Authorities in the state claim that the “American Cancer Society of Michigan” was a fraudulent charity. not even a credible imitation.
For starters, it wasn’t in Michigan. A rented mailbox on Staten Island in New York City was given as the organization’s address when it submitted an application to the IRS in 2020 to become a tax-exempt nonprofit. Neither was it the American Cancer Society: Actually, Ian Hosang, the group’s leader, had been conducting a scam and the actual American Cancer Society had already informed the IRS of this.
The group received IRS approval despite this. A short while later, it also gave the go-ahead for another business managed by Hosang, “the United Way of Ohio,” which was likewise registered to a Staten Island address.
In New York, Hosang, 63, is now being charged with conducting a long-standing charity fraud that has alarmed nonprofit watchdogs and regulators, and raised questions about the IRS’ capacity to act as the system’s gatekeeper.
not because the purported scheme was so successful.
since it was awful. It was effective.
Hosang, a convicted stock market scammer once charged with hanging a man from a skyscraper, persuaded the IRS to approve 76 charitable organizations, frequently in spite of clear signs of possible fraud. His enterprises used names taken from more well-known nonprofits. Where they clearly weren’t, they claimed to be.
However, the IRS continued to answer in the affirmative. As a result, the agency has come under fire for its new fast-track method for approving charities, an innovation put in place to deal with backlogs and budget constraints that, according to agency figures, currently rejects only one application out of every 2,400.
On allegations of grand larceny, identity theft, and orchestrating a fraud scheme, Hosang was indicted in the Brooklyn district of New York City in May. He has asserted his innocence. According to the Brooklyn district attorney, he took around $152,000 in donations that went through 23 of his charitable organizations. Hosang didn’t have to do much to market the organizations because donations poured in from websites that let donors choose from a list of nonprofits that have received IRS approval.
Prosecutors claimed that Hosang used the funds to pay his mortgage, credit card bills, and alcohol purchases.
“I did very wrong. I know that,” Hosang said in an emotional interview with The New York Times at his home in Staten Island. His voice breaking, Hosang said he had changed his life after a near-death spike in blood sugar in 2020, which he took as a sign from God. He said he wanted to make restitution for what he had done.
But, Hosang pointed out, every one of his charities had been approved.
“If you file something with an agency,” he said, “and they approve it, do you think it’s illegal?”
Hosang was born in Trinidad, raised in Brooklyn, and earned a degree in finance from New York University in 1984. He ended up on Wall Street’s dark side after being charged with orchestrating “pump and dump” operations that tricked investors into paying high prices for inferior stocks.
Later, according to prosecutors, Hosang and his friends recruited salesmen on the subway, gave them marijuana as payment, and collaborated with a Gambino crime family associate. Investigators claimed that once, when a rival came to complain, Hosang and the gang associate “dangled him out the window of the ninth-floor office.”
He was prohibited from the industry in 1997 by a self-regulatory organization at the time known as the National Association of Securities Dealers.
He entered a guilty plea to federal charges of fraud and money laundering in 1999. Yusuf El Ashmawy, Hosang’s counsel, claimed that Hosang worked with the police and contributed to the conviction of 150 persons. According to federal records, he served about two years in federal prison.
Hosang concentrated on a new company after being freed. The American Cancer Society for Children, Inc. was a new nonprofit that he requested tax exemption for in 2014, according to federal records. The American Cancer Society was not involved.
He took over management of the operation when the agency was already ill-equipped to spot fraud in incoming applicants.
The first issue, according to former IRS officials: Tax law does not forbid nonprofits from imitating more well-known nonprofits by using names that are similar to those of those organizations. The second is that there are no organized procedures for looking into past fraud.
Examiners who suspected fraud may delay applications by requesting financial records, future plans, or details about their officials. The requests were frequently a ploy to stop applicants from moving further, even though the agency had little jurisdiction to stop them if they did.
Nevertheless, Hosang succeeded. According to IRS data, the organization authorized 17 of his requests for organizations with the name “American Cancer Society” between 2014 and 2018.
The actual American Cancer Society was alerted by that. The group started getting in touch with state attorneys general, who frequently have the authority to close down shady NGOs in their areas. Although the state-by-state strategy was delayed, it was successful in North Dakota, Washington, and California.
The American Cancer Society agreed in 2018 that a national strategy was necessary. It described the pattern it had seen in Hosang’s groups in a letter to the IRS.
“It feels a little like ‘Scooby Doo,’” said Meghan Biss, a former IRS lawyer who represented the American Cancer Society. “It shouldn’t have been that hard to figure out who the bad guy was.”
“Using the exact same mailing address? ‘I am the American Cancer Society of, like, 19 different cities?’ she said, adding, “That didn’t raise flags to anyone?”
But then, in 2020, the agency approved four new groups connected to Hosang: The “American Cancer Society” of Michigan. And of Detroit. And of Green Bay. And of Cleveland. Same Staten Island mailbox.
