Fraudulent Telefunding for Charitable Donations
Not Also Known As
Many fraudulent telemarketers claim to represent charitable organizations, often using names similar to well-known, legitimate charities. For example, they may call themselves the American Kidney Foundation instead of the legitimate American Kidney Fund, or the American Cancer Center instead of the real American Cancer Society.
They will solicit a contribution or attempt to sell products that will benefit a charity or a specified group, such as firefighters, police or disabled and disadvantaged children. These products often include light bulbs, vitamins, trash bags, or other household or health aids that are sold for up to twenty times their value —all in the name of charity.
Shysters typically choose "mom and apple pie" monikers then prey on the altruistic impulses of people wishing to help others who are experiencing distress. And once you have shown a willingness to donate; they'll come back for more and more under different names and causes, keeping your name on their "sucker list".
All For A Good Cause
They'll say that your funds will be used to:
|purchase equipment such as bulletproof vests for law enforcement agencies or breathing apparatus for fire departments,|
|provide financial assistance to the families of law enforcement officers or firefighters who have been disabled or killed in the line of duty,|
|purchase needed medical equipment, supplies or gifts for sick children or veterans,|
|provide food, clothing and shelter to homeless people or wayward children,|
|support educational and recreational opportunities for children who are victims of fire or cancer,|
|benefit anything that tugs on your heart strings.|
They can respond quickly when tragedy strikes in a far-off community by establishing dedicated phone lines and local mail drops to solicit funds for a site-specific event such as hurricanes, earthquakes, blizzards, floods, bombings, a slain officer or a sickly child who has attracted media interest. No funds will actually go to the cause itself.
They will often claim to be from the police or fire department, so that you feel pressured to donate, out of fear that you might be deprived of their services in a time of need.
Commercial enterprises routinely place "donated clothing bins" with charitable-like names prominently displayed on their sides stating that a "portion" of the proceeds go to charity. They could in turn donate any unwanted material, as there are no restrictions on what that donated portion might be.
A donated car, which you felt where going to be scrapped, may even end up being resold, whereby you could become liable for tickets, fees, liens and accidents.
Fund-raisers often sell you tickets to events and then encourage you to "donate back" the tickets so that they can give them to worthy organizations and individuals who could not otherwise attend the events such as poor, disabled war orphans.
In some cases, thousands of "donated back" tickets are never actually purchased or distributed and in one case far exceeded the seating capacity of the hall.
For this reason some laws require that before "donated back" tickets can be sold, the fund-raiser must have commitments in writing from the intended recipients of the tickets.
Cons With A Contract
More and more, large telemarketing firms are setting themselves up to do the fundraising for actual charities who lack the facilities or willing personnel.
Typically, they pay a registered charity a flat fee of $1,000 or $1,500 per week in exchange for the right to solicit in the organization's name, with the amount increasing to as much as $2,500 per week in the second or third years of their contract with the organization.
Any and all funds collected over that flat amount are retained by the callers.
They may also agree to print and distribute a quarterly or yearly publication for the organization in which they will print the names of individuals and small businesses who donate or sponsor an ad.
The contracts usually call for them to use only "approved" scripts and materials in soliciting the public.
The contracts also authorize them to open a bank account in the organization's name, for the purpose of receiving donations.
Need Help Raking It In
This larger operation then contracts out to other fundraising agents, providing them with a complete turnkey operation —from an array of different nonprofit organizations for which to solicit, to the telephone script and the brochures and invoices sent to consumers.
All the subcontractors have to do is provide the callers, telephone lines and a means to collect the donations. A main 800 number is preprinted on the solicitation materials provided to consumers, so the head group receives most of the inquiries and complaints concerning the fundraising calls made by their subcontractors.
Percentages May Vary
Donor checks collected by the subcontractors are forwarded on for deposit in accounts that are in the charity's' names, but controlled by others.
From these accounts, they pay the subcontractors a contracted percentage of the donation, usually around 80% of the total collected.
In 1998, professional charity telemarketers raised $103.6 million in Ohio alone, or nearly $2 million per week. The charities received only $48 million of the money raised. The telemarketers kept $56 million.
Civic, charitable and public safety organizations that use paid telephone solicitors to raise money receive, on average, less than 30 cents for every dollar raised.
