By Dave DeLuca
What would you say if I told you that one man, living in a massive Mexican resort, was collecting tax-free profits from reselling used clothing to third world countries? That people like you put those clothes in bins operated by dozens of different charities who promise to fight global warming or provide clean water to African villages. That money raised from the sale of the donations was actually being laundered and eventually stashed in the Cayman Islands. What if I said that most of the people involved in the process of maintaining the bins were volunteers who had no idea their hard work ensured the continued lavish lifestyle of the protagonist in this amazing tall tale?
Here’s the catch: hundreds of media outlets, Interpol, and the FBI all believe this story is 100% true. And, 11 of those clothing donations bins are now here in Corvallis.
The man believed to be behind the scam is Morgens Amdi Petersen. He founded a Danish charity named Tvind. The charity is alleged to have formed a series of non-profit and for-profit organizations throughout North America, Asia, Africa, and Europe. Some of these organizations are USAgain, Campus California, Humana People to People, IICD, Planet Aid, Gaia Movement, and several more. These charities are operated largely through volunteer labor and run by board members allegedly hand-picked by Petersen.
With permission from private business owners, large donation bins are placed in the parking lots. The bins are labeled with vague messages about both local and global efforts promoting environmental and human rights causes. The bins collect hundreds of pounds of used clothing donations. The charities then collect the contents of the bins and bag them. Some of the bags are sold to local retailers, but the majority of the clothes get shipped to a used clothes broker in Atlanta named Garson & Shaw. G & S, which incidentally is owned by Tvind, then sells the clothes in developing countries.
The operating costs of such a financial empire are minimal. Their manpower is mostly volunteers. The sellable commodities are donated and few, if any, taxes are paid due to the non-profit status of the charities. Their only real expenses are the donation bins, trucks to pick them up, and shipping costs. Tvind has been accused of owning all the different organizations participating in the used clothing business, allowing them to inflate the value of the clothes in a common money laundering technique known as “transfer pricing” or “transfer mispricing.”
The story is as confusing as it is clever. And, due to an intricate web of international money and commodity transferring, it’s almost, but not quite, impossible to prosecute.
In 2001, The FBI launched an investigation of Tvind, which they referred to as “a loosely structured collection of organizations established in Denmark in 1967.”
The report filed by the Bureau stated: “Tvind derives income from the creation of developmental aid organizations. Money is raised by the collection of used clothes. The clothes are recycled and sold in third world countries. The proceeds are sent to charitable trust funds established in off shore tax havens.”
The report continued: “A number of these groups are operating in the United States. They include: UFF, Development Aid from People to People, Humana People to People, Institute of International Cooperation and Development, and Planet Aid. In each of these organizations the funds are ultimately controlled by captioned subjects who divert the money for personal use. Little to no money goes to the charities.”
At the same time that the FBI was investigating Tvind, a public prosecutor investigated Petersen himself back in his hometown of Holstebro, Denmark. The charges levied overseas included embezzlement and tax fraud. The Danish report stated that through the use of multiple related charities, Tvind was producing income from ship and container leasing, operation of factories, production and trade of containers, and the sale of clothes. In other words, Tvind was selling bins and clothes back and forth between its different charitable entities.
The report also included a document written by Petersen which explained the deceptive nature of Tvind’s finances:
“Funds are placed so that at any time they are available to us, that they are never available to others, that they are protected from theft, taxation, and prying by unauthorized persons, that the joint ownership is ensured and to lay down a twisted access path with only ourselves as compass holders.”
The Danish report also stated that “no major decisions on the situation of the Foundation are made without (Petersen) being involved, and that Amdi Petersen exercises his authority on the Foundation through ‘LG’s Economy.’” In effect, this meant all of the charities controlled by Petersen had boards of trustees which answered directly to him.
As a result of the two investigations, Petersen and six of his closest followers were arrested at LAX in February of 2002. The group was extradited to Denmark to stand trial for tax abuse and abuse of trust. Sten Byner, one of Amdi’s followers, eventually confessed to fraud. The rest of the group was acquitted in a lower court in 2006. They were set to be tried again on appeal, but fled the country. Amdi’s right hand man, Paol Joergensen, was captured and convicted of fraud in 2009. He served two-and-a-half years in a Danish prison. Petersen and his remaining cohorts have not been caught again, despite standing Interpol warrants. Many believe that Petersen still controls the finances of a long list of clothing recycling charities. The Chicago-based non-profit Gaia Movement is one of the charities believed to be under the leader’s control, and is actively collecting clothing donations in Corvallis with its big green bins.
