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Attorney General Lockyer Files Fraud Suit to Shut down Hollywood Fundraiser Aaron Tonken

Charities Bilked by Tonken Include Ones Supported by Actors and Musicians
Thursday, March 13, 2003
Contact: (415) 703-5837

(LOS ANGELES) – Attorney General Bill Lockyer today filed a lawsuit against Hollywood fundraiser Aaron Tonken, alleging he has defrauded charities and their donors, diverted donations to bank accounts he controlled and refused to account for more than $1.5 million in contributions to six charitable events he agreed to produce.

"This lawsuit details a sordid scheme to steal money from worthy charities, use it for improper purposes, and refuse to account for the donations," said Lockyer. "In bringing this action, our first priority is to shut down Tonken's operation to ensure he and other defendants cannot continue to defraud charitable causes and their generous donors. Allowing egregious misconduct like this to go unchecked can chill charitable donations and harm the organizations they support."

The defrauded charitable organizations include the Kids Campaign, the Joan English Fund for Women's Cancer Research, the Michael J. Fox Foundation, the Betty Ford Center, City of Hope, Inner-City Games Foundation, Westside Waldorf School, the Isabelle and Leonard Goldenson Association, and the Robert H. Lorsch Foundation Trust. The ripped off charities include organizations supported by celebrities such as singer Rod Stewart, the pop music group *Nsync and the cast of the TV show Ally McBeal.

The complaint filed in Los Angeles County Superior Court seeks a permanent injunction barring Tonken and the other defendants from engaging in charitable fundraising, or disbursing donations from the events cited in the lawsuit, until they provide a full accounting of the money. The complaint also asks the court to award general damages of at least $1.7 million, unspecified punitive damages and civil penalties of at least $350,000.

Defendants in the case include: Tonken; Aaron Tonken & Associates, his commercial fundraising firm; Cynthia Gershman, trustee of the Cynthia Gershman Foundation; Los Angeles-area lawyer Kevin Clarke; and Los Angeles resident Robert Freedman.

Under statutory and common law, commercial fundraisers for charities owe a fiduciary duty both to donors and the charities for which they solicit money. Additionally, they must ensure contributions are used for the charitable purposes for which they are raised. State law also requires such fundraisers to register with, and provide annual financial reports to, the Attorney General's Office.

The lawsuit alleges Tonken and his firm fraudulently solicited charitable donations, diverted donations to non-charitable purposes, improperly commingled funds, refused to account for the money and failed to comply with registration and financial reporting mandates. The complaint further alleges Gershman, Clarke and Freedman aided and abetted Tonken. Gershman also breached her fiduciary duty to the Gershman Foundation and engaged in self-dealing, the lawsuit states, by allowing Tonken to spend Foundation money to repay personal loans to Gershman, and to pay for Gershman's public relations expenses.

Cases detailed in the complaint include:

Family Celebration 2001 – President Clinton and Hillary Clinton served as honorary chairpersons; TV producer David E. Kelley and actress Michelle Pfeiffer as chairpersons. Beneficiaries included charities designated by the Ally McBeal cast and *Nsync. Tonken produced the event, which was held April 1, 2001 and which raised at least $1.5 million. The complaint alleges Tonken diverted some of the donations to accounts he controlled. To date, an unknown amount of the diverted contributions has not been turned over to the charities.

Celebrating Diana – This Tonken-produced event was supposed to benefit the Joan English Fund for Women's Cancer Research, the Robert H. Lorsch Foundation Trust and charities designated by TV producer Loreen Arbus. Tonken took in at least $550,000 in donations, loans and expense payments for the event and has failed to account for any of the money. The event never was held. The complaint alleges Tonken and Clarke diverted a substantial portion of the $550,000 to improper uses, including directing $200,000 to Freedman. Tonken falsely told the event's fiscal agent he needed the $200,000 to secure the appearance of former South Africa President Nelson Mandela.

Hollywood Gala Salute to Milton Berle – This event, also produced by Tonken, was supposed to raise money for the Westside Waldorf School, Women of Washington and charities designated by actress Whoopi Goldberg. No money raised from the event, which took place July 22, 2001, has gone to the Westside Waldorf School or Women of Washington. The complaint alleges Tonken diverted $100,000 of the contributions to Clarke's law firm, the Ronin Law Group.

Unified in Great Cause for an Evening to Remember – Produced by Tonken, this event was supposed to benefit the City of Hope, Inner-City Games Foundation and Knowledge Is Power. The event was held at Rod Stewart's home Sept. 19, 2002. To date, no donations from the event have been made to the City of Hope or Inner-City Games. It is unclear how much money, if any, went to Knowledge Is Power.

The Kids Campaign Event – This Tonken-produced event was supposed to benefit the Kids Campaign, the Mark Wahlberg Youth Foundation and the Children's Craniofacial Association. Tonken solicited $100,000 in donations for the express purpose of underwriting the event. The complaint alleges Tonken subsequently convinced the Kids Campaign to give $60,000 of that money to Freedman, under the false pretense the money would help cover the event's expenses. The event has not taken place, and Tonken has refused to provide an accounting.

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