Defenders say Planet Aid runs clean operation, fills need
When Uli Stosch began placing yellow clothing collection boxes around the Kansas City metro area, she knew Lawrence’s recycling faithful would donate all they could.
“Over and over we were told that Lawrence would be a very good place to collect,” Stosch said.
Stosch runs the Kansas City branch of Massachusetts-based Planet Aid, which dropped its first yellow bin in the Lawrence area last fall. Local retailers who agreed to have the boxes on their property say they were quickly filled with used clothing and shoes.
But even after Stosch and other volunteers met with retailers, questions remained: How much donated clothing or money raised stays in Lawrence? The answer: none.
Instead, the money raised by selling used clothes is funneled to charities with links to Tvind, a worldwide business whose founders, including Morgens Amdi Peterson, have been charged with fraud and money laundering in Denmark and elsewhere in Europe.
Stosch said the organization was legitimate and that the money it raised supported important programs in Africa and the developing world.
But records and Planet Aid whistleblowers who have spoken out against the company say Planet Aid’s clothing collection also helps to support a $350 million global organization that allegedly blurs the line between nonprofit charities and for-profit businesses.
Peterson founded Tvind in 1977, and the group quickly became associated with secrecy in both its public image and financial dealings, according to several media accounts. The core group of founders, often called the Teachers Group, has been called a cult in Europe and has prompted government leaders there to seek continent-wide investigations.
Lawrence resident Catherine Bolton drops off a bag of clothes into one of three Planet Aid boxes Saturday near 19th and Massachusetts streets.
In the 1990s, prosecutors in Denmark began an active probe into Tvind and its financial dealings. When police there filed fraud charges, Peterson was tracked to properties in the United States that included a million-dollar condominium development in Florida, according to a report filed by the Danish prosecutor, Henning Thiesen.
Thiesen could not be reached for comment.
A Tvind-run real estate company owned the property located on Fisher Island off the Florida coast, and Peterson was traced there in 2001.
Peterson was eventually arrested in Los Angeles International Airport on his way back from Africa and held for extradition back to Denmark. He hired attorney Robert Shapiro, who had represented O.J. Simpson, but was eventually sent back to answer the Danish prosecutors.
The prosecutors allege Peterson and other top Tvind officials transferred money earmarked for charities — including the Planet Aid-funded Humana People-to-People — to the company’s for-profit operations all over the world, including a logging company and several real estate ventures, according to court filings.
“The Foundation has made no allocations to (humanitarian) purposes, but to commercial enterprises, which are controlled by the defendants,” the Danish prosecutor’s office alleged in the filing.
Much of the money came from clothing collection operations like Planet Aid, the prosecutors allege. The case is expected to last until at least 2007.
Stosch said no current members of Humana People-To-People — the charity branch of Tvind — or Planet Aid were under indictment, and that Planet Aid’s finances were audited and monitored in part by the Internal Revenue Service, which registers and keeps yearly records of nonprofit groups.
According to 2003 IRS records, Planet Aid doles out cash for assistance to Tvind-controlled programs exclusively. Of the 26 Tvind-based programs Planet Aid supported, 10 share the same Zimbabwe post office box, while several others share cash destinations elsewhere in the developing world, records show. All of the programs the company supports are mentioned on Internet descriptions of Humana People-to-People, and many are destinations for student volunteers at Tvind-controlled Teacher’s Group schools around the United States.
But IRS records show the majority of the money the organization makes never finds its way to the charitable programs Tvind runs. Of the nearly $6.6 million in funds Planet Aid raised in 2003, only $600,000 went to development programs in developing countries, records show.
The total is well below the recommended amount registered nonprofits should donate to charities.
The alleged lack of money flowing into humanitarian projects prompted Danish officials to revoke their nonprofit status there, the prosecutor’s filing shows.
IRS spokesman Michael Devine said corporations, just like individuals, had privacy rights and that the IRS didn’t examine most nonprofits unless prompted.
“It’s going to be a case that someone files a complaint,” Devine said. “Then it may trigger an IRS investigation.”
But Devine said unless someone complained and so long as the nonprofit filed its required annual reports, it received the benefit of the doubt.
So where does the money go?
Just like the charities Planet Aid supports, the money rarely leaves the organization.
To sell the clothes, Planet Aid and other Tvind-run clothing collection groups use Garson & Shaw Inc., an Atlanta-based, for-profit clothing resale company. Georgia incorporation records and European documents show that Garson & Shaw is run in part by Tvind members including Allan Foighel and Inger Lise Jepsen. Their finances are not public.
But according to the Garson & Shaw Web site, clothing resale equals big business, with people in Eastern Europe and elsewhere paying cash for the stuff people throw away.
Garson & Shaw is only one example of an estimated 140 companies worldwide that are run in whole or part by Tvind members.
When Planet Aid first came to Lawrence, Stosch met with city recycling director Mollie Mangerich to explain more about the group.
“We had heard the same things, the Internet trail,” Mangerich said about the company’s past.
But Mangerich said after the meeting, the city felt comfortable promoting Planet Aid as a legitimate recycling service in the city. The company is now featured on the city’s Web site.
Though Mangerich said she had concerns about the company, Planet Aid provided an avenue for residents looking to recycle old clothes they may never wear.
Plus, Planet Aid apparently entered the city at the right time. Other local clothes recycling programs at Goodwill and elsewhere had stopped accepting clothes because of a lack of space or need.
Regardless of how the money is spent, the company at least allows people to give clothes away rather than throw them away, Mangerich said.
“That filled a gap in our collection efforts,” Mangerich said.
But according to Marilyn Stone at the Lawrence Goodwill Store, 2200 W. 31st St., the store is now actively accepting clothing for resale.
If you want to donate, many opportunities exist.
More than 10,000 choices are in the United States alone, said national nonprofit expert Paul Carttar — which is why people should do the research before they give to a company.
“You need not feel any obligation to give them what they want,” said Carttar, the former head of the Ewing Marion Kauffman Foundation and now executive vice chancellor for external affairs at Kansas University.
The nonprofit industry in the United States has transformed during the last 30 years into a multibillion dollar national industry, he said. The drive to give is uniquely American, he said, and there is no shortage of reputable companies who put this drive to good use.
The downside comes when people with shady intentions tap into this national drive, Carttar said. It happens more than donors would like to believe.
“It can be exploited by people without scruples,” Carttar said. “People need to ensure themselves that an agent is legitimate.”
To do that, Carttar and other national nonprofit watchdog groups say to do the research, especially if donations are going to a lesser-known group.
Agencies like the American Red Cross and Goodwill have a long track record of performing good work and using money for reputable causes.