as well as many others. Please note that I am not a lawyer, merely someone who has a passing acquaintance with 501c3 laws. I can’t answer all questions, nor do I claim to, but I was fortunate enough to consult with a wonderful lawyer who specializes in 501c3 charities and a deep love of horses.

This recent case, as reported by Horse Authority at https://horseauthority.co/8-million-verdict-gregory-horse-rescue-scam-charities-california-ag/ came to a close on November 16, 2018, but let’s explore it a little deeper to get an idea of the time that it took for the AG to begin prosecuting this case after a lengthy investigation, which took probably about 4-5 years, if not a little longer due to the fact that they claimed to be a 501c3 in the beginning when they were, in fact, not. The AG has now filed suit against this sham charity in the amount of 8 million dollars. It is my hope that by dissecting some of these charges, it can help people recognize exactly what the authorities look for, how it is charged, and possibly a time line to help explain why exactly it is taking so long.

On April 17, 2017, the AG first filed an order for what is called an “involuntary dissolution,” because they were being disbanded for fraudulent activities. That is the very tail end of the entire case, investigations, etc, meaning that by this time the AG office had gathered enough evidence to force the organization to shut down, which took approximately 2-3 years. After doing so, the AG appointed a receiver to dissolve the charity, oversee the disbursement of assets, etc. because as we all know the law states that assets must be disbursed to other 501(c)3 charities, as well as other items. Their charges contain only a few of what we have proven that Michelle, as well as her Board of Directors, have done:

A) Breach of fiduciary duty
B ) Deceptive and misleading solicitations for funds
C) Breach of fiduciary relationship, meaning that they were failing to act in the best interests of the charity or its donors
D) Self dealing—meaning that a trustee (Michelle, Romney, and other members of the BOD, who were obligated in fiduciary matters to act in the best interest of the charity ) taking action in their OWN best interests in transactions instead of the charity, with one such example being the fact that they were living on a multimillion dollar property and donors were paying for it when in fact they could have rented a smaller property at less than half that price and made it viable.
E) Unjust enrichment, which is be self-explanatory

Those are just some of the charges which the officers mentioned in the lawsuit were facing.
From the article above, I was intrigued to note that this AG office, unlike a few others that we have seen in various states, really took it down to individual instances, as can be evidenced by the press release:
“The jury found the Gregory defendants acted illegally 3,430 times .” That gives me a chuckle right there, because that tells me that they didn’t simply take one instance and go for prosecution based on an “overall instance.” It means that the Attorney General explored every inch of their finances and identified every single instance of these people not acting in the best interest of the charitable organization which they founded.

Also note that the charitable Mission statement, which Shed and I have long mentioned as being pivotal to any case, is written out in its entirety. A charity MUST abide by its mission statement, period—in all previous cases resulting in convictions such as HMER, AC4H, FPF, etc—a mission statement is quoted in the charges as being at the crux of any formal case.

Number 5 is pretty much self-explanatory, and something of which we are all aware: Charities MUST file taxes, and in Michelle’s case, 2017 taxes still remain unfiled but reads current due to a slight glitch in the AG computer system. Because they filed their 2016 taxes in 2018, the computer recognizes that as filing in 2018, so reads as current but needs to be updated manually. Attempts have been made to notify them of the issue but not with any exigency (see what I did there, Michelle?) because she claims to now being soliciting for donations only for herself and not on behalf of the charity. However, as noted in the final write-up of charges in the above case with the Wounded Warriors Support Program and Central Coast Equine Rescue and Retirement, a court order was issued that none of the founders, members of the BOD, etc could serve on the board of any charity, nor can they solicit donations for personal use or otherwise. That is important, and what will happen to Michelle as well as anyone associated with her. I can attest to the fact that AG offices do tend to be very interested in this after the fact, and when people see anyone of her cronies or BOD members attempting to solicit donations under their names for her, it will continue to need to be reported. I have every faith that the people in her area will be keeping a close eye on her.

Reading through the charges, you will note that even though the people listed in the above case are family, they are all charged with profiting off of the rescue, for anyone wondering why we have made it a point to continue to name Romney, Amanda, Robyn, as well as others for the fact that they profited off of the charity. Amanda for using the charitable assets (horses) to start her own ahem “riding lessons” business, as well as the people who received horses through so-called adoptions, etc. In each of those cases, they profited off of the charity for their own personal enrichment. Donor funds were used to purchase the horses at X amount of dollars, and these people “adopted” the horses for themselves, for the sum of 1.00. Each person in the above case were charged in amounts ranging from 140k to over 2 million dollars, depending on just how much they gained by doing so. All of the officers of the charity were charged, and some who were not officers but whom benefitted were also named (including their lawyer, I found that interesting!)

