2 states say they are reviewing 9/11 charities

Officials in Arizona and New York have launched investigations into charities that claim to serve 9/11 causes, probing whether they failed to follow state laws — and may have misspent mil...

Officials in Arizona and New York have launched investigations into charities that claim to serve 9/11 causes, probing whether they failed to follow state laws — and may have misspent millions intended to help and honor those affected by the terrorist attacks.

The announcements follow an investigation by The Associated Press last week that uncovered dozens of 9/11 charities across the country that didn't disclose publicly how they raised and spent money, didn't keep promises to create memorials or contribute to 9/11 causes, or did more to help their creators than those affected by the terrorist attacks.

New York Attorney General Eric Schneiderman's office said state lawyers are conducting their own "broad review" of 9/11 charities to make certain that all documentation for charities related to the 2001 terrorist attacks is in order and that all rules on fundraising and public disclosure are being followed.

In Arizona, state Attorney General Tom Horne said his office is investigating a 9/11 charity that raised more than $700,000 from students, police and others to create a massive memorial quilt that was never completed.

New York officials declined to discuss specific groups they are reviewing, but noted in a statement that state law requires most charities to register with the state if they are based in New York or raising money from citizens. There are some exceptions, such as religious and parent-teacher groups. The law also requires charities to file annual reports, and more detailed financial reports if they collect more than $100,000 a year.

Schneiderman spokeswoman Lauren Passalacqua said the AG "takes issues involving charities and nonprofit abuse very seriously, and encourages anyone with information about such matters to immediately contact our office."

Among troubled charities identified by the AP was Urban Life Ministries, a Manhattan nonprofit that its founder said raised more than $4 million to help 9/11 victims, relatives and first responders. The group also spent at least another $800,000 through 2009 to help Mississippi Gulf Coast residents rebuild after Hurricane Katrina.

Urban Life Ministries, created by the Rev. Carl Keyes, pastor at Manhattan's Glad Tidings Tabernacle church, didn't file the required financial statements with New York state to show how all the millions were spent, according to the attorney general's office. Records show the group filed a 2001 report, but nothing after that. Filings from that year showed that Keyes, his wife and his church received payments from the charity.

Arizona state officials are investigating Stage 1 Productions, a nonprofit that raised $713,000 to promote creation of a memorial quilt stretching across 25 football fields that would honor those killed in the attacks of Sept. 11, 2001.

Horne, the Arizona attorney general, said investigators launched the inquiry after reading the AP's report that the charity's founder paid himself and his relatives more than a third of the money raised for the project, including $141,000 in compensation, more than $45,000 to repay an undocumented loan, and $200 a week in car allowance.

"Once we start an investigation, I can't talk about that particular investigation until it's concluded," Horne said. "But as a general matter with respect to charities, if somebody represents that he's raising money for the charity, he needs to represent it for the charity. If he's raising it for himself, rather than the charity, that's really theft."

Kevin Held, who created the nonprofit in 2003, also spent more than $170,000 on travel, trips he said were necessary to promote the quilt project and raise more money.

Held has said he did nothing wrong, and can account for all the money spent.

The AP investigation identified 325 charities created after 9/11 to serve victims, their relatives and their memories. Those nonprofits collected $1.5 billion for their causes, which included programs to help those affected by the attacks, memorials to honor the victims, and services and cash provided to relatives of victims.

Most of the charities included in the AP's review followed public disclosure rules, spent the money on their stated purpose and spent very little, if any, on benefits for their founders. But the AP discovered dozens that paid salaries and benefits to their founders without delivering on promises of charity; raised and spent money without publicly documenting their finances; or spent most of the money raised on programs or events, like a motorcycle ride, with only a small amount going to charitable purposes.

Jim Riches, a New York City firefighter whose son died on 9/11 trying to rescue victims inside the World Trade Center, said he was disturbed when he read about some of the charities profiled by the AP.

"I don't even know where these people come from with these charities. Everybody latches onto 9/11, making money," Riches said.

"It's disgusting. They're taking advantage of 9/11," Riches said. "I think it's blood money."

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