Millions In Clothing Donations Diverted From Charity

KIRO 7 News, Seattle/November 17, 2009

Seattle - The large, red, metal bins advertise for you to donate "Clothes & Shoes," but the setup is not what it appears.

When your kids outgrow their shoes or you get sick of a certain shirt, charity bins are a great alternative to the garbage can.

Drop the goods into a blue Northwest Center box and you're helping fund a bona fide non-profit.

Drop the clothes in a red U'SAgain (pronounced like Use-Again) bin and you're essentially giving away cash to a multi-million dollar enterprise.

U'SAgain has installed clothing donation boxes in around 600 parking lots, alleys, and business fronts all over Western Washington. The company cashes in on peoples' preconceived notions that all bins represent charity.

In reality, U'SAgain sells the majority of your toys, sweatshirts, shoes and bundles of blankets, to international used clothing brokers in Russia, South America and Africa.

It might get to a needy person, but they'll likely have to pay for it.

Bill Arvish has put clothes inside the red bins thinking it was a charity.

"It's disappointing. It's a rip off. It's a scam. We're donating our kids' clothes and our clothes and shoes so they go to local charities so it pisses me off," Arvish said.

Another donor, Louise Hutmacher, was surprised that U'SAgain is a for-profit company.

"That's not nice. It's very deceptive. It's cheating people here," Hutmacher said.

A former employee, with details of U'SAgain finances, tells Team 7 Investigators the company diverts hundreds of tons of used clothing and millions of dollars away from legitimate local charity organizations in Washington every year.

Part of their success is duping unknowing donators and part is convincing businesses, like Kim's Auto Repair, to give free space to a red U'SAgain bin.

Manager, Sherry Asbury, said that employees of U'SAgain approached her and specifically told her "all proceeds were going to charity."

She had no idea U'SAgain was a for-profit until we told her.

"That's ridiculous. We had no idea that anything like that was going on. I thought maybe a homeless shelter or a shelter for women. I'm kind of stunned," Asbury said.

Linda MacKay runs a local daycare facility in Ballard. She said she agreed to allow a red bin on her property, free of charge, because U'SAgain employees told her "they helped non-profits."

"I feel misguided, considering that I care about giving to other people. I work hard around here to teach children and families about respect and truthfulness and it's pretty sad when someone has misguided you in that direction," MacKay said.

Lea White used to run U'SAgain's Seattle branch. She agreed to speak with KIRO Team 7 Investigators about how the company operated while she was there.

"Too many people are being deceived, thinking they are doing good and they aren't," White said.

For starters, she said workers routinely pretended to be a charity so business owners wouldn't ask for rent on the bin space.

"I helped place many, many bins and never once mentioned "for-profit" because if I mentioned for-profit the businesses they (the business owners) were going to say ‘What's in it for me?'" White said.

U'SAgain is run by a Swedish-born Chicagoan named Mattias Wallander.

He agreed to meet with KIRO Team 7 Investigators at their Auburn warehouse for a rare on camera interview.

Wallander said the company recently added the word "commercial" to bins and has always been honest about its profit motives.

"Our interest is in doing something that's good. We're not looking to get rich on this. We're looking to provide good for the planet and good for the local community and, of course, make a living in the process," Wallander said.

Wallander and his cofounder, Janice Bostic, are controversial figures in the used-clothing industry for reasons beyond their for-profit venture.

Court records show in 2001, the Public Prosecutor for Serious Economic Crime in Denmark links U'SAgain with helping finance an alleged cult called the "Tvind Teachers Group."

The Teachers Group leader, Morgens Amdi Pedersen, is an international fugitive, wanted in connection with a $22 million tax fraud and embezzlement scheme.

Wallander is not individually named in the case - there's just a reference to U'SAgain, in which he is part owner.

"We are not associated with any organization in Denmark and if anyone is accused of wrongdoing in Denmark, it doesn't have anything to do with U'SAgain or business we're doing here," Wallander said.

Some financial records uncovered by Team 7 Investigators indicate otherwise.

"Fairbank, Cooper, and Lyle" is a Caribbean-based investment company that, according to its Web site, is the majority stakeholder of U'SAgain.

European court documents show Fairbank, Cooper, and Lyle controls most of the Teachers Group finances.

Wallander admits he's involved with the Teachers Group. However, he denies it's a cult or that he's every done anything illegal.

"That's a ridiculous statement and I don't think the Teachers Group is anything that needs to be defended. Like you say, it is a personal choice I have made to be associated with a community that does good around the world. That's my personal choice and it doesn't affect U'SAgain. It doesn't affect people who donate clothing to U'SAgain," Wallander said.

Former U'SAgain branch manager, Lea White, disagrees that Wallander's association with the Tvind Teacher's Group didn't affect business. She said there was pressure put on her to join, which included giving up all her possessions.

White: "I was told when they invited me to the Teachers Group, that there was common time, common economy, common whatever, which meant they all pooled their money together. They only took a small salary to live with. The rest was put toward their goals. Halsne: "Did you feel pressure to join the group?" White: "Yes I did. I was actually very scared. I was horrified when I found out I was working for a cult. I even informed my employees, this is who we worked for."

Denise Small is a manager at Northwest Center, a certified charity in Seattle.

When people place used-clothing donations inside its blue boxes, the money stays local. Northwest Center provides vocational training for the developmentally disabled.

"Unfortunately, when they place (their bins) next to us, we end up losing or not getting the donations." Small said.

She adds, "The most vulnerable people and the ones we work with - people with disabilities. It's really even harder to get jobs for them if we don't have the funding and backing to do that."

U'SAgain says most bins have a sticker that says "We are a commercial company." Critics said, if it ended there - people might not be as confused.

The label goes on to say "We cooperate with schools, non-profits, and city recycling programs."

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