Various charges, that I won’t cover much of, had to do with money not being used for the purpose in which it was solicited. In this case it will potentially be applied to Michelle’s car payments, spyware, fast food, personal pets, credit cards, bills, and so much more.

I will also skip over most of the charges relating to the fact that they did not keep sufficient records regarding donations, etc as that is pretty much self-explanatory. (I guess someone must have stolen their receipts, too!) The charges state that the AG is going by bank records and estimates that the fraudulent charity in reality owes a lot more than that for which they are being charged. In essence, that details precisely what they either are or will be doing in regards to Michelle’s instance but lets people know that they can indeed proceed with only bank records, which they subpoena as part of their investigation.
In 2016 the AG ordered a cease and desist of their raffles, which is not what they did to Michelle, because they only needed to update—however, that adds yet another year to the timeline.
The Attorney General Office did have to file for an order for involuntary dissolution of the charitable corporation, and appoint a receiver to protect and oversee the remaining assets. This is slightly different case than Michelle, who claims that she “dissolved,” HiCaliber herself, which is not going to be recognized by the State and still leaves her open to being charged for failing to do so. There is a possibility that it could leave her open to even MORE charges, because at this point it could be claimed that she absconded with the charitable assets, money, etc and is selling them for personal use, a point which some of us are attempting to make with the San Diego DA.

Going to skip a lot, but if you take a look at 41 (A), the charges of misuse of restricted donations. In that case, it mentions that solicitation of donations would be used to help a therapeutic riding center, and injured veterans. Instead, funds were used to pay personal expenses, etc.
In Michelle’s case, certain items like the tanning bed, concert tickets, tack, blankets, etc. which were donated to be used to raise funds for the horses, instead were used by Michelle and her cohorts for themselves and did not benefit the purpose for which it was intended. (There are many more instances, but those are the ones off the top of my head.) Charge 43, in this case, can be used when one thinks of the 10k donation received for the care of certain horses, at least one of which was then shot, and the other horses were soon taken from the rescue and sent elsewhere, with no funding from the original 10k ever provided to their previous owners, meaning it did not get used for the purpose for which it was intended.

There are obvious and other charges throughout this that I am skipping, such as the failure to keep meeting minutes, books, receipts, etc. but this post is lengthy enough and those are pretty much self-explanatory. This includes the presentation of false information to the IRS, the State of California, as well as disseminating false information to the public.

Charge 61(G) Operating with the intent to deceive or defraud
Again, self-explanatory and we saw it every week. An obvious explanation was the changing price of auction horses, as well as the claims all funds raised were going to purchase the horses from auction but not mentioning the Starbucks, eating out, and everything else we watched occur every Tuesday.

The Third Cause of Action is interesting:
“…has used the funds to fund her lifestyle, and used charitable funds to maintain her personal horses and other equestrian related props.” We can all see how that relates to Michelle and the fact that she was keeping 20-25 horses of her own on donations which were intended for the charity. Horse Authority quoted the Attorney General, Xavier Becerra’s own words when he stated “the charity used donor funds to board and care for the Gregory family’s personal horses.” (Gina Gregory is a lawyer, personal relation, and also named in the charges.)

 

The Fifth Cause of Action is too long to get into, but what is important is this:
“…imposes a charitable trust on funds collected for charitable purposes, and a ‘fiduciary relationship between a charity and any person soliciting on behalf of a charity’…”

That part is important, because it leaves open each and every person who continued to solicit funds for Michelle including Romney, Robyn, et al, especially as they were aware that the money was NOT going towards its intended purpose. Some, yes—but not all, nor was it ever divulged to the public that not all funds were going to the horses but instead to support their lifestyles.

They cover the unjust enrichment part and explain it pretty well, so seeing the parallels between their actions and the HiCaliber team are pretty obvious when you read the charges. It’s 5 am here and this post is pretty damned long, so I think I have bored you enough for tonight—but hope that it will give you guys a better look at what exactly the AG looks for when dealing with fraudulent charities, and how we—and anyone dealing with a case like this in the future, because it WILL happen, it is human nature— aimed at noting Michelle’s actions in particular to gain the interest of the officials by having an idea of what exactly the officials are looking for in regards to starting an investigation and seeing it through. Throughout the US, almost every single OAG office overseeing charities is looking for items such as this, and remains true from state to state.

