Ohio Attorney General Dave Yost is suing a man accused of exploiting the East Palestine train derailment disaster with a sham charity he used to collect more than $100,000.
The lawsuit, filed on Monday, accuses Michael "Mike" Peppel of operating an "unlawful charity using a high-profile disaster to divert donations away from the intended recipients."
Fast Facts
A Norfolk Southerntrain carrying toxic chemicals derailed on Feb. 3 in East Palestine, located in Northeast Ohio's Columbiana County.
The derailment released over a million gallons of hazardous materials from at least 39 railcars, with substances running into nearby Sulfur Run as well as other waterways. Since the derailment, East Palestine residents have reported feeling ill.
SEE MORE: Norfolk Southern overhauls exec payouts after Scripps News Probe
Red Flags
Second Harvest Food Bank in Northeast Ohio started getting flooded with calls and emails after the explosive train derailment. But the messages raised red flags for executive director Michael Iberis.
"This particular website was tugging at their hearts and saying, 'Look, we got this problem down here, and we have created this entity to be able to help those people on the ground with water and other things — and we are partnering with Second Harvest Food Bank of the Mahoning Valley,'" Iberis told Scripps News reporter Morgan Trau.
But that partnership wasn’t real.
People from around the country asked Iberis and his team if they were affiliated with the Ohio Clean Water Fund. After enough calls, he published on their website that they were not with the fund.
"This is where it started to unravel," the charity director said.
Peppel, upon seeing the posts from Second Harvest denying their relationship, reached out to Iberis.
"He was indicating to me that 'maybe there's some kind of a misunderstanding here' and 'I have $10,000 for you,'" Iberis said.
Peppel did deliver the $10,000, and after he did, that was when Iberis said he knew this was a scam.
"It was definitely something that had to be taken to a higher level," the director said. "That's when we referred it to the attorney general."
SEE MORE: CDC investigators sick after studying East Palestine derailment
Lawsuit
In the scathing lawsuit, Yost alleged that Peppel and others had pocketed at least $131,000 of the more than $141,000 raised from more than 3,200 donors.
“The idea that somebody would so brazenly exploit a disaster situation and the good hearts of people who want to help is unconscionable,” Yost said. “I’m mad as hell about this, and we’re going to make sure this sham charity gets shut down.”
Peppel used more than $90,000 of the funds on "administration fees," according to the lawsuit.
The suspect said he needed that much money because "utilizing a texting service to raise money is costly," Youngstown news station WFMJ-TV reported.
Financial expert Michael Goldberg said that doesn't make sense.
"A typical charity spends 75% of its budget on programs, according to Charity Navigator," Goldberg said. "So in the case of the gentleman who is raising money and he's saying that 75% of the money is going towards data and other fees, is completely out of whack with what the standards are — and frankly, it's a red flag."
Yost also cited the discrepancies in his filing as a charity. The Ohio Clean Water Fund was formed as a limited liability company in March 2023 by Peppel, but the IRS has not recognized them as a 501(c)(3) tax-exempt organization.
"Peppel is profiting illegally from this well-publicized tragedy with his unlawful charity, Ohio Clean Water, and rampant deceptive and fraudulent practices," Yost said.
Yost sought a temporary restraining order and preliminary injunction to stop Peppel from engaging in more "charitable" solicitations.
"He just took advantage of the people of East Palestine, who suffered enough by being victimized not only by Norfolk Southern but now from this person who lives in the same county that they do," Iberis said. "And then he victimized all the people that sent money, the 3,000 people that actually sent money because they cared."
Peppel and his legal team did not respond to requests.
"Have you seen any other parts of that money since this report came out?" Trau asked Iberis.
"We have not," he responded.
SEE MORE: Justice Department sues Norfolk Southern over toxic train derailment
Aftermath
As of right now, the case will be heard in the Columbiana County Court of Common Pleas.
On Tuesday, Judge Scott Washam granted Yost's temporary restraining order, saying there is "good cause" to believe that defendants Peppel and/or Ohio Clean Water have "unlawfully solicited funds" and that their order would be "in the public interest."
This means that Peppel must cease all types of solicitations. He is also not allowed to transfer property or funds. The order remains in effect for 13 more days.
"They should be put in jail, as far as I'm concerned," Iberis said about people who commit this type of fraudulent behavior. "That's where they belong."
Iberis and his team plan to attend all hearings.
"Obviously, he's a total scoundrel; there's no question about it," the director added.
The first hearing is scheduled for April 20.
“Here’s a message for anybody else who might hope to profit from the situation in East Palestine: Don’t even think about it,” Yost said.
Who is Peppel?
Working around Capitol Square in Columbus, Peppel is a well-known name. He stopped working as Republican state Sen. Michael Rulli's legislative aide on Feb. 3, the day of the derailment. Rulli represents Salem, and his district encompasses East Palestine. He also worked as an aide to U.S. Rep. Bill Johnson, R-Ohio, also in the same area.
Rulli did not respond to comment, and a Senate spokesperson declined to comment on the pending litigation. Johnson's team did not respond.
Peppel's bio has been removed from places he has previously worked and from a company he was supposed to work at. McKinley Strategies, run by TimkenSteel CEO Ward Timken, Jr., told the Columbus Dispatch that the company "decided not to bring him on when allegations about the charity fund came to light."
The fact that Peppel was working in government should worry everyone, Iberis added.
"I think that we seriously need to talk to our elected officials about... doing more to shore up the process for identifying scammers," he said.
As a society, he said, people should be worried when scammers are working in the government.
SEE MORE: Mistrust stirs on East Palestine crisis as Ohio sues Norfolk Southern
How to help East Palestine
Second Harvest is still collecting funds to help the town, but only from their website or location.
For those wanting to make a charitable contribution, Yost encouraged donors to research charities.
Anyone can visit the attorney general’s Good Giving Guidelines and Research Charities webpage to check whether charities have complied with registration requirements.
This article was written by Morgan Trau for Scripps News Cleveland and Cincinnati.
