California Attorney General Xacier Becerra is aiming to dissolve two nonprofits based in Carmel, and bar the family members involved from operating nonprofits in California.
That's in addition to seeking penalties, damages and some $500,000 in allegedly illegally raised money, according to a lawsuit filed Monday in Alameda County Superior Court.
The lawsuit, against two nonprofits—Wounded Warrior Support Group and Central Coast Equine Rescue and Retirement—claims that Matthew G. Gregory, his wife and their two two adult children raised money for charity through illegal raffles, then spent the money on themselves and their daughter's show horse hobby.
"Although WWSG advertised that raffle proceeds would support veterans through a therapeutic equestrian program, no such program has ever existed," according to the lawsuit. "Instead, virtually all of the money that donors gave to help injured veterans was used by members of the Gregory family for personal expenses, hobbies and for their for-profit business."
That business is Gregory Motorsports, located in Fresno County, and a key fundraising mechanism for the two nonprofits has been raffles at car shows.
According to WWSG's form 990s, which nonprofits file with the IRS in lieu of tax returns, the organization raised $381,416 in donations in 2014. Of that, they spent nearly $57,000 advertising, $21,000 on office expenses, $57,000 on conferences and conventions and put $152,000 in the bank.
In addition, that nonprofit gave $94,000 to Central Coast Equine Rescue and Retirement, which in turn spent $94,000 caring for horses.
Those horses were intended to become part of a therapy program for veterans, but that program never quite materialized. Instead, the Attorney General claims, the donated money went toward personal use—including dressage equipment and horse care, as well as other personal expenses like eating out and shopping at Victoria's Secret, Nordstrom, Macy's and other stores.
Matthew G. Gregory, the father, said Tuesday that a call from the Weekly was the first he'd heard of the lawsuit.
"I never intended to break any law, and never used a CPA, or any attorney," he says. "This has just been a family winging it, the way it should be."
Gregory, along with his wife, Danella, and children Matthew J. Gregory and Gina Gregory, are named in the complaint.
As a U.S. Army veteran who trained in Fort Ord, Gregory describes his long-held dream to open an equestrian recovery center for veterans in the Carmel area: "If we save one life—if we meet one mother or one father, and can direct them to the right help—it's worth it," he says.
Gregory says the complaint is baseless, and blames a government he views determined to sink his organization in particular: "Basically I have to prove innocence, which is so typical of this government. The Attorney General basically picks and chooses who they will allow to operate. The government basically has made it impossible for us to make this charity stand as a business, and all charities are a business."
To that end, Gregory still views the organization as a business venture: "We tried to comply with the law. We never had a charity, we had a startup, it was my money that started the thing," he says.
"We found out the only way you could raise money for any cause was through a raffle or a drawing."
Gregory says they've raised enough money for three horses and to send his daughter, Gina—who is also named in the complaint—to a training program to become an equestrian instructor.
As for the alleged Victoria's Secret and other clothing expenses, Gregory says those were gifts for volunteers staffing raffles and other fundraising activities: "We buy them a little gift, maybe a bra or panties."
But the Attorney General isn't having it. The lawsuit seeks an order blocking all four Gregory family members from operating nonprofits in California, and to dissolve the two named organizations and distribute the money via a court-appointed receiver.
“It’s a breach of the public trust to deceive and exploit the goodwill of generous Americans," Becerra said in a statement. "It's worse when you do so at the expense of our veterans. I will vigorously investigate and prosecute any charity falsely claiming to help our veterans.”
As for Gregory, he believes he'll be exonerated in court: "They will find out the charity probably still owes me $800,000."
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