$1.4 million in refunds urged

Published: August 9, 2006  |  Source: kansascity.com
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Charity raffle under scrutiny | Officials allege proceeds were spent for personal use.

A new lawsuit has been filed after a spinal cord injury research fundraiser failed to award the prizes it promised.

The Missouri attorney general wants a St. Louis-based charity to refund $1.4 million to consumers who purchased raffle tickets for an opulent Parkville mansion, a fundraiser that was supposed to help spinal cord injury research.

State officials allege that funds from the charity’s raffle in Kansas City and elsewhere instead ended up in the organizer’s pocket and were spent on personal mortgage payments and credit card expenses, including a ski trip to Colorado.

The legal actions this week amend a lawsuit filed in May by Attorney General Jay Nixon that moved to halt four pending raffle sales by Gateway to a Cure, which conducted the raffle “Grand Giveaway, KC.”

An attorney for the director of the charity’s Kansas City chapter declined to comment on the allegations, saying that neither he nor his client had read the amended lawsuit.

The local raffle offered the Parkville home, plus a Bentley luxury sedan valued at $1.5 million as the grand prize.

The Kansas City raffle, which began in 2003, also offered seven consolation prizes, including a Maserati Spyder sports car, a Harley-Davidson motorcycle, a baby grand piano and a grandfather clock. Nixon alleges that the charity never owned some of the prizes, including the house and the sports car.

Organizers said they hoped to sell 2,000 tickets at $1,000 each and donate up to $200,000 toward spinal cord research, after prize costs and expenses.

The amended lawsuit filed Tuesday now names Carl “Lou” Sengheiser, president of Gateway to a Cure, and Mary M. Bolling of Parkville, who worked as executive director of Gateway’s Kansas City chapter. The two repeatedly misled ticket buyers about the drawing date and number of tickets sold, according to the lawsuit, which was filed in St. Louis County Circuit Court.

“We don’t believe that Mary’s done anything wrong in this matter at all,” said Jeff Hensley, Bolling’s attorney.

Neither Sengheiser nor the charity’s attorney could be reached Wednesday. A woman who answered the phone at Gateway to a Cure said Sengheiser was in the hospital. She did not elaborate and did not identify herself.

Beside the refunds to ticket-holders, the lawsuit asks the court to impose civil penalties against the defendants of at least 10 percent of the total restitution.

According to the lawsuit, Gateway attorney John Kress said the charity sold 1,409 tickets. Organizers had identified 1,800 tickets as the break-even point.

In April, raffle organizers told The Kansas City Star that they did not raise enough money to pay for the prizes and to make a donation to spinal cord research after their “Grand Giveaway, KC.” The drawing occurred Feb. 14 at Metro North Mall.

The lawsuit quotes promotional materials and letters to ticket holders signed by Sengheiser and Bolling, including one from Bolling dated Jan. 12, 2005. It told consumers: “Now, the big question is, when is the drawing? Well, we are so close, that depends on how quickly we sell the remainder of the tickets. We only need to sell approx 300. …”

In April, organizers told The Star the raffle winner, identified only as “S. Clark,” of Texico, Ill., agreed to a cash settlement in place of the home.

The lawsuit also identified the second prize winner as a New York City resident, Scott Fitzgerald, who has yet to claim his prize, the Maserati, which organizers valued at $98,500. The address for Fitzgerald, provided to Nixon by the charity, hasn’t been occupied by Fitzgerald since January 2003, about 10 months before the raffle began in October 2003, according to the lawsuit. Officials said in the document that Fitzgerald may not exist.

Bolling and her husband, Mark Bolling, were at the time the principals of Mark Bolling Homes, the company that built the house at 6601 N. National Drive before 2000, according to the lawsuit. Mark Bolling is not listed as a defendant in the lawsuit.

The charity told ticket buyers the winner would receive a “new” home, although Nixon alleges that Mary Bolling may have lived in the home for a while. A spokesman for the attorney general’s office declined to elaborate.

The home remained for sale through the raffle’s duration, according to the lawsuit, and Gateway never acquired title.

To date, Gateway has failed to account for all funds raised in the Kansas City raffle, the lawsuit states. The document quotes Kress as stating that at least $1.2 million had been collected, though 1,409 of the $1,000 tickets were sold.

“Because the tickets were sold in advance, no money should remain to be collected for the ticket sales,” the lawsuit states.

A preliminary injunction signed earlier by a St. Louis County judge bars the charity from advertising or selling tickets in three pending home raffles in St. Charles, Mo.; Orlando, Fla.; and Calhoun County, Ill., as well as a college scholarship raffle. In total, Gateway’s raffles sold around $2 million in tickets.

The amended lawsuit also details how Gateway checks were used to pay for personal credit card bills that listed charges at such St. Louis-area stores as JC Penney and Dirt Cheap Cigarettes. The suit also accuses Sengheiser of arranging for private individuals to buy vehicles using the charity’s tax-exempt status.

Gateway to a Cure was founded about 10 years ago to raise money for spinal cord injury research. Sengheiser began the charity after his son, Jason, was paralyzed in a fall.
Grand Giveaway, KC raffle

Here is a timeline of events, as outlined in the civil lawsuit amended this week by the Missouri Attorney General’s Office:

•October 2003: Gateway to a Cure begins soliciting the sale of raffle tickets. The cost of each ticket is $1,000 and 2,000 tickets were offered for sale.

•May 27, 2004: Gateway sends a letter to participants, stating that the drawing will be September/October 2004.

•Aug. 18, 2004: Kansas City organizer Mary M. Bolling announces that officials are close to setting a date and that “we are SO CLOSE to completing our goal” of selling 2,000 tickets.

•Sept. 26, 2004: Bolling writes to consumers that “we have less than 600 tickets remaining and then we will schedule the drawing …”

•Jan. 12, 2005: Bolling writers to ticket buyers, “We only need to sell approx 300 more …”

•July 18, 2005: Gateway’s Web site states, “Hurry! Less than 150 tickets remain!” in regards to the Kansas City raffle.

•Undated correspondence: The charity announces the raffle will be Sept. 23. The correspondence discloses that the “drawing subject to a minimum of 1,800 tickets sold prior to 9/23/05.”

•Sept. 15, 2005: Gateway president Carl “Lou” Sengheiser sends a letter announcing the drawing’s postponement to Feb. 14, 2006, “regardless of tickets sold.”

•Feb. 14, 2006: Hundreds of ticket holders gather at Metro North Mall, where Sengheiser reaches into a tumbler and announces the winners, including grand prize winner “S. Clark” of Texico, Ill.

•March 30, 2006: Gateway officials tell the attorney general’s office the charity sold only 1,409 tickets in the Kansas City raffle.
To reach Lindsay Hanson Metcalf, call (816) 234-5904. Source: State of Missouri v. Gateway to a Cure Inc., Carl Sengheiser and Mary Bolling.

By LINDSAY HANSON METCALF The Kansas City Star