- The Washington Times - Wednesday, August 2, 2006

The fundraising arm of Children’s National Medical Center in the District yesterday dropped a federal lawsuit against a top company executive whom the charity accused of mismanaging nearly $700,000 in vehicle donation proceeds to fund pediatric health services.

Attorneys for the Fairfax-based Babcock Agency and Children’s Hospital Foundation filed documents in federal court in the District yesterday, saying they had reached a settlement in the case. The case was filed in January 2005.

The fundraising scandal prompted the foundation to scrap its heavily advertised car donation program.

Lewis Weiner, an attorney for the foundation, yesterday said the terms of the settlement are confidential. Geoffrey S. Gavett and Scott Ives, attorneys for the Babcock Agency and its chief executive, Gregory Babcock, declined to comment.

According to the foundation’s lawsuit, Mr. Babcock and other executives began a Fairfax-based company now known as Charity Vehicle Systems, which in 2001 began managing the charity’s vehicle donation program.

The lawsuit said Charity Vehicle Systems and its officials misled foundation officials about the proceeds it collected in 2002 and 2003, tried to cover up a massive accounting shortfall and used some funds to expand unrelated business at the Babcock Agency, which was named as a defendant in the case.

The foundation also stated that funds were “diverted from, or not deposited into, escrow accounts established for Children’s.”

Mr. Weiner said yesterday the settlement does not include Richard Murray, former chief operating officer of Charity Vehicle Systems.

Yesterday’s settlement dismisses the foundation’s claims against Mr. Babcock, the Babcock Agency and Mr. Babcock’s wife, Ruth Song Babcock, who also was a company official and recently filed for bankruptcy in the District.

“Mr. Murray remains the sole remaining defendant,” Mr. Weiner said.

The attorney said the foundation plans to pursue its claims against Mr. Murray, who has relocated to Texas, “by all means necessary.”

The lawsuit prompted charges and countercharges among Charity Vehicle Systems executives.

Mr. Babcock stated in legal documents he filed that he “did not have any proactive role in the day-to-day operations of this entity,” saying Mr. Murray and chief marketing officer Daniel Corrigan ran the operation.

Mr. Babcock also said he and Charity Vehicle Systems first alerted the foundation about possible problems concerning the handling of vehicle donation proceeds.

Mr. Murray said in a previous phone interview with The Washington Times that he and Mr. Corrigan “were out of the company when a lot of this came down.”

An attorney for Mr. Corrigan, who previously settled with the foundation, called his client “a minor figure” in the business.

The foundation contracted out its charitable vehicle-donation program to the Charity Vehicle Systems on a trial basis in December 2001 before signing two one-year agreements with the company, court records show.

Vehicle donation programs are common among charities, which solicit the cars and trucks, usually by touting the tax benefits. Some nonprofits then outsource the towing and selling process to private firms in exchange for a percentage of the final sale price.

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