These figures are for only registered telemarketers and do not include fraudulent telemarketers who do not register and keep a much greater percentage, if not all, of the amount collected.
The commercial fund-raisers Rainbow Connections and Little Miracles misrepresented the percentage of donations that would go to their self-created charitable organization.
They also claimed that funds raised for Helping Hands and the Holiday Basket Fund would be used to provide holiday food baskets for the poor, when in fact only 3 percent of the money was used for that purpose.
The Civic Development Group and the Children's Charity Fund told donors that their "extraordinary organization provides crucial medical services and equipment to disabled and handicapped children throughout the state," when in fact, only half of one percent of the money raised went for that purpose.
Of $40,000 raised, the only medical equipment that was provided consisted of a small shipment, to one hospital, of walkers and canes estimated to be worth less than $200.
Give So We Can Live
You get a call from a person representing a charity called "Operation Life" stating that you have been selected to receive a valuable and extravagant prize —ranging in value from $3,500 to $50,000 in cash.
You are then told that all you have to do to receive the prize is to make a significant tax-deductible donation to "their" designated charity.
Not surprisingly, the prizes are almost worthless and any amount of money that might reach actual charitable organizations is infinitesimal.
A reminder that slick professional materials don't make a charity legitimate comes from one grassroots con who, with a computer and a graphics print program, created his own charity and kept the proceeds from the sale of discount coupon books which he said would be used to help local troubled and homeless youth.
He recruited and used local high school students to sell the coupon books, offering discounts from restaurants and businesses that had never heard of it, nor offered such discounts.
Although the so-called charity had no relationship with local high schools, students selling the coupon books were instructed to tell people it was affiliated with the schools.
Holier Than Thou
One outfit using invented religious titles for themselves such as "Brother Olaf" and "Sister Owen" claimed that as much as 65% of the money donated would go directly to the charitable purpose when in fact none did.
How Fast is Fast?
Merritt Productions, Inc., a professional fund-raiser hired by the Dallas Sheriff's Union and the Dallas Police Patrolman's Union, told consumers that they were raising money: to benefit the Dallas Sheriff and Police Departments; for charitable purposes such as children's parties; that contributions were tax-deductible, which they were not; and that decals provided in return for contributions entitled you to break traffic laws with impunity.
They claimed those who displayed such decals would not be detained by law enforcement officers, regardless of their adherence to the laws in Texas.
They actually kept 85% of the money solicited from the public with 15% going to the police unions, which used the money to benefit their own members. Neither the Sheriff's Office nor the Police Department ever benefited from the contributions.
Come Back With Your Quota
Youth In Progress and Team USA recruited children as young as eleven to sell candy and other novelty items door-to-door and in front of stores. They showed preprinted cards that stated, "our main goal is to keep teens busy by providing supervised activities after school and on weekends".
In fact, the children were not part of an organized youth program as stated, but were paid for each item they sold. Parents thought their children were adequately supervised and participating in a charitable operation.
Instead, they were often left on their own for hours, unsupervised in strange and unfamiliar neighborhoods, despite child labour laws which require a supervising adult be in contact with the child every fifteen minutes.
Impact On Reputable Charities
Generous individuals rely on the false promises of benefits to their local communities and donate in response to these fundraising pleas, believing that their donation will support the programs described to them.
In fact, the small portion of the donation that makes its way to the organization —often less than 10% of the total amount raised —goes to the coffers of national organizations which often do not undertake the programs described to you or which are not active in your locale.
Nonprofit organizations that do undertake charitable endeavors in your community also suffer from these deceptive tactics, as individuals and businesses with limited disposable income have fewer dollars available to support these local programs.
Tips To Avoid Trouble
Ask for written information and ID. A legitimate charity will give you information outlining its mission, how your donation will be distributed, and proof that your contribution is tax-deductible.
Many states require "paid fund-raisers" to identify themselves as such and to name the charity for which they're soliciting.
Be skeptical if someone thanks you for a pledge you don't remember making. Check your records if you have doubts about a pledge you supposedly made.
They may send someone to pick up the cheque if they are working locally rather than mailing out a pledge card. Refuse high pressure appeals as legitimate charities won't push you to give on the spot.
