INQUIRIES ELSEWHERE : 2 Other States Go After Anti-Drug Group : Pennsylvania and Connecticut sue to stop alleged widespread fraud by Irvine-based United Citizens Against Drugs.

By DAVID REYES

Nov. 20, 1992 12 AM PT

TIMES STAFF WRITER

Convinced that an anti-drug charity was a massive fraud, the state of Pennsylvania went to court to shut down Irvine-based United Citizens Against Drugs Inc. operations in that state last summer.

In its lawsuit, Pennsylvania alleged that the United organization was part of a “pass-along” network of charities in which donated goods were passed from one charity to another at “grossly” inflated value, said Daniel Clearfield, Pennsylvania’s executive deputy attorney general.

The same scheme allegedly was used in Connecticut, where state authorities filed a similar lawsuit on behalf of consumers, said Connecticut’s Atty. Gen. Richard Blumenthal.

“We are pursuing vigorously allegations against United Citizens Against Drugs of fraudulent conduct,” Blumenthal said in an interview Thursday.

A spokeswoman at the Irvine offices of United said the organization had no comment at this time.

In Pennsylvania, the lawsuit alleged that United, a group whose stated purpose is the prevention of drug and alcohol abuse, violated Pennsylvania law when it allegedly passed along outdated textbooks on marketing and accounting to American Indians and called it a “million-dollar anti-drug education program,” according to Clearfield.

Damaged books were bought by United for $867, according to the Pennsylvania lawsuit. But United later claimed they had a value of $322,000, according to the Pennsylvania lawsuit. The books were passed through other charities to the Sioux tribe for the stated purpose of “treatment of drug-dependent babies,” Clearfield said.

The state alleged that United in fact provided virtually no services. But United reported providing $1.45 million in program services for 1990, including the “donation” of 1,400 cases of assorted damaged books it valued at $322,000, claiming they were used to treat crack babies and the drug-dependent, said Clearfield.

According to Clearfield, once the allegedly fraudulent $322,000 “pass-along” transaction has been eliminated, the program service total is $1.15 million. Of that total, nearly all the rest was spent on fund-raising letters with some generic drug-education information thrown in, he said.

In August, Pennsylvania Atty. Gen. Ernie D. Preate Jr. was quoted as saying, “I think it would shock the consumers who contributed more than $1.6 million to UCAD in 1990 to know that only $705 was given out for programs that directly address drug dependency.

“The alleged scheme made it appear that (United Citizens Against Drugs) was providing millions of dollars to the charitable causes they cite in their solicitations; nothing could be further from the truth,” Preate said.

Also sued were Cancer Fund of America of Knoxville, Tenn., National Children’s Cancer Society Inc. of Edwardsville, Ill., and the Child Protection Program Foundation Inc. of Dallas.

In August, Connecticut’s Consumer Protection Commissioner Gloria Schaffer said she was appalled with the United Citizens organization, which her office alleged had devised “this Byzantine scheme” of sending inflated-value commodities through a maze of participants.

Schaffer said that “these organizations have undermined the very system we’ve developed to protect consumers.” She added: “There was little or no link between the donation and the stated purposes.”

Blumenthal, the top law enforcement officer in Connecticut, said that United Citizens claimed in 1990 that it received, in donations, $322,000 in books--the same value United Citizens placed on the book transaction in Pennsylvania.

United claimed in papers filed with that state that it donated the books to another charitable organization, the Famine Relief Fund.

The Irvine group claimed its donation constituted $322,000 spent on “dependent drug care programs (helping crack babies),” Blumenthal said.

The books, according to Connecticut’s lawsuit, were not actually donated to United Citizens Against Drugs, the books were not worth $322,000 and they had not been donated to the Famine Relief Fund. In addition, the distribution of those books did not constitute dependent drug care programs, Blumenthal said.

Blumenthal said that although United Citizens has obtained legal counsel, “we’ve had no reports that they are still active here.”