There has been no shortage of media outlets reporting on the activities of Tvind. Hundreds of articles have been written attempting to expose the still expanding clothing scam. Chicago Tribune reporter Monica Eng was a former student in Tvind’s Institute for International Cooperation and Development (IICD) in 1992. In 2004, she co-wrote an article entitled “The Green Bins of Gaia.” The article quoted former Tvind leader Steen Thompson, who outlined how used clothing was exchanged among Tvind companies to inflate its value. “It is sold gross to private companies at symbolic prices and then resold to other companies or to the public.”
Eng’s research also connected Gaia, which was not mentioned in the FBI or Danish reports, to Tvind. Funds from one of Tvind’s central treasuries were used to launch Gaia Movement. $60,000 was transferred from the Massachusetts-based Tvind clothes collection charity, Planet Aid. Memos gathered from Tvind show how the money was used to purchase the bins now found in cities from Chicago to Corvallis.
Gaia declared in tax filings that between 1999 and 2002 virtually all of the $2 million it reaped was spent on environmental programs. However, according to the Chicago Tribune, tax reports showed more than 96% of Gaia’s income went to running the clothing resale business. Gaia’s director claimed those were legitimate charitable program expenses, because their resale business diverted textiles from landfills.
What do the local Gaia Movement representatives have to say about the dizzying dilemma?
Kevin Escobar is the operations manager for Gaia Movement in Oregon and Washington. He runs all aspects of the operation from hiring drivers to setting up routes to budgeting. He is passionate about trying to keep textiles out of the waste stream, and uses his job as an opportunity to educate the public on how much Americans throw away. He explained how there are currently 11 Gaia Movement bins in Corvallis, one in Philomath, and 10 in Albany. The donations from the bins are taken to Portland for packaging. Some of the packages are then sold to Saver’s in Salem, more commonly known as Value Village. The rest are most likely sold to Garson & Shaw or another company like Pacific Clothing. However, he is unsure about exactly where all of the clothes are sent after he and his staff prepare the bags for shipping.
One of the supposed trademarks of Tvind charities is the use of vague environmental promises. The Gaia Movement bins here are labeled with the message “Together We Practice Acts of Greenness.” There are columns listing both local and global examples of the supposed greenness.
Some of the bullet points listed for local acts include:
- Mobilize volunteers for beatifications and clean-up projects.
- Establish community rain and vegetable gardens.
- Donate books and toys to people in need.
When asked about the labels, Escobar indicated those bullet points represented their eventual goals. For now, though, they are still trying to establish the basics of their operation to become economically sound and profitable.
When asked about the relationship between Gaia Movement and other so-called Tvind charities, such as Gaia Movement Trust in Switzerland, Escobar said that there was no business relationship. However, he did state, “One example of an international project goes like this, though: we contribute five grand to them so they can write grants to the World Bank saying, ‘We want to dig wells in Africa using such and such group, Gaia Movement USA is giving us this money, will you match it?’ World Bank then contributes 10 grand and as a result, Gaia USA has tripled our money and funded projects of clean water in Africa. This is a real example (although I’m not positive on the numbers). I don’t believe they are involved in all our projects, though, I think they also have clothing collection bins but their organization is completely independent of ours.”
While Petersen and his friends have been able to remain free from arrest and prosecution, there’s certainly enough evidence to suggest people should hesitate before dropping off their apparently valuable old clothes in those green bins around Corvallis. If you’re not sure your donations are being used appropriately, donate them somewhere else. And ask those charities collecting clothes exactly where your donations will go.
For more information on Gaia Movement, go to their website www.gaia-movement-usa.org. For information on Morgens Amdi Petersen and Tvind go to www.culteducation.com, www.tvindalert.com, www.humana-alert.org.uk, or http://IICDwatch.bravepages.com. Other sources used for this article include the Chicago Tribune, NUVO (Indianapolis), Bangor Daily News, KIRO 7 News (Seattle), East Bay Express (Oakland), The Patriot Ledger (Massachusetts), The Observer (London), Interpol.gov, and FBI.gov.