Attorney General Schwalb Announces Permanent Shutdown of Nonprofits That Exploited DC Kids and Misled Consumers

Attorney General Schwalb, along with Maryland Attorney General Anthony Brown, Maryland Secretary of State Susan Lee, and Virginia Attorney General Jason Miyares, today announced that two fraudulent nonprofits, Maryland Youth Club of America, Inc. (Maryland Youth Club) and Virginia Youth Club of America, Inc. (Virginia Youth Club), will permanently shut down and that their founder, Jule Huston, as well as other officers and directors, are banned from doing any business or soliciting charitable donations in the District. Huston is also barred from forming a charity or soliciting charitable donations in Maryland and Virginia, and from serving as an officer or director of any Maryland or Virginia charitable corporation.

The settlements resolve a joint investigation by the Attorneys General of DC, Maryland, and Virginia, and the Maryland Secretary of State, which uncovered evidence that Maryland Youth Club and Virginia Youth Club recruited school-age children from low-income neighborhoods to sell candy door-to-door, telling people that the proceeds would fund scholarships and enrichment activities for at-risk kids, when in fact the adults running the program illegally used the funds for their own personal benefit.

"For too long, Maryland Youth Club, Virginia Youth Club, and Jule Huston engaged in an illegal scheme that exploited both DC children and the generosity of DMV residents," said Attorney General Schwalb. "I am grateful for the partnership of Attorney General Brown, Secretary of State Lee, and former Attorney General Miyares in putting an end to this unconscionable conduct. As the District's independent Attorney General, I will continue to use every tool available to my office to protect young people and keep our community safe from fraud and financial exploitation."

Maryland Youth Club is a tax-exempt nonprofit incorporated in Maryland that was registered to do business in DC. Virginia Youth Club is a tax-exempt nonprofit incorporated in Virginia and registered to do business in DC. Jule Huston, a New York resident, served as president of both organizations.

Both Maryland Youth Club and Virginia Youth Club claimed that their purpose was to support youth programs and activities intended to "rescue teens from challenging environments before they become statistics" through scholarships, trips, enrichment activities, part-time employment, laptops to support their education, and other benefits. The organizations recruited middle-school- and high-school-aged children who lived in low-income neighborhoods, including in DC's Wards 7 and 8, and drove them to more affluent neighborhoods to sell candy door-to-door. The children were instructed to tell buyers that their candy purchases would support charitable activities benefitting youth.

The Office of the Attorney General for the District of Columbia (OAG) opened an investigation with authorities from Maryland and Virginia, where the organizations were based. The joint investigation found evidence that:

• Maryland Youth Club and Virginia Youth Club failed to uphold their charitable purposes. Between 2018 and 2022, Maryland Youth Club and Virginia Youth Club collected over $857,000 in gross candy sales, but the organization was unable to show that children were paid for their work soliciting donations, or that they received any trips, scholarships, or other benefits. Dozens of DC kids likely sold candy for these groups, and at least 49 DC kids sold candy for a related organization run by the same people and with a similar business model.
  
• The organizations misled consumers by falsely claiming that candy purchases would support at-risk youth.
  
• Maryland Youth Club's president, Huston, illegally diverted charitable funds for his own personal benefit and the benefit of other private individuals. Huston transferred a total of more than $23,000 from Maryland Youth Club's bank account to his personal CashApp account, his mother, a New York corporation he created, and an officer of Virginia Youth Club. Maryland Youth Club also incurred significant expenses in New York, where Huston resides, from local gas stations and Petco, AutoZone, and Walmart locations, and other businesses. A large amount of the funds collected by Maryland Youth Club and Virginia Youth Club remain unaccounted for.
  
• Huston intentionally and illegally destroyed nonprofit financial records. He destroyed financial books and other records for the Maryland Youth Club for 2020, 2021, 2022, and 2023.

Under the terms of a settlement agreement resolving DC's allegations that Maryland Youth Club, Virginia Youth Club, and Huston violated multiple DC laws, including laws governing nonprofits and laws protecting consumers:

• Maryland Youth Club and Virginia Youth Club will be permanently dissolved. The organizations have stopped doing business during the multistate investigation. Now, Huston must take all necessary steps to formally dissolve Maryland Youth Club in Maryland and Virginia Youth Club in Virginia, and must provide documentation of dissolution to DC.
  
• Huston and other directors, officers, agents and employees of Maryland Youth Club and Virginia Youth Club are permanently banned from doing business in DC, including seeking charitable donations from individuals in DC. Huston is also specifically and permanently banned from serving as an officer, director, or in any fiduciary position in any DC nonprofit or trust, and from engaging in any charitable solicitation in DC, including by serving as a consultant or advisor to a charity.
  
• Maryland Youth Club, Virginia Youth Club, and Huston will pay a $5,000 fine that will be redirected to area nonprofits that serve at-risk youth.

The District's settlement agreement is available here.

Under the terms of separate settlements with Maryland and Virginia, Maryland Youth Club, Virginia Youth Club, and Huston are permanently barred from creating any charitable organization, soliciting charitable contributions, or serving as a professional solicitor of charitable funds in Maryland or Virginia. These settlements also specifically prohibit Huston from serving as officer or director of any organization raising charitable funds in Maryland or Virginia and allow Maryland and Virginia to immediately seek or obtain judgment against Huston, Maryland Youth Club, and Virginia Youth Club for the full amount of misappropriated funds if they violate any term of the agreement.

This matter was handled by Assistant Attorneys General Cole Niggeman and Cara Spencer, Investigators Willie Haynes and Kenithia Alston, and Antitrust and Nonprofit Enforcement Section Chief Adam Gitlin.

About the District's Nonprofit Corporation Act

Under the District's Nonprofit Corporation Act (NCA), the Attorney General has the authority to police nonprofit activities and ensure that nonprofit entities operating in DC spend their funds to serve their stated missions. Nonprofit organizations are set up to benefit the public, and nonprofit funds cannot be spent to benefit a private individual or company-especially an individual who has influence over the organization.

OAG's Nonprofit Enforcement Work

Since becoming an independently elected Attorney General's office, OAG has steadily expanded its capacity to enforce District laws governing nonprofits. Last year, OAG sued the former Treasurer of an elementary school's parent-teacher organization for misusing nonprofit funds and secured a settlement requiring her to return the misappropriated money. OAG also sued the former executive director of a local affordable housing nonprofit who diverted more than $1.25 million to pay himself unauthorized bonuses.

Previously, the office secured a revised deal to sell the nonprofit Providence Hospital campus for redevelopment that protected $5 million in healthcare resources for the District and ensured that the proceeds of the sale of property owned by an affordable-housing nonprofit would still be used to provide affordable housing in the District. OAG also resolved an investigation into the Coast Guard Auxiliary Association for improper payments to its Board President, and a civil action against Delta Phi Epsilon, Inc. for using nonprofit funds for personal gain.

If you suspect that a nonprofit or officer of a nonprofit doing business in the District of Columbia is violating District law, please contact OAG at (202) 727-3400 or at [email protected].

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