Los Angeles AIDS Rides Organizer Faces Suit

Pallotta TeamWorks of Los Angeles, which organizes the nationally popular AIDS bike rides and Avon breast cancer walks, is the subject of a class action lawsuit claiming it took too much money off the top from donations for AIDS vaccine research.

The company gave researchers just $8 million of the $28 million raised during four bike rides in 2000 and 2001, according to the suit, which was filed on Tuesday in San Francisco Superior Court. That return -- less than 25 percent -- is far less than the benchmark of 60 percent set by most charitable groups, said Palo Alto attorney Victor Schachter, who filed the lawsuit on behalf of cyclists and their sponsors. The remainder of funds raised went to expenses, administrative costs and marketing. Pallotta, a for-profit private company, also took $1.3 million in fees, according to its website. The company has come under increasing criticism for the amount of profit it takes and the amount of money it spends on the elaborate fundraising efforts. Some events have provided as little as 15 percent of donor money to charities.

Founded in 1992 by Dan Pallotta, the company held its first California AIDS Ride in 1994 and this year will hold 24 events in the United States, Canada, Africa and Europe benefiting causes including AIDS, breast cancer, suicide prevention and services for needy children. The lawsuit challenges only the AIDS vaccine fund-raising rides, not other Pallotta charity events. Pallotta has sole control over the funds raised in the vaccine rides; the others are done under contract with the beneficiaries. Pallotta spokesperson Janna Sidley dismissed the suit as being "wholly and entirely non-meritorious." Pallotta's argument is that providing comfortable accommodations during the grueling outdoor events has attracted more participants and raised more money.

Mark Cloutier of Berkeley, director of a San Francisco AIDS service organization, filed the lawsuit. He was a rider in Pallotta's Alaska vaccine bike ride two years ago.

The complaint asks the court to order Pallotta to account for the funds and to give to vaccine researchers any amount the court determines was misspent.

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