COMMONWEALTH OF . DEPARTMENT OF-STATE BEFORE .THE SECRETARY OF THE COMMONWEALTH Commonwealth of Bureau of Corporations and Charitable Organizations v. File No. 17-98-03317 Phantoms Charities Respondent CONSENT AGREEMENT AND ORDER The Commonwealth of Bureau of Corporations and Charitable Organizations (?anreau?), by and through its undersigned prosecuting attorney, Michael J. Gennett and Phantoms Charities (?Respondent?), stipulate as follows in settlement of the above- captioned matter: JURISDICTION 1. This matter is before the Secretary of the Commonwealth (?Secretary?) pursuant to the Solicitation of Funds for Charitable Purposes Act, Act of December 19, 1990, P.L. 1200, No. 202, as amended 10 RS. 162.1 et. seq. 2. At all relevant and material times, Respondent acted as a charitable organization as de?ned by the Act. STIPULATED FACTS 3. Respondent?s last known address on ?le with the Bureau is 701 Hamilton Street, Allentown, PA 1 81 01 . 9171 9890 0-935 0158- 9256 65 4. On or about September . 21, 2016, Respondent became registered as a charitable organization with the Department of State, Bureau of Corporations and Charitable Organizations (Bureau) and holds certi?cate number 105352 issued by the Bureau. 5. Respondent is a charitable organization that collaborates on certain programs with the Lehigh Valley Phantoms (?Phantoms Hockey?), a professional ice hockey team and member of the American Hockey League. 6. Respondent was unregistered from October 4, 2014 through September 21, 2016 and from May 16, 2017 through December 14, 2017, while soliciting contributions and conducting fundraising events. 7. During these unregistered periods, Respondent received gross annual contributions of approximately $736,471.00 and conducted at least eleven (11) fundraising events. 8. Respondent was not exempt from registration under 10 PS. since Respondent received contributions in excess of $25,000.00 per annum. 9. Respondent admits to numerous transfers of funds between ReSpondent and the Phantoms Hockey bank accounts, speci?cally, funds identi?ed as charitable contributions had been deposited into the Phantoms Hockey account and either held there for several months before being transferred to Respondent, or not transferred at all due to a netting of expenses paid and revenues collected. 10. Respondent admits that funds from the Phantoms Hockey bank account were used to pay charity?related expenses and that transfers between the two accounts represented reconciliations of the hockey team account paying charity expenses and seekingreimbursement from the charity, and the hockey team holding charitable contributions and payments tendered in the form of credit card payments or wire transfersand later directing those contributions, minus expenses, to the charity. 1 1. Respondent adrhits that it cannot locate copies of four (4) of Respondent?s credit card purchase receipts totaling approximately $3,261 for purchases made in 2016 when requested by the Department of State?s Bureau of Enforcement and Investigation, which is within the three (3) years after the end ofthe period of registration to which they relate. 12. Respondent engaged in the practice of utilizing the Phantoms hockey team bank account to pay charity-related expenses'and held charitable contributions and payments made in the form of credit card payments and wire transfers, until. such time as those were transferred in full to Phantoms Charities. 13. These deposits were later reconciled through the transfers of ?mds for the net differences between the hockey team and Respondent.? shank accounts. 14. As a result of this practice, bank statements provided to the Bureau of Corporations and Charitable Organizations by Respondent, and made available for public inspection, do not provide an accurate picture of the charitable expenses and contributions since an undetermined number of contributions and expenses were not processed directly through the Respondent?s bank account. I 15. On or about November 8, .2017, Respondent's website contained the disclosure statement required under Section 13(0) of the Act, indicating that the Organization was properly registered as a charitable organization. 16. Respondent was not properly registered during the period of May 16, 2017 through December 14, 2017. AGREED VIOLATIONS 17. RespOndent admits and agrees that by engaging in the aforementioned activities, Respondent committed violations Of the Act as follows: a. Violating Section 15(a)(l) of the Act, 10 PS. by and through 10 PS. by soliciting contributibns without the approved registration ?led with theBureau. Violating Section 15(a)(1) of the Act, 10 PS. by, and thrOugh 10, PS. by failing to maintain and administer all contributions raised on its behalf through an account in the name of the charitable organization and under its sole control. c. Violating Section 15(a)(1) of the Act, 10 PS. by and through 10 PS. by failing to maintain records, books and reports for at least three (3) years after the end of the period of registration to which they relate. d. Violating Section 15(a)(1) of the Act, 10 PS. by and through 10 PS. 162.12 by failing to keep true ?scal records as to the activities in this Commonwealth as may be covered under this act. e. Violating Section 15(a)(2) of the Act, 10 PS. by utilizing any unfair or deceptive acts or practices or engaging in any ?