Consider the costs. When buying merchandise or receiving free goods for giving, remember that these items are paid for out of your contribution.
Be wary of guaranteed sweepstakes winnings in exchange for your contribution. You never have to donate to be eligible to win.
Don't send cash. For security and tax record purposes, pay by check. Write the official name of the charity on your check, certainly not the telemarketers.
You should check their license or registration status because there is no tax benefit if the operation turns out to be phony. Call the local association of the organization to confirm whether they are in fact holding a fundraising drive.
Charitable Fundraising Rules
Although a 1988 U.S. Supreme Court decision prohibits states from requiring paid fund-raisers to disclose to would-be contributors how much of each dollar goes to the sponsoring charity, there's no law that prohibits a prospective donor from asking, "Where does the money go?"
Before you pay or authorize a contribution, the paid fund-raiser is required to tell you where you can get that information.
Several years ago I discovered that my mother's retirement funds were being seriously depleted at an alarming rate. She didn't have enough money to replace a faulty gas heating unit, for example. Then I began to monitor her mail.
She was getting solicitations from all sorts of charities and from conservative causes (and politicians) that amounted to 35 to 45 pounds of mail per month.
She was writing between $700 and $1000 worth of checks to these organizations monthly.
I spent a couple of hundred dollars on long distance calls to these groups in an attempt to get her name removed from their lists.
The promises they made, they never kept. I registered her with Direct Mail, but that was also a wasted effort.
I talked to her endlessly. When I took away her checkbook, her heart was broken. She felt out of control of her own life.
I had her stop payments on checks that she wrote at her bank. But the next day, she'd return to writing checks.
Jesse Helms sent her 12 identical mailings in one day asking for money. My mother, a Southern Baptist, was bombarded with requests from Catholic charities.
I finally used my power of attorney and had her mail diverted to my office. There I throw everything away.
Now she gives heavily to her local church, but that's all right. At least we know who's getting the money and we hope that they are worthy.
I wrote to my congressional delegation, the attorneys general in several states, and to the Postmaster. No one could help.
Stopping the mail was the only solution. Now I occasionally "hide" mail in her box so that she thinks she still gets mail.
Charlotte Dean 12/21/00
What you describe is a common problem for many seniors and other kind-hearted individuals. Once they are on one list, the requests seem to multiply, as even the "legitimate" fundraisers sell their lists to others to raise money.
Getting off of their databases is obviously a hard and long drawn out task. Even the dead continue to be solicited after requests to stop go unheeded, as I found out with my father-in-law.
He gave a bit to a lot of charities and while not quite as serious, the mail still comes in bulk as you say.
It is not just the scammers who take advantage as you note. Political parties, charities, etc. all rely on mass mailing to vulnerable people. Imagine then, what it is like when the scammers have a person on their hit list. Thanks for the insight.
I've written guest editorials for the local paper. And the NonProfit Times (I think that is the name) also featured an article about me and my mother's mail with a picture of a month's mountain of mail.
At one point, she was getting mailings with "peal-and-stick" postage paid labels that she was supposed to affix to an envelope with her check in it. I used the "peal-and-sticks" on (expensive-to-mail) boxes that got bigger and bigger as time went on.
Finally I was mailing (unpleasant) garbage in big pasteboard boxes with the labels on them. The biggest I could find.
All I succeeded in doing was putting an end to the use of "peal-and-sticks" by solicitation firms.
This is a $40-50 billion dollar industry. Vast amounts of money are being made in the solicitation business. It's too lucrative and too pervasive for any single individual to attack successfully.
Charlotte - Florence, Alabama
Charity Golf Game
Mitchell D. Gold, 44, already facing 33 counts of mail fraud, wire fraud and money laundering for raising $27 million in the name of charity, but allegedly keeping most of it for himself and his associates, is now under investigation in a scheme to defraud golf-club buyers, according to police documents.
Phone salespeople apparently call golfers and offer a 60-day "test" of clubs made from cutting-edge material called cryo-plasma, which they say enables golfers to hit the ball farther with greater accuracy.
The telemarketers take a $1,300 security deposit on the clubs which are manufactured and sold mostly by Professional Golf Products of Huntington Beach though some of Gold's companies, including State of the Art Golf Products and Desert Sports, also sell the clubs.
