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STATE OF WASHINGTON, Plaintiff, v. GRETCHEN L. SALSTROM, Defendant.

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF UNDER THE CONSUMER PROTECTION ACT AND CHARITABLE SOLICITATIONS ACT
The Plaintiff, State of Washington, by and through its attorneys Robert M. McKenna, Attorney General, and Sarah A. Shifley, Assistant Attorney General, brings this action against the Defendant named below. The State alleges the following on information and belief:
I. PLAINTIFF
1.1 The Plaintiff is the State of Washington.
1.2 The Attorney General is authorized to commence this action pursuant to
RCW19.09.340, RCW19.86.080, and RCW19.86.140.
II. DEFENDANT
2.1 Defendant Gretchen L. Salstrom (hereinafter “Defendant” or “Salstrom”) was at all times relevant to this action, the Executive Director of People Helping Horses (“PHH”) and a member of its Board of Directors, and controlled the policies, activities, and practices of PHH, including all of those alleged in this Complaint.
2.2 Salstrom resides at 24717 43rd Ave NE, Arlington, WA, 98223, Snohomish County.
2.3 PHH is a Washington non-profit corporation located in Arlington, Washington, and conducts business in Snohomish and other counties. PHH solicits and collects charitable contributions from the general public.
III. JURISDICTION AND VENUE
3.1 The State files this complaint and institutes these proceedings under the provisions of the Consumer Protection Act, RCW 19.86, and the Charitable Solicitations Act, RCW19.09.
3.2 The Defendant engaged in the conduct set forth in this complaint in Snohomish County and elsewhere in the state of Washington.
3.3 Venue is proper in Snohomish County pursuant to RCW4.12.020 and .025.
IV. NATURE OF TRADE OR COMMERCE
4.1 Defendant was at all times relevant to this lawsuit, engaged in trade or commerce, within the meaning of RCW 19.86.020, by directly and indirectly soliciting and collecting charitable contributions from the general public in the state of Washington.
4.2 Defendant was at all times relevant to this action in competition with others engaged in similar activities in the state of Washington.
V. FACTS
5.1 Defendant founded PHH in 2002. PHH was incorporated as a non-profit on July 11, 2002, and registered with the Washington Secretary of State Charities Program on December 21, 2004.
5.2 Through PHH, Salstrom solicited and received charitable contributions from the general public through a variety of media, including: direct mail and online, through a website at http://peoplehelpinghorses.org/, and through various social networking media.
5.3 Salstrom was at all times relevant to this action the Executive Director of PHH and a member of its Board of Directors, and controlled the policies, activities, and practices of  PHH, including those alleged in this Complaint.
5.4 At all times relevant to this action, Salstrom had ultimate control and decision making authority over development of PHH solicitation efforts and decisions regarding the form and content of all solicitation materials.
5.5 Direct mail solicitations sent from PHH were in the form of letters personally signed by Salstrom.
5.6 At all times relevant to this action, Salstrom had ultimate control and decision making authority regarding the development of the PHH website, and website and social networking media content.
5.7 At all times relevant to this action, Salstrom had control over the use of funds donated to PHH without oversight of the Board of Directors, including signatory authority on PHH’s bank account.
VI. FIRST CAUSE OF ACTION
(Deceptive Misrepresentations in Solicitation Materials)
6.1 Plaintiff realleges Paragraphs 1.1 through 5.7.
6.2 Since approximately January 1, 2009, Defendant stated in one or more means of solicitation that PHH partnered with government policy makers when in fact, it had had no such partnerships.
6.3 Since approximately January 1, 2009, Defendant stated in one or more means of solicitation that PHH partnered with equine education organizations when in fact, it had no such partnerships.
6.4 Since approximately January 1, 2009, Defendant stated in one or more means of solicitation that PHH partnered with schools when in fact, it had no such partnerships.
6.5 Since approximately January 1, 2010, Defendant stated in one or more means of solicitation that PHH performed periodic check-ups of horses after the horses have been adopted, even though PHH did not consistently perform such periodic check-ups.
