4 Dead: Charity Uninsured For Special Event

July 2, 2007       Mark Hrywna      

A nonprofit whose charity car show went fatally wrong didn’t have insurance for the event and could pay a heavy price as the family of one of the victims has filed suit seeking $10 million in damages. In addition, Cars for Kids-Southern Style is under investigation by the state’s Division of Charitable Solicitations and Gaming for failing to register.

The first of what probably will be more lawsuits was filed in connection with the June 16 charity car show in Selmer, Tenn. (100 miles east of Memphis), that killed six people and injured at least two dozen more. A 1993 Corvette, modified for drag racing, lost control during an exhibition burnout. Cars for Kids-Southern Style, the nonprofit that has organized the car show for 18 years, does not have insurance, founder Larry Price said in a telephone interview with The NonProfit Times.

"We never had insurance, we’re just a group of people raising money," Price said. "Insurance can be a lawsuit itself." Asked if the organization has legal representation, Price would only say there are advisers. Others have identified Steven Farese, Sr. as an adviser to Price or legal representative of some kind. Messages to Farese’s office were not returned by presstime. Farese was among the defense attorneys for Mary Ann Winkler, the Selmer woman who in April was convicted of voluntary manslaughter in the death of her preacher husband.

Bruce Replogle, whose 15-year-old daughter Scarlett was among the victims, filed suit in McNairy County Circuit Court June 26. The lawsuit seeks $7.5 million in punitive damages and $2.5 million in compensatory damages and names Price and Cars for Kids as defendants, in addition to veteran drag racer Troy Warren Critchley, the driver, and Dallas-based AMS Staff Leasing Inc., which owns the car.

Criminal charges are not out of the question but the investigation is still weeks away from being complete and the District Attorney will make that decision. Tennessee Highway Patrol have interviewed more than 100 witnesses and a blood sample came back negative on the driver, according to a spokesman.

The Tennessee Department of State’s Division of Charitable Solicitations and Gaming is looking into whether Cars for Kids was registered under its 30-year-old solicitation law.

"We know that they were obviously soliciting to a limited extent," said Todd Kelley, director of Division of Charitable Solicitations and Gaming in the Tennessee Department of State. "Clearly the organization is in violation just by the virtue of soliciting and not being registered," though it’s not clear how it raised the money, something his investigation will determine.

If a nonprofit is soliciting in Tennessee, it must either register with the state or file for exemption, Kelley said. Cars for Kids would not qualify for any general exempt categories, such as a religious organization or educational institution, but it might qualify for exemption if it raised less than $30,000 from the public each year. However, judging by what’s on the Cars for Kids Web site, Kelley said, it appears the nonprofit raised more than $30,000 a year.

The investigation depends partially on the willingness of Cars for Kids to participate, whether they will turn over financial documents and advise the state as to the extent of its solicitations. Kelley said if he has to subpoena documents and witnesses, it could mean the difference of weeks versus months to an investigation.

There’s also some question as to whether Cars for Kids needed some type of approval since the parade of cars occurred on a public street, U.S. Highway 64/Mulberry Avenue. Price said the organization didn’t need any approval, while the lawsuit alleges that he failed to apply for a required parade permit from the city. The suit also claims former and current local elected officials refused permission for a permit in the past because of safety concerns.

"I hope our long-term relationship with Cars for Kids will continue, but careful evaluations and stricter precautions for public safety will be mandated," said Selmer Mayor David Robinson as part of a statement released after the accident. He did not return messages by presstime.

The lawsuit asks for an injunction to bar Cars for Kids from staging future events in Selmer without appropriate requests and a written plan of activities and appropriate safety plan. It also asks that Price be required to "establish that he is in fact a charitable organization and demonstrate where the proceeds of these funds have gone in the past and will go."

Cars for Kids files as a private foundation with the Internal Revenue Service (IRS). The most recent Form 990 available on GuideStar is from the year ending 2002, indicating about $94,000 in revenue and $80,000 in expenses, which includes $48,000 in grants disbursed to some 16 organizations. The organization listed almost $48,000 in net assets.

The Monday after the tragedy, the Cars for Kids Web site, www.carsforkidsusa.org, saw 41,000 hits, compared to the 200 to 500 hits a week it usually gets, Price said. Money is still coming in, he said, with feedback since the accident overwhelmingly positive. He said the racing team paid for the funerals for the victims and a Cars for Kids Victim Fund raised $10,000 within a week of the accident.

Price expects to continue organizing the car shows. A list of scheduled events on the Cars for Kids Web site indicates several more shows this year in Tennessee, Illinois, Missouri and Arkansas. Most organizers of the local car shows declined to comment for this story. Gene Church, who organizes a September car show in Harrisburg, Ill., said the event will go as planned, with the exception of burnouts. Not all the shows indicated that burnouts would take place.

"That was one freak accident, we don’t know why, no one knows but the good Lord above," Price said. People have spent their own money to raise funds for a good cause, he said, and "now everyone wants to run this into the ground. It’s the devil trying to run us into the ground. The driver didn’t come here to do that."

"Do people want us to keep doing this or want do they want the devil to win out on one accident in 18 years," Price said. "I don’t have to do this, I can sit at home," but handicapped and abused kids still need help, he said, adding that he made a promise to dying children to keep it going.

Price founded Cars for Kids as a promise when after his 12-year-old son, Chad, lay in a hospital bed as a result of a bicycle accident. His prayer promised that if his son was able to live he would donate the rest of his life to raising money to help kids who were injured, handicapped or in financial need. Since its inception in 1990, Cars for Kids has raised more than $2 million for charities, including St. Jude’s Children’s Research Hospital in Memphis, Muscular Dystrophy Association and Easter Seals. According to its Web site, the group raises more than $200,000 annually.

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