The "American Cancer Society of Michigan," state authorities say, was a fake charity. And not even a good fake.

It was not in Michigan, for one thing. When the group applied to the IRS to become a tax-exempt nonprofit in 2020, it listed its address as a rented mailbox on Staten Island in New York City. It was not the American Cancer Society, either: In fact, the real American Cancer Society had already warned the IRS that the leader of the sound-alike group, Ian Hosang, was running a fraud.

The IRS approved the group anyway. Soon after, it also approved another operation run by Hosang: "the United Way of Ohio," also registered to the Staten Island address.

Hosang, 63, is now accused of operating a long-running charity fraud that has astounded nonprofit regulators and watchdogs — and raised concerns about the IRS' ability to serve as gatekeeper for the American charity system.

Not because the alleged scheme was so good. Because it was terrible. And it worked.

Hosang — a convicted stock market fraudster — got the IRS to approve 76 nonprofits, often despite glaring red flags of potential fraud. His operations stole the names of better-known charities. They claimed to be located where they obviously were not.

But the IRS kept saying yes. And in doing so, the agency has attracted scrutiny of its new fast-track system for approving charities — an innovation implemented to deal with backlogs and budget cuts that now denies only one application in 2,400.

"Nobody's watching the store," said Nina Olson, who was the IRS' in-house national taxpayer advocate from 2001 to 2019 and warned repeatedly about the decreased level of vetting. "They're the gatekeeper to this whole universe of charitable subsidies. And if the IRS is not doing its job as a gatekeeper, then you've got real problems."

The agency declined to answer questions about Hosang's case, citing taxpayer privacy laws. It also declined to make officials available for in-person interviews, but it released a statement saying that the fast-track approval system "continues to reduce taxpayer burden and increase cost effectiveness of IRS operations."

Hosang, was indicted in Brooklyn in May, on charges of grand larceny, identity theft and conducting a scheme to defraud. He has pleaded not guilty. The Brooklyn district attorney said he stole about $152,000 in donations that flowed through 23 of his nonprofits. Hosang did not need to do much to promote the groups; the money came in through online platforms that let users choose among IRS-approved charities.

Hosang, prosecutors said, spent the money on mortgage payments, credit card bills and at liquor stores.

"I did very wrong. I know that," Hosang said in an interview at his Staten Island home. His voice breaking, Hosang said he had changed his life after a near-death spike in blood sugar in 2020, which he took as a sign from God. He said he wants to make restitution. But, Hosang pointed out, every one of his charities had been approved. "If you file something with an agency," he said, "and they approve it, do you think it's illegal?"

Hosang was born in Trinidad, grew up in Brooklyn, and graduated from New York University in 1984 with a degree in finance. He wound up on the ugly side of Wall Street — accused of running "pump and dump" operations that conned customers into paying high prices for low-quality stocks.

Prosecutors later said Hosang and his associates recruited salesmen on the subway, rewarded them with marijuana and worked with an associate of the Gambino crime family. Once, when a rival visited to complain, investigators said, Hosang and the mob associate "dangled him out the window of the ninth-floor office."

In 1997, he was barred from the industry by a self-regulatory body then called the National Association of Securities Dealers.

In 1999, he pleaded guilty to federal charges of fraud and money laundering. Hosang's attorney, Yusuf El Ashmawy, said Hosang cooperated with authorities and helped convict 150 people. He spent about two years in federal prison.

After his release, Hosang focused on a new business. In 2014, federal records show, he asked the IRS to approve tax exemption for a new nonprofit: "The American Cancer Society for Children Inc." It wasn't connected to the American Cancer Society.

"I got sidetracked. My son passed away," Hosang said, explaining how he had turned to setting up charities. "It was not a stable mind at the time."

He began running the operation at a time when the agency was already ill-prepared to detect signs of fraud in new applicants.

The first problem, according to former IRS officials: Tax law does not prohibit nonprofits from impersonating better-known nonprofits by using sound-alike names. The second: There are no systematic checks for a history of fraud.

The IRS, in its written statement, said that employees reviewing new applications "have been trained to identify fraud."

Hosang still got through. Between 2014 and 2018, the agency approved 17 of his applications for groups with "American Cancer Society" in their names, according to IRS records.

Hosang switched to the fast-track system in 2019, according to agency records. His mailbox in Staten Island was the same. The red flags were still red. But, despite the warning from the American Cancer Society, Hosang was even more successful than before: In two years of using the fast-track system, Hosang got the IRS to approve 56 new charities.