PRIOR LAKE, Minn. - A fundraising business accused of ripping off small businesses across Minnesota now faces a lawsuit by Attorney General Lori Swanson.

Swanson told KARE 11 she aims to shut down Dad’s Fundraisers, also known as Moms and Dads For Kids, and keep its owner Mike Gerken from doing business in Minnesota. 

KARE 11 first exposed Gerken’s businesses in February after more than a dozen small business owners from throughout the metro told us they’d given him money for advertising space on school fundraising cards and gotten nothing in return.

On his website, he claims to own the “#1 Fundraiser in the USA.”  But KARE 11 discovered a history of complaints, actions by state regulators and court judgments against Gerken and his companies.

The companies claim to run fundraisers for school and youth groups. Gerken sells advertisements on coupon cards and then kids sell the cards, which also offer access to a website with additional deals.

Gerken keeps the money from the advertising he sells and receives 20 percent of the money the kids collect when they sell the coupon cards.

However, local business owners who paid hundreds of dollars to advertise on those cards say Gerken never made their ads, kids never sold them and, in some cases, there was not even a local fundraiser.

The Attorney General’s office received similar complaints and launched an investigation. In all, Swanson says they have spoken with more than 25 business owners who say Gerken took their money and never delivered promised advertising.

In the complaint, she calls Gerken’s business “deceptive, fraudulent and unlawful.”

“It was really ripping off people’s generosity, them wanting to help the community and it’s a lot of money too.  Some of these businesses paid as much as $2,000,” she said in an interview Tuesday.

The cases of nine of business owners were detailed in the lawsuit.

One of them was Vicky Biren, an Elk River realtor profiled in KARE 11’s investigation. She says Gerken told her that her banner ad would appear on fundraising cards sold by local school athletes.

Biren, who gave Gerken $790, told KARE 11 she was excited about the opportunity to promote her business and be involved in a school fundraiser.

“I think that appeals to a lot of people,” she said. “People care about kids. People care about helping their communities where they live.”

Biren says she never saw any fundraising, no kids ever sold the ads and she never heard from Gerken. The Elk River athletic director confirmed for her that the school had no fundraiser with him.

Susan Michaletz, owner of Popped Corn in Minnetonka, also spoke to KARE 11 and is included in the Attorney General’s lawsuit.

She also wrote Gerken a check for $790 believing her coupon would appear in an advertising booklet sold by local youth and school groups. A win-win, she thought.

“I thought that was a great way to get a grassroots word out of who we are and where we are,” she told KARE in January.

Michaletz never received any advertising. She says Gerken stopped returning her calls until she took him to court.

The lawsuit filed by Swanson aims to help recoup monetary damages for businesses who were allegedly duped by Gerken.

She says she is also seeking a court order barring Gerken from operating fundraising businesses in Minnesota.

Gerken did not respond to KARE 11’s request for comment.