A Phoenix-area man who raised an estimated $150,000 for Tucson foster children, then left town without helping them, did not act alone.

He was one of six operators in three states using a dozen different names to raise money for kids in a way that ensures most of it doesn’t go to charity, an Arizona Daily Star investigation has found.

Together, these cash-based operators have raised at least $1 million in the past two years without fully accounting for where the money went, according to public records and accounts from ex-employees and affiliates.

Each entity has a name that sounds like a charity, but about half are not. Rather, they are commercial fundraising firms using methods that, while legal, make charity experts cringe.

At least four of the names used for fundraising link to a single federally registered charity that collapsed in 18 months without filing a nonprofit tax return — leaving no public record of what happened to the cash.

Each operator uses the same method, in which solicitors collect cash in jars outside local businesses and keep half of every dollar as their payment — without telling donors.

All learned the system from the same person — Mark Carpenter of Tempe, a commercial fundraiser-turned-consultant, who once hired them as cash-jar solicitors for his fundraising firm before they fanned out to replicate his methods in Tucson and four other western U.S. cities.

Carpenter also gets a cut of the money they raise — reportedly $400 a week for each city in which fundraising occurs — which leaves little left for charity once other costs are factored in.

Solid figures are hard to come by, but two former employees estimate only about 20 cents of every dollar raised ends up going to a charitable cause — the opposite of what experts advise for well-run nonprofits.

Spending less than a third of every dollar on charity is a “gross misuse of funds,” said Ashley Post, a spokeswoman for Charity Navigator, one of several national nonprofit rating organizations. Charities typically must spend at least 70 to 80 cents of every dollar on their cause to qualify for positive ratings.

The collapse this past summer of Southern AZ Foster Kids in Tucson marked at least the third time since 2015 that operators trained by Carpenter have set up shop in the city, the Star found.

The first was a Tempe man who was arrested, but not prosecuted, on suspicion of fraud in 2013. A police report said he hired juveniles to sell worthless entertainment coupons door to door in Maricopa County, then paid them with a cut of the money. The Maricopa County Attorney’s Office said it declined to prosecute because a conviction was unlikely.

The second was a Tucson woman sentenced in 2012 to 3.5 years in state prison for forgery. She fundraised last year under the name Southern Arizona Charities Foundation Tucson, which is not a charity but a for-profit company she operated in 2017.

Besides Tucson, Carpenter-trained fundraisers have operated or are operating in Tempe; Maricopa County; San Diego; Orange County, California; Los Angeles; and Las Vegas. The Star identified the locations through employee interviews, online employment ads, websites and social media posts.

Meanwhile, the Arizona Attorney General’s Office is looking into what happened earlier this year to the estimated $150,000 that former Carpenter associate Bruce Landau collected for Tucson foster kids before he left town in August.

“This is an ongoing matter with our office and no further comment will be made at this time,” said Katie Conner, a spokeswoman for the state office.

In Tucson, Landau’s cash jar fundraising negatively affected some of the city’s established charities for foster children, who saw their donations dip.

NOT ILLEGAL

Carpenter, 57, makes no apologies for his methods.

Cash jar solicitors aren’t deceiving donors by keeping half the money, he said. Though they may not volunteer the information, they’re trained to answer truthfully if asked, he said.

Ex-employees said donors rarely thought to ask before dropping $5 or $10 bills — or most commonly, $1 bills — into cash jars outside Tucson businesses.

Carpenter said fundraisers he trained have done a lot of good over the years and noted, correctly, that it’s legal to solicit donations that are not entirely spent on charity.

Carpenter emphasized that some of the money does go to charity and that the people who receive it are thrilled to get it.

“The money that was raised has enabled thousands of families and children to do things and go places they could not have experienced otherwise. I’m extremely proud of that,” he said

Carpenter said he severed his business relationship with Landau, the Tucson fundraiser, when Landau pulled up stakes here. Carpenter described Landau as a “bad apple” whose behavior shouldn’t reflect on the fundraising industry as a whole.