6.6 Since approximately January 1, 2010, Defendant falsely stated in one or more means of solicitation that “Boukra,” a horse previously in PHH’s custody, is “currently spending time in a loving foster home, where he is able to live as a companion horse with ample turn-out.”
6.7 Since approximately January 1, 2010, Defendant falsely stated in one or more means of solicitation that “Savannah”, a horse previously in its care, “has settled in beautifully to her happy new home.”
6.8 Since approximately January 1, 2011, Defendant misrepresented in one or more means of solicitation that PHH offered a free public event in 2011 called “Celebrate the Horse.”
6.9 Since approximately January 1, 2011, Defendant stated in one or more of its means of solicitation that it offers a therapeutic riding program for children supported by donations when in fact, it offers no such program.
6.10 Since approximately April 1, 2011, Defendant stated in one or more of its means of solicitation that it operated a Horse Sanctuary in California supported by donations when in fact PHH had ceased operating any such sanctuary.
6.11 Since approximately May 23, 2012, Defendant stated in one or more means of solicitation that 26 horses received from Skagit County Animal Control would have gone to “the auction yard” and been killed if PHH had not taken them, when, in fact, the horses would not have been killed if they were not taken by PHH.
6.12 Since approximately July 1, 2012, Defendant stated in one or more means of solicitation that three or four of the 26 horses received from Skagit County Animal Control in May, 2012, were pregnant upon their arrival, even though three or four of the horses were not pregnant upon their arrival.
6.13 The conduct described in paragraphs 6.1 through 6.12 violates RCW19.09.100(15). Pursuant to RCW 19.09.340, violations of the Charitable Solicitations Act are per se violations of the Consumer Protection Act, RCW19.86.
6.14 Notwithstanding RCW19.09.340, the conduct described in paragraphs 6.1 through 6.12 violates RCW19.86.020 of the Consumer Protection Act.
VII. SECOND CAUSE OF ACTION
(Deceptive Failure to Disclose Use of PHH Funds and Property)
7.1 Plaintiff realleges Paragraphs 1.1 through 6.14.
7.2 From approximately January 1, 2009 to present, Defendant deceptively failed to disclose in any solicitation materials that she used PHH facilities and property, funded by solicited donations, for her own personal horse and dog breeding businesses.
7.3 Since approximately January 1, 2009, Defendant failed to disclose in various means of solicitation that she used donated funds for her personal expenses, including substantial entertainment and travel expenses.
7.4 The conduct described in paragraphs 7.1 through 7.3 violates RCW19.09.100(15). Pursuant to RCW19.09.340, violations of the Charitable Solicitations Act are per se violations of the Consumer Protection Act, RCW19.86.
7.5 Notwithstanding RCW19.09.340, the conduct described in paragraphs 7.1 through 7.3 violates RCW19.86.020 of the Consumer Protection Act.
VIII. THIRD CAUSE OF ACTION
(Failure to Segregate Restricted Donations or Apply them to Appropriate Purpose)
8.1 Plaintiff realleges Paragraphs 1.1 through 7.5.
8.2 At all times relevant to this action, Defendant failed to maintain properly segregated accounts for funds solicited and/or donated for a specific use or purpose (i.e., “restricted donations”) necessary to ensure that such funds were applied to the specific use or purpose for which they were intended.
8.3 Defendant solicited charitable contributions for the purpose of developing a horse sanctuary in California but did not hold contributions received in a segregated account or apply all donated funds to the horse sanctuary as indicated in its solicitation materials.
8.4 Defendant accepted charitable donations for the “Leg up for Kids” therapeutic riding program but failed to hold contributions received for the program in a segregated account or apply all the donated funds to the program.
8.5 Defendant solicited charitable contributions for food and veterinary care for “Baylee,” “Doxie,” and “Sid,” but did not hold contributions received in segregated accounts or apply all donated funds specifically to food and veterinary care for “Baylee,” “Doxie,” and “Sid” as indicated in its solicitation materials.
8.6 Defendant solicited charitable contributions for the purpose of funding the treatment and care of 26 horses obtained from Skagit County Animal Control beginning in May 2012, but has not held contributions received in a segregated account or applied all donated funds to the treatment and care of those horses.