-audulent conduct which creates the likelihood of confusion or misunderstanding. PROPOSED ORDER 18. The participants, intending to be legally bound, consent to issuance of the following Order in settlement'of this matter: a. Respondent violated Section 15(a)(1) ofthe Act, 10 PS. by and through 10 PS. 162.5 by soliciting contributions?without the approved registration ?led With the Bureau. - b. 7 Respondent violated Section 15(a)(1) of the Act, 10 PS. by and through 10 PS. by failing to maintain and administer all contributions raised on its behalf through an account in the name of the charitable organization and under its sole control. c. Respondent violated Section 15(a)(1) of the Act, 10 RS. by and through 10, RS. by failing to maintain records, books and reports for at least three (3) years after the end of the period of registration to which they relate. I (1. Respondent violated Section 15(a)(1) of the Act, 10 PS. by and through 10 PS. 162.12 bylfailing to keep true ?scal records as to the activities in this Commonwealth as may be covered under this act. e. Respondent violated Section 15(a)(2) of the Act, 10 PS. by utilizing any unfair or deceptive acts or practices or engaging in any fraudulent conduct which creates the likelihood of confusion or misunderstanding. ADMINISTRATIVE PENALTIES 19. An ADMINISTRATIVE FINE of Nine Thousand Dollars is levied upon Respondent. Respondent shall tender the full sum of Nine Thousand Dollars with this executed Consent Agreement. a. Payment shall be by certi?ed check, cashier?s check, attorney?s check, or U.S. Postal money order. b. The . instrument of payment shall be made payable to the ?Commonwealth of and shall be valid for a period of at least one hundred eighty (180) days. c. Re5pondent agrees that payment will be made by one of the methods indicated in subparagraph above and that payment by uncerti?ed personal check, corporate check or cash will not be accepted. CASE SETTLED AND DISCONTINUED 20. This case shall be deemed settled and discontinued upon the Secretary issuing an Order adopting this Consent Agreement and the Respondent?s successful completion of the requirements of this Order. However, nothing in this Consent Agreement and Order shall preclude the Prosecuting Attorney for the Bureau from ?ling charges or the Secretary from imposing disciplinary or corrective measures for violations or facts not contained in this Consent Agreement and Order. I ACKNOWLEDGEMENT OF NOTICE AND WAIVER OF HEARING 21. Respondent waives the ?ling of an Order to Show Cause in this matter. Respondent knowingly and voluntarily waives the right to an administrative hearing in this matter, and to the following rights related to the hearing: to be represented by counsel at the hearing; to present Witnesses and testimony in defense or in mitigation of any sanction that may be imposed for a violation; to cross-examine witnesses and to challenge evidence'presented by the Bureau; to present legal arguments by means of a brief; and to take an appeal from any. ?nal adverse decision. AGREEMENT NOT BINDING ON OTHER PARTIES 22. This Consent Agreement is between the Bureau and Respondent only. It does not bind any other administrative or governmental entity of the Commonwealth of including any other bureau within the Department of State. Except as otherwise noted, this Agreement is to have no legal effect if the Of?ce of General Counsel expresses an objection to the Agreement?s ferm or legality and/or unless and until the Secretary issues the stipulated Order. EFFECT OF REJECTION 24. Should the Secretary not approve this Consent Agreement, presentation to and consideration of this Consent Agreement and other documents and matters by the Secretary shall not prejudice the Secretary from ?irther participation in the adjudication of this matter. This paragraph is binding on the participants even if the Secretary does not approve this Consent Agreement. . ENTIRE AGREEMENT 25. This Agreement contains the whole agreement between the parties; provided, . however, that the captions printed in the various provisions of this agreement are for ease of reading Only and are not to be interpreted as forming any part of this agreement. There are no other terms, obligations, covenants, representations, statements or conditions, or otherwise, of any kind whatsoever, concerning this Agreement. AGREEMENT DOES NOT PREVENT REFERRAL TO OTHER AGENCIES 26. The partiesaclmowled'ge that other federal, state, and/or local agencies may have jurisdiction over the activities of, or representations made by, Respondent and its of?cers, directors, agents, employees or independent contractors. Nothing in this Consent Agreement or the Order based upon this Consent Agreement shall preclude representatives of the Bureau from referring any information or data produced as a result of this matter to any federal, state, or local agency or governmental unit having jurisdiction over the activities of Respondent or any of?cer, director, agent, employee or independent contractor. of the Respondent. VERIFICATION OF FACTS AND STATEMENTS 27. Respondent veri?es that the facts and statements set forth in this Agreement are true and correct to the best of Respondent?s knowledge, information and belief. Respondent understands that statements in this Agreement are made subject to the criminal penalties of 18 4904 relating to unsworn falsi?cation to authorities. CM 0 Michael . Wanna Prosecuting A espondent Department of State By: James Print Title: W. Print 5737167205? DATED: g/e/w IN THE MATTER OF Phantoms Charities File N0.: 17-98-03317 . . AND NOW, this day of 2018, the foregomg Consent Agreement is hereby approved and the terms set forthherein are hereby adopted and inCorporated herein as the Order of the Acting Secretary of the Commonwealth, now issued in resolution of this matter. THIS ORDER shall take effect imrr_1ediately. BY ORDER: 6a yes/W Ro'bert Torres Acting Secretary of the Commonwealth For the Commonwealth: Michael J. Gennett Prosecuting Attorney 306 North Of?ce Building 401 North Street . Harrisburg, PA 17120 Marie K. McConnell, Esquire Shareholder Fitzpatrick, Lentz and Bubba, RC. 4001 Schoolhouse Lane Center Valley, PA 18034 Attorney for Respondent For Respondent: