To determine if the organization is legitimate, there are a few things you can do:
1. If the person is representing that the organization is a non-profit entity that is tax exempt (i.e. a 501(c)(3) or a 501(c)(6) organization), go to the IRS website and do a search of charitable entities: http://www.irs.gov/charities/article/0,,id=96136,00.html. If the entity has only been in business for a year or so, it may not yet qualify since it takes a while to go through the process to attain 501(c) status. But, the entity should not be representing itself as a 501(c) organization without being granted that status by the IRS.
2. Contact your state's secretary of state and comptroller of public accounts to ask if the entity has officially been formed as a non-profit or for-profit entity and if it is in good standing in the state. Most likely, if the entity was formed, it was formed in the state in which it is operating. The entity could have been formed in Delaware, which is also common. So, if it isn't formed in your state, then also check Delaware.
3. The entity should have a board of directors. Most states require at least 3 members to serve on the board of a non-profit entity (and it sounds like this would be a non-profit entity). So, you can ask who the other board members are and speak to them as to whether they are actively participating.
4. Non-profits who are 501(c) entities are required to file financials with the IRS and they are open to the public for inspection. But, because this entity is so young, it most likely has not been required to file the financials just yet. The 501(c) application is a matter of public record and you can request to see it from the IRS.
5. If, after doing this investigation, you feel he is misrepresenting the entity, you can contact the IRS charities division regarding your concerns and they may investigate if they agree. You can also contact the District Attorney in the county in which the entity is based and present evidence (not just a concern) to them of the fraud you believe is occurring. If the DA agrees, it may proceed with an investigation and case against this person.
Unfortunately, there is no way to keep the person from starting up this type of business again. But, a conviction for fraud on his record may help. Our society is trusting though and so, without someone doing a background check on him and knowing which counties to check for criminal problems, he might get away with it again.
Disclaimer: This answer does not create an attorney-client relationship and does not constitute legal advice. Each situation is fact specific and there may be facts not disclosed that could alter the answer provided. It is impossible to evaluate a legal problem without a comprehensive review of all the facts or documents.