Many buyers were unimpressed after trying them but most couldn't seem to get a refund, resulting in almost 300 complaints to the local BBB.
Sad Vision of the Future
Investigators with the Department of Agriculture and Consumer Services determined that Helping Hands for Veteran's and Florida's Future Today, in addition to not being registered, mislead potential donors into believing the "charities" were to use the donated money to benefit veterans and children.
In fact, the money collected was not being used for charitable purposes at all.
Arrested were Ronald Lee Rosell and Michael Eugene Reed, both of Florida, who if convicted, face up to five years in Florida's Department of Corrections and a $5,000 fine on each felony count.
The arrests stem from the Governor's Strike Force Against Fraudulent Enterprise Initiative (S.A.F.E.), an operation by multiple state agencies to combat fraud in Florida where registration information about charities can be determined by calling 1-800 HELPFLA (435-7352).
In the wake of September 11th, fraudulent charities wasted no time in pushing their appeals onto the trusting and sympathetic public.
Brian Walsh of Ireland was so outraged by this abuse that he established a website dealing with just that issue. It contains examples of some of the many solicitations that have appeared. see also Giver Beware in Smart Business Magazine.
03/04 - WASHINGTON (AP)--The public should be protected from telemarketers who shade the truth about how much of your contribution really goes to charity, government lawyers told the Supreme Court.
Illinois, backed by 45 states and the federal government, says some such fund drives amount to fraud but telemarketers and many large charities argue that their pitches are protected as free speech.
"We ask this court not to hold that half-truths are constitutionally protected," Illinois Assistant Attorney General Richard Huszagh told the justices.
His state wants to stop misleading sales pitches made by a professional fund-raising firm in the name of a Vietnam veterans' charity called VietNow.
Telemarketing Associates Inc. took in more than $8 million on behalf of the veterans' charity, and pocketed 85 percent of the money. Would-be donors allegedly were told their money would go for food baskets, job training and other services for needy veterans, with no mention of fund-raising costs.
Better-known charities have taken pains to distance themselves from VietNow and its practices but still side with the charity and its fund-raiser in the Supreme Court case saying that potential donors would slam down the receiver if told upfront that a telemarketer would keep the overwhelming share of any contribution.
The fees and overhead costs that telemarketers charge simply are a cost of doing business, and there is an intangible value in spreading a charity's message through fund drives, charities contend. ``High fund-raising costs alone, and the failure to disclose those costs, are not fraud," lawyer Errol Copilevitz argued for the fund-raising firm.
Charitable solicitation is protected under the First Amendment, and the Supreme Court has three times struck down state or local laws intended to regulate how much charity fund-raisers were paid or what donors must be told about the costs.
Illinois argued that free speech claims and the high court's previous cases do not apply when the telemarketer charges so much and stretches the truth besides. The state used its ordinary anti-fraud law to sue the fund-raiser, but lost three rounds in state courts.
The Better Business Bureau's Wise Giving Alliance calculated that VietNow spent 91 percent of what it raised in 2001 for fund raising, and spent only 3 percent on charitable programs. "VietNow has one of the worst, if not the worst, performances of the charities reviewed," the nonprofit alliance argued in a friend-of-the-court brief.
Wise Giving's standard is that fund-raising and administrative costs should not exceed 35 percent of funds raised from donors, unless the charity provides evidence that its use of a greater percentage is reasonable.
Still, the justices seemed reluctant to call the group's fund drive a fraud.
"It may be easy to say that a company that keeps 85 or 90 percent of money raised in a charity's name is out of bounds", Justice David Souter said, "But what about a split of 60-40, or 65-35?"
Any attempt to set such percentage limits is asking for trouble, Justice Antonin Scalia said then pointed to other potential problems with prosecuting telemarketers for fraud. How, he asked, does government gauge whether the public has been deceived? "Are you going to take a public opinion poll?"
The case is Madigan v. Telemarketing Associates Inc., 01-1806.
05/03 WASHINGTON (Reuters) - A unanimous Supreme Court ruled Monday a state may pursue a fraud case against a professional telemarketing firm for making false or misleading representations about how charitable donations will be used.