“I am sick that I trusted others to duplicate my fundraising model and some of those people failed me,” Carpenter said in an email.

“It doesn’t mean everyone who fundraises is ‘shady,’” he said. “I do believe 99 percent of all nonprofits are genuinely run and operated at the highest levels of ethics and integrity.”

Carpenter declined to share documentation showing how much money he’s raised in recent years. Doing so would intrude on his privacy, he said, since he reports his income from fundraising businesses on his personal tax returns.

While it may be legal, spending heavily on fundraising with little left for charity is not considered ethical in the wider nonprofit world.

“Organizations should not exist primarily to fundraise or pay overhead,” said Post, the Charity Navigator spokeswoman.

A Tucson family that briefly relocated to Los Angeles last year and used Carpenter’s method to start a new children’s charity said his fundraising system turned out to be a recipe for failure.

Carpenter said the family was “unethical” and incompetent at fundraising.

Carlos Palau, 59, said his family met Carpenter in 2016 in Tucson. At the time, Palau said his wife was volunteering, and then later went to work, as a cash-jar solicitor for Arizona Cancer Kids, which they thought was a charity but was actually part of Carpenter’s commercial fundraising firm.

Palau said his family had long been interested in helping others. He said they decided to set up an L.A. children’s charity that he, his wife and their three grown children would operate on a volunteer basis once the cash-jar solicitors got their 50 percent cut.

The nonprofit they created, the SoCal Charity Foundation, folded in five months amid a hail of legal threats from Carpenter, who was angry the Palaus had failed to send him an agreed-upon monthly cut of donations as payment for his fundraising advice.

“MISREPRESENTED”

At least three established nonprofits that had dealings with Carpenter — including Ronald McDonald House Charities of Southern Arizona and the Steve Nash Foundation, named for the retired Phoenix Suns basketball star — said they cut ties within a short time because of complaints about Carpenter’s soliciting tactics.

Kate Jensen, CEO of the local Ronald McDonald House, said she was approached in spring 2017 by Carpenter and one of his former fundraisers, Sara Murphy, who was working in Tucson using Carpenter’s method and, unknown to Jensen, had a felony record for forgeries in Pima and Maricopa counties.

Carpenter said Murphy was branching out on her own. Public records show Murphy, 42, registered the Southern Arizona Charities Foundation in March 2017, although a Facebook account under the same name was opened in 2015.

Jensen’s organization was trying to raise funds for a playground shade structure, and the duo said they could help raise the $20,000 or $30,000 needed, she said. Murphy said they had access to corporate donors, Jensen said, so she thought that’s where the money would come from.

Murphy was contacted by phone for this story and asked to have questions sent to her email address. She did not respond to the email.

Jensen said she was shocked when fundraisers walked into a business run by a woman who already was a Ronald McDonald House donor and asked for money. Then she heard solicitors were asking for donations with cash jars outside local businesses.

Jensen and her development director, Nancy Kirk, both said they thought Murphy might still be trying to learn about fundraising and so they tried to guide her. They asked Murphy at the end of May to stop using the Ronald McDonald House name and logo, and told her to only use her company name.

After that, Jensen and Kirk said Murphy stopped communicating with them and, when they spoke to her again late in the summer, she said she had stopped seeking funds for them. The contract ended that October.

Carpenter says he was only involved with Ronald McDonald House in the beginning, when he attended the first meeting with Jensen as Murphy’s consultant. After that, he said he is not familiar with what occurred — even though the contractual agreement with Ronald McDonald House is with Carpenter’s organization, not Murphy’s.

In the end, Ronald McDonald House received about $3,000 from the fundraising efforts as well as some toy and activity baskets for the children.

“They misrepresented their fundraising technique,” Jensen told the Star. “It’s not our practice to be putting up tables in front of Home Depot asking for money.”

The Steve Nash Foundation reports a similar experience with Carpenter in 2012.

Carpenter offered to do fundraising that February, according to information the foundation provided to the Arizona Daily Star. The foundation cut ties two months later after complaints that Carpenter’s solicitors were going door-to-door, sometimes late in the evening.

