Two nonprofit organizations that claimed to raise money for at-risk youth have been permanently shut down after a multistate investigation found that children from low-income neighborhoods were used to generate hundreds of thousands of dollars that never reached charitable programs, according to the Office of the Attorney General for the District of Columbia.
“For too long, Maryland Youth Club, Virginia Youth Club, and Jule Huston engaged in an illegal scheme that exploited both D.C. children and the generosity of DMV residents,” Attorney General Brian Schwalb said.
He announced that Maryland Youth Club of America Inc. and Virginia Youth Club of America Inc. will be dissolved and that their founder and president, Jule Huston, is permanently barred from doing business or soliciting charitable donations in the District.
Efforts to reach Huston were unsuccessful.
The enforcement action follows a joint investigation by the attorneys general of the District, Maryland, and Virginia, along with the Maryland Secretary of State.
“These adults exploited children twice—first by sending them door-to-door as salespeople, then by misusing the money donors thought would help at-risk youth,” said Maryland Attorney General Anthony Brown. “We’ve shut down these sham operations and banned the people behind them from ever running a charity in Maryland again.”
Investigators said they concluded that the two nonprofits recruited middle school and high school students from low-income communities, including neighborhoods in Wards 7 and 8, then transported them to more affluent areas to sell candy door to door. Buyers were told their purchases would support scholarships and enrichment activities for children. Authorities found no evidence those benefits were ever provided.
According to the settlement agreement, Maryland Youth Club and Virginia Youth Club collected more than $857,000 in gross candy sales between 2018 and 2022.
Investigators said they were unable to confirm that children were paid for their work or received trips, scholarships, or educational support described in fundraising materials. Federal tax filings for that period reported no meaningful program expenses benefiting young people despite extensive fundraising activity.
The investigation also determined that consumers were misled by claims that candy purchases would support at-risk children. At least 51 transactions allegedly occurred within the District between February 2022 and February 2023, with dozens of District children involved. Authorities said they also identified at least 49 District children who sold candy for a related organization run by the same individuals using a similar structure.
Financial records reviewed by investigators showed that Huston diverted charitable funds for personal use and for the benefit of private individuals. More than $23,000 was transferred from Maryland Youth Club accounts to Huston’s personal CashApp account, his mother, a New York corporation he created, and an officer of Virginia Youth Club.
The settlement documents also cite numerous expenses in New York, where Huston resides, including purchases at gas stations and national retail chains. A substantial portion of the funds raised by the organizations remains unaccounted for.
Investigators further said they found that Huston intentionally destroyed nonprofit financial records for multiple years, eliminating required accounting documentation for Maryland Youth Club from 2020 through 2023. District law requires nonprofit corporations operating in the city to maintain accurate financial records.
Under the settlement resolving the District’s claims, both nonprofits must formally dissolve and provide documentation of dissolution to District authorities. Huston and all officers, directors, agents, and employees associated with the organizations are permanently barred from doing business in the District or seeking charitable donations from District residents. Huston is also prohibited from holding any fiduciary role with a District nonprofit or trust or from participating in charitable fundraising in any capacity.
The agreement includes a $5,000 payment that will be redirected to nonprofits serving at-risk youth in the region. Separate settlements with Maryland and Virginia impose permanent bans and allow those states to seek immediate judgments for the full amount of misappropriated funds if any term of the agreements is violated.
“Our office strongly opposes deceptive charitable practices and will take decisive action to ensure the integrity and health of the nonprofit sector and to protect generous Marylanders,” said Maryland Secretary of State Susan C. Lee. “We are committed to keeping bad actors out of the nonprofit world and upholding Maryland’s charity laws.”
Schwalb said this case follows his dedication to safeguard District residents.
“As the District’s independent Attorney General, I will continue to use every tool available to protect young people and keep our community safe from fraud and financial exploitation.”
Source: Published without changes from Washington Informer Newspaper