8.7 Defendant accepted restricted donations for specific uses, e.g., for the purchase of hay, but failed to hold such contributions in segregated accounts or apply all such contributions to the use for which the donations were made.
8.8 The conduct described in paragraphs 8.1 through 8.7 violates RCW19.09.100(15). Pursuant to RCW19.09.340, violations of the Charitable Solicitations Act are per se violations of the Consumer Protection Act, RCW19.86.
8.9 Notwithstanding RCW19.09.340, the conduct described in paragraphs 8.1 through 8.7 violates RCW19.86.020 of the Consumer Protection Act.
IX. FOURTH CAUSE OF ACTION
(Failure to Maintain Accurate and Current Records)
9.1 Plaintiff realleges Paragraphs 1.1 through 8.9.
9.2 Since approximately January 1, 2009 to present, Defendant failed to keep records for cash on hand, a.k.a. “petty cash,” or for cash donations under $15.00.
9.3 Since approximately January 1, 2009, Defendant failed to keep records identifying the individual horses under their care on a monthly or yearly basis.
9.4 Since approximately January 1, 2009, Defendant failed to keep records of all board meetings and resolutions regarding the spending of donated funds.
9.5 Since approximately January 1, 2009, Defendant failed to keep records of employment agreements for any compensated officers, directors, or independent contractors, despite the fact that PHH paid cash and non-cash compensation to such individuals.
9.6 Defendant failed to maintain bills of sale for animals that she sold directly to PHH.
9.7 Defendant failed to maintain records of lease agreement(s) that she entered personally with PHH.
9.8 Defendant failed to maintain records of contracts, written agreements, or other similar documents entered into with commercial fundraisers or other fundraising organizations.
9.9 The conduct alleged in paragraphs 9.1 through 9.8 violates RCW 19.09.200(1). Pursuant to RCW19.09.340, violations of the Charitable Solicitations Act are per se violations of the Consumer Protection Act, RCW19.86.
X. SIXTH CAUSE OF ACTION
(Non-Compliant Use of Commercial Fund-Raisers)
10.1 Plaintiff realleges Paragraphs 1.1 through 9.9.
10.2 Between approximately January 1and December 15 of 2010, Defendant contracted for fundraising services with a commercial fundraiser for solicitation of donations from Washington consumers without complying with the requirements of RCW19.09.097 (registration requirements) and RCW19.09.100 (solicitation disclosures). 10.3 Pursuant to RCW 19.09.340, violations of the Charitable Solicitations Act are per se violations of the Consumer Protection Act, RCW19.86.
XI. PRAYER FOR RELIEF
WHEREFORE, Plaintiff, State of Washington, prays for relief as follows:
11.1 That the Court adjudge and decree that Defendant has engaged in the conduct complained of herein.
11.2 That the Court adjudge and decree that the conduct complained of constitutes unfair or deceptive acts and practices and unfair methods of competition contrary to the public interest and is unlawful in violation of the Consumer Protection Act, RCW19.86.
11.3 That the Court adjudge and decree that the conduct complained of violates the Charitable Solicitations Act, RCW19.09, and therefore violates the Consumer Protection Act, per se.
11.4 That the Court issue a permanent injunction enjoining and restraining Defendant Gretchen L. Salstrom, and her representatives, successors, assigns, officers, agents, servants, employees, and all other persons acting or claiming to act for, on behalf of, or in active concert or participation with Salstrom, from continuing or engaging in the unlawful conduct complained of herein.
11.5 That the Court assess civil penalties pursuant to RCW 19.86.140 of up to two thousand dollars ($2,000) per violation against the Defendant for each and every violation of RCW19.86.020 caused by the conduct complained of herein.
11.6 That the Court make such orders pursuant to RCW 19.86.080 as it deems appropriate to provide for restitution to consumers of money or property acquired by the Defendant as a result of the conduct complained of herein.
11.7 That the Court make such orders pursuant to RCW 19.86.080 to provide that the plaintiff, State of Washington, have and recover from Defendant the costs of this action, including reasonable attorney’s fees.
11.8 For such other relief as the Court may deem just and proper.
ROBERT M. MCKENNA
Attorney General

View Gretchen Salstrom Complaint 

View Gretchen Salstrom Consent Decree

 

Scandal Rocks Washington Horse Rescue

 

View People Helping Horses Complaint 

View People Helping Horses Consent Decree