As you can see, the OAG won the lawsuit against them for over 8 million dollars. It is interesting to note that the Wounded Warriors Support Group’s page here on the Registry verification database shows that at no time did they ever succeed in bringing in over a million dollars a year; as a matter of fact, their highest yearly claims were $648,891.00 . Of course I didn’t look up the other businesses that benefitted, but it also brings to mind her new “Alphamare, LLC” and how they can work that into her charges, when they are filed. Most importantly, to me: “The court issued a judgment for the involuntary dissolution of the charities. A court order permanently prohibits the defendants from operating or serving on the board of any California charity. They are also prohibited from soliciting any type of donation. “ This means them, personally, as an individual, which will put paid to Michelle’s hopes of living the rest of her life on other people’s money. It is also something that will have to be continually monitored, for several years, and evidence provided to the AG, especially if it is one of her friends, or her alter egos—but trust me, that is one thing that they WILL enforce, with evidence.
Timeline to have this all done took almost 5 years, as best as I can tell from the paperwork because of course it doesn’t mention the dates that the investigation actually began. Frustrating, but something that Shed and I knew when we began attempting to get this to the attention of the authorities. The last time I looked, and I cannot remember where I found it, sadly enough but it is on the AG site somewhere—was that there were 250 cases on the AG’s log, and I believe that at that time 36 cases were currently being prosecuted. I am going off of memory but I think there are 4-6 Deputy Attorney Generals, who are responsible for prosecuting the cases. That means all four of them are responsible for the current prosecutions of the 35 cases at that time (again, going by memory which I freely admit is not functioning at 100% right now) which means that they are tremendously busy at any given time, hence the reason why getting an investigation started, and to the court room, takes so much time. Frustrating for us, absolutely—but I do have faith that it will happen, as we have always stated, just not in the timeline that we wish it would happen.
For some amusement value, especially as it pertains to Shed—be sure to read to the bottom of the Horse Authority article, in the link provided above. Apparently the family members involved attempted to sue media outlets for reporting on the case after the investigation was announced. However, a digital media lawyer proclaimed to the court that he would file a motion under the California Anti SLAPP (actually, it is available anywhere) law, which protects free speech, to strike the motion down. One might do well to study the SLAPP law, which is interesting in itself but an easy definition provided by Horse Authority is that “A SLAPP suit, or a strategic lawsuit against public participation, is a civil claim filed to ‘silence and harass’ by forcing a defendant to spend money and time defending a baseless suit, according to The Public Participation Project. “ It might behoove others to be aware of this statute and use it to their advantage.

In closing I want to say this.

One of the first things to be aware when something might not be all it is purported to be is us types of people, AKA ‘haters.”Trust me, even the best rescues have detractors, maybe because they are disgruntled people turned down for adoption, or even some other reason known only to them. You might expect to see 5 or 10, depending on how many alter egos they make up. But when a rescue begins to have 20, 30 and more people beginning to raise questions, it is a good idea to remember that old adage, “Where there is smoke, there is usually fire.”
Be informed. Be aware. It is ok to simply study the laws in your state, as did I and countless others to learn this stuff.. It doesn’t mean you are the rescue police, it simply means that you are a well-informed consumer who knows when a rescue is “doing it right,” and can place your trust in supporting someone. Even more importantly, as we saw with Michelle, and others—many times people start out with the best of intentions and then go bad once the lure of easy money starts coming in. I absolutely believed in one of the above rescues charged by their state and supported them, but at the end, I realized when others presented their evidence that all was no longer on the up and up and then assisted in bringing it to the State’s attention. It doesn’t mean you are stupid, or a fool—unless you refuse to believe what the evidence shows. It has happened to many, many of us, trust me. The only idiots are those who continue to not believe when the evidence is right in front of them. Hell I trusted HiCaliber at first, too—just not enough to give them my money, unlike the other.
Let’s work together—and make no mistake, it is going to be you, and the other people you educate from what you’ve learned in this situation to carry this burden, because I won’t be around and no guarantees for Shed—to make certain that situations like this are not allowed to grow to the size of this fiasco in the future before someone takes action. A reputable rescue has absolutely no problems answering questions with transparency and accountability, if asked with respect. They have no problem with accounting for money, assets, purchases, etc. We have the power to prevent this from happening again. Let’s make certain it doesn’t by being well-informed, and aware of the responsibilities of a charitable organization has to its donors, as well as the public.