In the end, the Steve Nash Foundation received $135.

A few weeks later that same year, Heather Allen, the president of Phoenix’s HALO Animal Rescue agreed to let Carpenter’s outfit help her raise money.

The contract Allen received, and recently provided to the Star, shows solicitors would sell discount cards and the organization would get $5 for every $20 HALO card sold. The cards, which look like the ones Landau used this year in Tucson, include coupons — many or most already available for free online — for a variety of services and businesses in the Phoenix area.

Allen said people soon started calling her organizations to ask why fundraisers were coming to their doors late in the evening to collect for HALO.

Allen said Carpenter told her the problem was likely a single solicitor and said he’d handle it, but complaints continued. Eventually, she said she threatened Carpenter with legal action if he kept collecting money in her organization’s name.

Carpenter blamed the woman handling HALO’s fundraising. “I have never had a charity act so ungrateful as to what we experienced with HALO,” Carpenter wrote in an email.

Carpenter also has some happy customers.

Kentucky resident Mark Hannah, who described himself as a longtime friend of Carpenter’s, runs a small nonprofit called Pros for America’s Youth that was near-extinct after 30 years. He said Carpenter-related fundraisers saved the day by providing his charity with $10,000 a year from 2015 to 2017.

Hannah said he flew to Arizona several times to attend children’s events put on by Carpenter and was pleased with what he saw. He said he knew Carpenter’s cash-jar solicitors were keeping half the money and supported it because their job isn’t easy.

“I thought they deserved it,” he said.

RED FLAGS

Arizona makes it easy for fundraisers to operate here without scrutiny.

Most states force fundraisers to register with the government and to publicly disclose their activities, but Arizona’s Legislature eliminated those requirements in 2013 for most types of solicitations.

One thing the state still does is publish a list of red flags alerting consumers to potentially fraudulent fundraising practices. Some of those red flags warn donors to steer clear of the methods used by Carpenter and the fundraisers he trains.

“Never give cash,” the list advises. “Always ask for information in writing of how much the fundraiser will keep of the donations collected and how much will actually go to charity,” it continues.

“Watch out for charities with names that sound similar to well-known organizations. Sometimes these sound-alike names are intended to confuse donors.”

Some of the names under which Carpenter has raised funds — such as Arizona Cancer Kids, Arizona Charities Foundation and Special Kids Special Needs — sounded like charities but were part of his private fundraising business, the Star found.

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Kristen Merrifield with the Alliance of Arizona Nonprofits said the group and its members have recently considered whether it would be a good idea to bring back legislation requiring fundraisers to register with the Arizona Secretary of State.

“I WENT TO SCHOOL FOR THIS”

Landau, 63, the man under state investigation for his failed Tucson foster kids operation, did not respond to requests for comment for this story. But in recorded interviews with the Star earlier this year, he said Carpenter taught him everything he knows about fundraising.

“I went to school for this,” Landau said, describing how he learned the ropes by going to work as a cash-jar solicitor for Carpenter’s commercial fundraising firm in 2015

The set-up strategies are similar at every outfit Carpenter is linked to, the Star found.

All are in sunny climes to accommodate outdoor soliciting. All use nearly identical help-wanted ads that offer pay of $20 to $40 an hour, and nearly all focus on children who are disabled or disadvantaged.

The ads make flowery references to children, calling them “our special little ones” or “our little troopers.”

“People love our kids so your job is simply sharing what we do for our special little ones,” the job postings say. “This is a wonderful job opportunity for those with outgoing positive personalities and big hearts.”

Not long after going to work for Carpenter, Landau said he met two co-workers who ended up leading fundraising efforts in Tucson from 2015 to 2017.

One was Murphy, who was involved in the short-lived campaign for the Ronald McDonald House. The other was Justin Hack, 38, who was arrested, but not prosecuted, over claims he paid kids to sell worthless coupons to Maricopa County homeowners in 2013. A police report said Hack told authorities he made $60,000 from that effort.

Hack, described by some past clients as Carpenter’s right-hand man, now runs a Tempe nonprofit for foster kids called Foster Hope Foundation, which uses Carpenter’s fundraising model and pays him for fundraising advice.

