Minnesota attorney general: Car charity had cozy deals

Minnesota's attorney general accused one of the nation's largest vehicle-donation charities on Wednesday of putting little money toward its advertised mission while steering millions to the for-profit companies owned by the group's founders.

Attorney General Lori Swanson said about one-fifth of the Car Donation Foundation's $108 million in gross revenue over a four-year period went toward charitable grants, while the rest was used for overhead, marketing and payments to a pair of companies. The St. Paul-based foundation solicits vehicle donations under a "Wheels for Wishes" program that pledges the proceeds to local Make-A-Wish chapters to help children battling cancer.

Nearly 50,000 vehicles were donated to the foundation in 2014, amounting to $37 million in revenue. The foundation makes itself attractive to donors by arranging quick pickup of inoperable vehicles and documentation that could be used for income tax deductions.

"Donors need transparency to make informed decisions, including who they are donating to and how their money is going to be used," said Swanson, a Democrat. "Transparency wasn't given to donors here."

The foundation referred calls for comment to the founders, William Bigley and Randy Heiligman. The Associated Press left phone messages seeking comment from both men.

Swanson's investigators said the foundation would pay one of the founder's for-profit companies for managing the charity's operations and fundraising, and another associated company for towing, scrapping or reselling donated vehicles. The two companies, owned by Bigley and Heiligman, reaped a combined $36 million in payments from the foundation between 2011 and 2014, according to the office's review of tax records. Swanson said $23 million went to the charitable mission over that time.

The foundation has a presence in about 40 states and has come under prior IRS scrutiny for its cozy ties to private firms. The founders left the charity's board of directors in response but maintained a hands-on role in daily operations. Regulators in South Carolina and Oregon have highlighted the group in reports of charities with unusually high administrative costs.

Mishele Cunningham of Brooklyn Park donated her 12-year-old car in 2013 after searching for a charity benefiting kids with cancer. It was subsequently re-sold for more than $1,000 but she was disappointed to learn of allegations that little of that filtered down to Make-A-Wish, an organization known for sending ill children on amusement park trips or arranging one-of-a-kind outings.

"I would have sold the car outright and given the money to Make-A-Wish myself," she said. "They advertise they are part of Make-A-Wish, and they are not."

According to internal documents released by Swanson, the Make-A-Wish Minnesota chief executive resigned in June amid an independent probe. The charity told Swanson's office he was paid $70,000 by the private companies to help line up deals between local chapters around the country and the car-donation charity, receiving $5,000 for every contract arranged.

Minnesota law gives the attorney general jurisdiction over charities. Swanson said that details of her office's investigation were in a compliance report, which can be a precursor to litigation or other enforcement actions if the deficiencies identified aren't corrected. They have 30 days to respond.

Swanson also forwarded her findings to the IRS, which could examine the foundation's charitable tax status.