Company behind mattress fundraisers not compliant with state regulations for years

STOUGHTON, Mass. — No one could miss the group of students outside Stoughton High School, waving signs and making noise one Sunday morning in October. They yelled, played musical instruments, even dressed in mattress costumes to lure people to the school.

Behind them, bright orange banners advertised "POPS Mattress Fundraiser," promising, "30 to 50% off retail," to benefit the Parents of Performing Students, a non-profit organization in Massachusetts.

The sales pitch was good enough to attract Tamika Grady and her family.

"We were just looking for a new mattress," Grady said. "We just assumed it was all going to the kids because it seems like it's a lot of students working it."

Richard and Linda Rinaldi also wanted to help a good cause.

"We knew some of the proceeds were going to the marching band, so we thought we'd help," Linda said.

No one would know from the signs or banners outside Stoughton High that morning, but there was a commercial company making a profit off of this fundraiser: Custom Fundraising Solutions Boston South.

CFS Boston South has organized hundreds of mattress fundraisers in public schools across Massachusetts, but according to the Massachusetts Attorney General's Office, the company was operating out of compliance with state regulations. Promotional material used by CFS Boston South indicate the company was not in compliance for several years, dating as far back as 2013.

The company is also not registered as a business with the Secretary of the Commonwealth.

"I became increasingly concerned, like, 'What is going on with this company?'" said Christine Potts, former president of the Medfield Music Association.

Potts became an outspoken critic of CFS Boston South after she began digging into the company's business practices, including the recruitment of students to help sell its mattresses and a lack of transparency.

"I believe they make their formula very confusing about how much they're committing to giving back," Potts said.

The company sold 43 mattresses out of Medfield High School on Sept. 22, according to CFS owner Jack Isaacs, and handed over an $8,000 check to the music department.

"It makes it for a very easy fundraiser," Medfield Music Director Jason Bielik said. "They provide all of the fundraising materials, all of the signs, all of the fliers, all of the digital media," Bielik said.

The Massachusetts Attorney General's Office website spells out the requirements and best practices for commercial co-ventures.

"If asked, a fundraiser must accurately disclose the percentage of funds that will go the charity," according to the website.

However, Isaacs wouldn't say what percentage of the gross profits actually went to the students.

"What we do, whether it's mattresses, sheets, pillows, [or] massage chairs, we gather all those receipts up, and they get paid based on volume incentives and also based on what size mattresses they get, and they get a check in about two weeks," Isaacs said in an interview on Sept. 22.

Commercial co-ventures are required to file annual financial reports and individual reports from every fundraiser.

A Massachusetts Attorney General's Office spokesperson said CFS Boston South was working with the state on a "compliance issue," and had not filed the required documents or charitable contracts for years.

"I learned of the requirements for state compliance after launching my business, which is not uncommon," Isaacs wrote in a statement to Boston 25 Oct. 22.

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"At this time, all necessary documents have been filed and are in the process of being reviewed by the appropriate parties. Our fundraising partnership with local schools is still active and we remain in good standing," Isaacs wrote.

After Potts complained over the summer, Isaac filed a Form 10B with the Attorney General's Office ahead of the Sept. 22 Medfield mattress fundraiser.

According to the form, Isaacs wrote CFS Boston South would donate, "an unspecified dollar amount to the charity."

Below, under, "approximate percentage of gross receipts that the charitable organization will receive," Isaacs wrote "40-60%" from an estimated $5,000 gross.

Custom Fundraising Solutions was formed in Ohio in 2005 and has 93 franchise locations across the country, according to its website.

Charitable records from North Carolina show, "Custom Fundraising Solutions of Raleigh, Inc." gave between 9-19% of the profits to charities in 2017-18, far less than the 40-60% estimated in Medfield on Sept. 22.

"The number one best practice [is to] tell them exactly how much of your purchase price is going to charity," said Robert Laplaca, a Connecticut attorney who specializes in charitable law.

"Don't just say the money is going to charity. Let the people make an actual decision of how much it is," Laplaca said.

The parent company of CFS has had financial and legal issues nationwide.

"Custom Fundraising Solutions, LLC" filed for bankruptcy in Delaware district court in Oct. 2018.

"Mattress Firm" and "Custom Fundraising Solutions, Inc." were also included in that bankruptcy petition, filed in U.S. Bankruptcy Court for the District of Delaware.

The state of Washington shut one CFS business down for, "deceptive acts or practices" after it failed to register as a commercial fundraiser in 2015, according to court documents.

CFS agreed to, "cease operating" until it, "successfully registered as a commercial fundraiser with the Washington Secretary of State," documents show.

The state of Wisconsin listed "Custom Fundraising Solutions of Wisconsin" in its "Biggest Delinquent Taxpayers" of 2016 and 2017 for owing $58,475.53, according to local news reports.

There are more than 3,000 charities and hundreds of commercial co-ventures in Massachusetts, according to the Attorney General's Office.

Because there are so many, Boston attorney Russell Stein said state regulators often depend on complaints from consumers to find out if someone is not following the law.

"Most states, including Massachusetts, don't regulate [charities and commercial fundraisers] proactively," said Stein. "They don't have the personnel to go out and make sure whenever there is a fundraiser. Most of it is reactive," Stein said.

Stein said it falls on the consumer and the charities to ask the right questions.

"You should try to get as much information as you can about the actual event," Stein said. "Ask questions [like] who is doing the selling? How much money is my charity going to get?"

Potts said she believes the CFS Boston South mattress fundraiser diminished the reputation of the Medfield Music Association.

"If you want your music program to be treated seriously, then why are you putting your students in mattress costumes on the street?" Potts said.

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