The justices overturned an Illinois Supreme Court ruling that dismissed on free-speech grounds a fraud lawsuit against a company that said donations would go to charity but actually kept the vast majority of the money.
Justice Ruth Bader Ginsburg said the First Amendment protected the right to engage in charitable solicitation, but did not shield fraud. Therefore, the state's lawsuit could proceed.
The decision could have far-reaching implications for fund-raisers. Charitable solicitations generate more than $200 billion a year, with an even greater volume handled by professional telemarketers, the state of Illinois said.
The ruling was a defeat for Telemarketing Associates Inc., a company that calls people at home. The case involved donations on behalf of an Illinois-based charity called VietNow.
The telemarketing firm told potential donors their contributions would be used for charitable purposes, including providing food, shelter and financial support for Vietnam War veterans.
But under an agreement with VietNow, the telemarketing firm kept 85 percent of the money for sales, expenses and profits while the charity received 15 percent, Illinois said.
Illinois sued Telemarketing Associates and its owner, Richard Troia, for violating the state's general anti-fraud laws. It said the representations of how contributions would be used were false and misleading, deceiving people for the telemarketer's financial gain.
The lawsuit cited one instance in which a potential donor asked how much went for fund-raising expenses and was told by the telemarketer that "90 percent or more goes to the vets."
The Illinois Supreme Court dismissed the lawsuit on the grounds that it would violate the firm's right to communicate freely with the public.
Illinois argued the ruling "transformed the First Amendment into a license for unscrupulous fund-raisers to defraud the public in the name of raising money for charity, dealing a crippling blow to one of the state's principal weapons against telemarketing fraud."
The Justice Department, the Federal Trade Commission, more than 40 states, the Council of Better Business Bureaus and the AARP group representing those 50 or older all supported Illinois.
A number of telemarketing, charitable and nonprofit organizations supported the company's free-speech argument.
Ginsburg said high fund-raising costs alone did not establish fraud.
She also said failure to disclose information on how much money will be kept does not by itself establish fraud. But when nondisclosure is accompanied by intentionally misleading statements designed to mislead the listener, the First Amendment allows a fraud claim, Ginsburg concluded.
Trade Commission v. Tamara Bell, et al.
The Federal Trade Commission filed a complaint alleging that defendant Tamara Bell created six nonprofit corporations to use as vehicles for soliciting donations from consumers. Among other things, the complaint further alleges that the corporations are sham nonprofits created and controlled by unscrupulous fundraisers for personal profit. This case was filed as part of the fundraising fraud sweep, "Phoney Philanthropy."
Trade Commission v. Community Affairs, Inc. et al.
The Federal Trade Commission filed a complaint alleging that Community Affairs, Inc. et al., mislead donors during its telephone solicitations by falsely representing that: the caller is a member of a law enforcement, police, or firefighter organization; the contributor has a current or previous relationship to the charitable organization for which the defendants are soliciting funds; and all, or substantially all, of the money raised goes to the charity or to specific programs. This case was filed as part of the fundraising fraud sweep, "Phoney Philanthropy."
Trade Commission v. DPS Activity Publishing, Ltd., et al.
The Federal Trade Commission filed a complaint alleging that, when telemarketing books, the defendants falsely represent that they are affiliated with or authorized by local hospitals to solicit sales of the books on their behalf and that children in those hospitals would actually receive the books purchased.
The complaint also alleged that the books purchased from defendants for donation were either never delivered to the hospitals or would never be distributed to children because the hospitals to which they were donated have no use for them. This case was filed as part of the fundraising fraud sweep, "Phoney Philanthropy."
Federal Trade Commission v. Mitchell D. Gold, et al.
The Federal Trade Commission issued three announcements regarding this matter. Two of these announcements related to settlements with certain defendants in this case. The other announced entry of a default judgment against two of the defendants.
In its initial complaint the FTC alleged that the defendants and their more than 70 fundraising subcontractors engaged in deceptive telephone solicitations for nonprofit organizations purporting to support, police, fire fighters, veterans and sick children. This case was originally filed as part of "Operation Missed Giving." [TEXT 1] [TEXT 2] [TEXT 3]
Trade Commission v. West Coast Advertising & Marketing,
Inc., et al.