Hack’s charity raised $858,000 in donations in 2016, according to a nonprofit tax return he filed with the IRS six months ago. But the return was riddled with errors and didn’t show where the money went, according to two nonprofit experts who reviewed the document. Hack did not dispute the Star’s calculation that less than 20 cents of each dollar he raised went to charity.

The tax return also stated Hack’s charity had no income in 2017 — even though social media sites reviewed by the Star show numerous fundraising events were held that year. In one of them, Foster Hope Foundation staffers are seen clutching a giant donation check for around $2,500.

Hack also reported on the tax return that his charity paid him a $104,000 salary in 2017 despite the filing saying the charity had no income that year. Hack told the Star his tax preparer made mistakes on the return and that he plans to have her correct the errors.

Phoenix resident Dan Shufelt, CEO of Arizona Helping Hands, the state’s largest provider of basic needs for foster kids, said he became curious a few months back when he saw fundraisers outside a restaurant soliciting for a group he had never heard of. It turned out to be Hack’s organization.

Shufelt knows most of the people serving foster children in Maricopa County, so he posted questions about it on two private Facebook groups for foster-care insiders.

Almost no one had heard of Hack’s charity, and with 5,000 members in the groups, only one said she had attended a Foster Hope event, he said.

While Hack’s group spends about 80 percent of its income on fundraising and overhead, Shufelt’s is just the opposite. Ninety-three cents of every dollar goes to help foster children, and only 7 cents goes to overhead costs.

Another comparison is Kris Jacober’s organization, the Arizona Friends of Foster Children Foundation, which spent 11 cents of each dollar on overhead during the last fiscal year.

Both of those organizations, and many like them, are on the Arizona Department of Revenue’s list of Qualifying Foster Care Charitable Organizations. That means the state certified them as eligible to receive state tax credit donations.

The Foster Hope Foundation is not on the list.

LANDAU LEAVES VEGAS

After leaving Tucson, Landau headed to Las Vegas and set up another nearly identical fundraising operation there, using the same methods he learned from Carpenter. It didn’t last long.

The Las Vegas Review-Journal recently reported that Landau’s new venture folded within a few months, and that he left town without staging the charity events he claimed to be raising money for — just as he had done in Tucson.

In San Diego and Orange County, the charity Landau ran there before coming to Tucson is also closed. The California Helping Hands Foundation was shut down by the California government, which licenses charities in the state, for failing to disclose financial information about its operations.

In its place, Landau’s relatives recently set up a new charity for military children — in the same San Diego office Landau used before coming to Tucson.

And like Landau, they’ve hired Carpenter to train their fundraising solicitors. A recent Facebook posting showed a photo of Carpenter in action, surrounded by trainees learning his cash-jar solicitation method.

Landau’s nephew, Ryan Fox of Ohio, who previously worked for Landau, recently set up the new venture with his wife and his mother, Landau’s sister.

Fox was Landau’s former CFO in California and ran Landau’s charity there for months after it was declared delinquent and suspended from fundraising by the state, public records show.

Fox said the family has cut ties with Landau over his business practices and intends to run the new venture for military children, called SoCal Children’s Foundation, by the book.

Charity expert Ellis Carter said the fundraising method described by Carpenter’s affiliates doesn’t lend itself to long-term stability or success.

“One risk is that donors discover that the majority of their support is going to fundraising costs and not to the organization, and withdraw their support,” said Carter, a tax lawyer who advises nonprofits at the Tempe firm Caritas Law Group.

“The other downside is that they aren’t going to be able to make much of an impact if the majority of the funds raised don’t go to support the mission.”

Contact reporter Patty Machelor at pmachelor@tucson.com or 806-7754. On Twitter: @pattymachstar

Reporter

Carol Ann has been with the Star since 1999, but has been an investigative reporter for more than 30 years. She's won several awards in the U.S. and Canada. In 2003, she was a war correspondent in Iraq and was a Knight-Wallace Fellow in Michigan in 2008.