More than a month after California ordered Flipcause to shut down for withholding donations from nonprofits, officials have not said whether the Oakland-based company complied with the order.
After 31 nonprofits complained to the Department of Justice that Flipcause was withholding more than $500,000 in donations, the attorney general issued a cease and desist order.
Nonprofits across the country have told Oakland Voices that the company is withholding more than $2 million in charitable contributions from their organizations.
Although Flipcause’s website is still live as of Dec. 16, no Flipcause staff were observed at their 101 Broadway address. Their Oakland business license expires this month.
Attorney General Rob Bonta ordered Flipcause company to provide an accounting of its assets and clients dating back to 2015. Flipcause was supposed to transfer all its assets to a blocked bank account by Dec. 12.
Neither the attorney general’s office nor Flipcause has responded to inquiries from Oakland Voices about the status of the order.
First action taken against charitable fundraising platform
Nonprofits across the country have told Oakland Voices that the company has withheld more than $2 million.
The Flipcause case appears to be the first action taken against a charitable fundraising platform since California’s landmark legislation, AB 488. The 2021 law expanded the authority of the attorney general’s office and required platforms to register with the state and file annual reports. The law took effect in 2024.
According to the order, Flipcause had 30 days to respond or appeal. It is unclear if Flipcause has complied with the order.
Oakland Voices contacted Flipcause and its CEO Sean Wheeler, both named in the order. Wheeler did not respond to an email requesting comment.
Oakland Voices also filed a California public records act request with the attorney general. We also contacted the attorney general’s press office to confirm if Flipcause complied or appealed the decision. The office did not respond to questions either.
Flipcause in court this week
On Friday, Dec. 19, U.S. District Court Judge Jon S. Tigar is scheduled to hear arguments on whether to issue a preliminary injunction against Flipcause and its CEO, Sean Wheeler. A federal lawsuit brought by 29 plaintiffs from 18 states accuses Flipcause, Wheeler, and co-founder Emerson Ravyn of fraud.
If granted, the injunction would stop Flipcause from taking actions with the plaintiffs’ funds while the case proceeds.
Stripe stops processing payments to Flipcause
Besides opening its books and transferring its assets within 30 days, the order required Flipcause to provide a copy of the order to all employees, owners, directors, and nonprofit using its services within 10 days.
While no organization contacted by Oakland Voices received any notification by Nov. 22 about the order, Flipcause recently announced an “unexpected development” on its dashboard.
In a Dec. 6 announcement to Flipcause users, the company notified its users that payment processor Stripe discontinued processing new online transactions.
“This decision was made by Stripe with minimal notice to us, and it impacts all future payments processed through the Flipcause platform,” according to the announcement. Flipcause said it would refund portions of users’ subscriptions if they transitioned from the platform. Users would receive funds “in the coming weeks,” Flipcause said.
“If you decide to fully transition away from the Flipcause platform and website services, any unused portion of your subscription will be refunded to your account upon completion of that transition,” Flipcause announced. “Additionally, any pending balances within your Flipcause account will be reconciled in the coming weeks.”
The announcement did not mention the attorney general’s orders.
Stripe did not respond to a press inquiry from Oakland Voices about its relationship with Flipcause.
Flipcause penalized $70,000 for noncompliance
The attorney general also fined Flipcause $70,000 for operating without being registered and for not filing annual reports.
The fines included $34,000 for not filing annual reports for two years. The first annual report was due in June 2025. The attorney general’s office did not respond to a request to explain how it assessed penalties for a time period before the requirement for platforms to file annual reports took effect. No other company submitted an annual report before 2025.
Oakland Voices recently reported that nearly one in five donation platforms have not complied with the state’s registration requirements.
Flipcause could face more penalties, contempt
According to the order, the penalties would become effective 30 days after the notice. Payment was due to the Department of Justice on Dec. 12, unless Flipcause filed an appeal. Penalties would accrue at a rate of $100 each day until Flipcause shut down and provided written confirmation of compliance with the order.
Under California law, the California attorney general may determine if Flipcause failed to comply and refer the matter to a superior court. It is unclear if the attorney general will do so.
FLIPCAUSE FINED
California fined Flipcause $70,000 (and counting) under a 2021 charitable fundraising platform law.
- Failing to comply with registration requirements as a charitable fundraising platform $2,000.00 ($1,0000 x 2 years)
- Acting as a charitable fundraising platform without being registered $17,000.00 ($1,000 x 17 organizations)
- Failing to remit donations to the charitable organizations within five business days $17,000.00 ($1,000 x 17 organizations)
- Failing to file annual fundraising reports (Form PL-4) by January 15 of each year $34,000.00 ($1,000 x 17 organizations for 2 years)
Dear Mr. Shabazz
Your efforts to research and report the facts of this situation in a manner readers are willimng and able to digest is a gift to the nonprofit community.
Mark W.