The Federal Trade Commission announced the filing of a complaint against these defendants alleging that the defendants' telemarketers falsely claim that donations made will benefit these nonprofits and that they are associate with legitimate organizations. This case was filed as part of the fundraising fraud sweep, "Phoney Philanthropy."
Rookie officer allegedly bilked $2.5 million using phony police charities
By Suzanne Zalev, San Mateo County Times
11/01/03 - SAN JOSE -- An East Palo Alto police officer will stand trial on telemarketing fraud charges as soon as there's an open courtroom, Santa Clara County Deputy District Attorney Martha Donohoe said.
Officer Lesa Stone and five other people are accused of bilking would-be donors out of more than $2.5 million in a telemarketing scheme. Thirteen people were indicted in 2002 in connection with the case, and all but six have pleaded guilty, Donohoe said.
Stone and the other defendants, including her ex-husband, are accused of soliciting donations from organizations with names that sounded like law enforcement but had no connection with any agency, such as the "Santa Clara County Deputy Sheriffs' Sports Association." They allegedly solicited more than $3 million in donations, but less than $50,000 actually went to charity, prosecutors said.
Stone is charged with conspiracy, grand theft, embezzlement, perjury, money laundering and tax evasion. If she is convicted of all charges, plus enhancements, she could face up to 22 years and eight months in prison, Donohoe said.
If Stone is acquitted, Bowling said she'll be put back on regular duty. The possible stigma of having an officer who was indicted for multiple felonies "has concerned me, but legally, she has a right to her job if she hasn't been convicted," Bowling said. If she's convicted, he said, the department would move to terminate her.
'Church' Founder Accused Of Creating Charities, Pocketing Money in Church Scam
11/04/03 LOS ANGELES -- The founder of a Costa Mesa, Calif., "church" was convicted with his boyhood friend Monday of pocketing millions solicited ostensibly for homeless children, AIDS research, veterans, police and the like.
A federal jury found Gabriel Bernardo Sanchez, 36, and Timothy James Lyons, 35, guilty of 33 counts of mail fraud and 10 counts of money laundering, said Assistant U.S. Attorney Ellyn Lindsay.
Sanchez founded First Church of Life in Costa Mesa in 1993. The next year, the church registered various fictitious business names, such as American Veterans Help Fund and Americans Against Drugs.
Christian Outreach Ministries and Mercy Ministries were added, starting in 1997, and two years later, Mercy changed its name to Glory Ministries, according to a federal indictment that referred to the entities as "sham churches."
Using telemarketers, Sanchez and Lyons "solicited $7 million in the name of needy people," Lindsay said.
"But the biggest percentage, 90 percent, went to Lyons and (the) telemarketers," Lindsay said. "Of the 10 percent that supposedly went to charity, virtually all went to Sanchez."
"It was a modest living (for Sanchez), but it was at the expense of needy people," she said.
Beginning in August 1993, Lyons owned and operated North American Acquisitions, which in turn "employed telemarketers and contracted with outside telemarketing operations to raise funds for the sham churches and purported charities," according to the indictment.
"Virtually no money was spent on any of the programs the sham churches and purported charities claimed to support," the indictment states.
An Internal Revenue Service agent cited 14 criteria the agency uses to determine if a church is legitimate or a tax dodge, Lindsay said.
One is whether there is a regular congregation that attends services. According to testimony, Lindsay said, Sanchez met one criteria: incorporation.
"The defense was that this was a legitimate charity," Lindsay said. Neither William Kennon, Sanchez' attorney, nor David Conn, Lyons' attorney, could be reached for comment.
Both defendants were taken into custody after the verdicts were read, Lindsay said, and each faces up to five years per count of mail fraud and 20 years per money laundering count. U.S. District Judge David Carter set sentencing for Feb. 9.
Co-defendant Steven De Lattore, 33, admitted to one count of mail fraud before trial. He faces five years in prison when he is sentenced Jan. 5.
Another co-defendant, Roger Lane, 34, pleaded guilty to two counts of mail fraud and faces up to 10 years. Sentencing for Lane is also set for Jan. 5.
I Wish They'd Stop Calling
01/04 - Maine - Telemarketers are calling asking for donations to local police and firefighters and the Make-A-Wish Foundation, which grants the wishes of terminally ill children.
Problem is that police and firefighters have nothing to do with the calls and Make-A-Wish never raises funds over the telephone.
The scammers ask people for different levels of donations, say, $100, $80, $60, then if people decline, they will reduce the amount asked, or become more high-pressure. For authenticity they even have "supervisors" come on the line.
They then mail out a thin envelope of materials, bumper stickers, pictures of men in uniform and a brochure which asks that checks be made out to the "International Police and Firemen's Game."
The non-existent game, it claims, has been in existence since 1954, sending police officers and firefighters every two years to sports competitions held in Germany, Canada and Australia.
Those who receive similar calls are asked to contact the Make-A-Wish Foundation at 1-800-491-3171.
Seven accused in charity scam
By Kim O'Brien Root - Daily Press
01/04 NORFOLK, VA -- The pleas for money sounded legitimate - donations would go to help disadvantaged children and the elderly, fund mentoring programs, encourage diversity, even support the families of victims from the Sept. 11, 2001, terrorist attacks.
It was all a scam, federal authorities said Tuesday.
An indictment unsealed Tuesday accuses seven Hampton Roads residents of soliciting donations for various charitable causes, then keeping the money for themselves.
Authorities say the group collected hundreds of thousands of dollars from mostly small businesses in Hampton Roads and the Northern Neck over seven years.
Authorities said there could be hundreds to thousands of victims, some who have not been located.
"If there is such a thing as a career or serial con artist, these defendants would certainly be at the top of the list," Paul McNulty, U.S. Attorney for the Eastern District of Virginia, said during a news conference Tuesday.
The 31-count indictment charges seven people with conspiracy to commit mail fraud, wire fraud, use of a fictitious name, money laundering and conspiracy to commit money laundering.
Those charged include John Maurice Henoud, 51, Sharon Kay Moore, 43, and Ronald Clark Morrison, 50, all of Virginia Beach; Russell D. Williford, 70, and Ralph Collins, 67, both of Chesapeake; Matthew John Russo, 40, of Portsmouth; and Douglas Harold Decker, 61, of Suffolk.
All but Williford and Morrison, both thought to be out of town, were arrested Tuesday, McNulty said.
Henoud, considered to be the ringleader, formed two purportedly nonprofit organizations - Youth At Risk Foundation and Just Sports Publications - that claimed to provide charitable services for disadvantaged youth, according to authorities.
Those and several more sub-groups claimed to provide programs that would develop young athletes, sponsor middle school basketball tournaments, promote diversity and help at-risk youth.
Some of what the organizations did appeared legit, authorities said: They sold advertising space to businesses, printed souvenir programs for high school sporting events and sponsored a scholarship program for high school athletes.
Donations for the programs were solicited on Web sites, by telephone and by advertising sales, and were collected in person, by mail and by wire transmissions, authorities said. Knowingly fraudulent checks worth $163,000 were cashed at Bunny's Pawn Shop in Suffolk, where Russo and Decker are managers, authorities said.
Cash donations haven't been accounted for.
Five businesses on the Peninsula and several in Suffolk were named in the indictment as being victims. Esther Petty, owner of Decorating by the Yard in York County, said she remembers writing a check to advertise in a publication for senior citizens. The $45 was supposed to help the elderly, for whom she has a soft spot, she said.
But authorities said that was one of the schemes - selling advertising space in something called the Senior Shopping Guide. Proceeds were supposed to fund programs for senior citizens, but the guides were rarely produced and no programs were funded through ad sales, the indictment alleges.
"Wow," Petty said Tuesday after being told of the indictment. "I'm not an easy sell. I guess you have to be careful."
Another scheme collected donations and promised scholarships to high school athletes - two in Virginia Beach and one in Newport News - but never made good on the scholarships, the indictment said. In another scheme, according to the indictment, Henoud represented himself as the cousin of a passenger on one of the planes that struck the World Trade Center in the terrorist attacks.
Henoud solicited money for the families of victims - an Episcopalian day school donated $210 - and went to a charity event to raise money, but none made it to any fund, the indictment said. He also wasn't related to any of the Sept. 11 victims.
Federal authorities began investigating the alleged scams nine months ago after receiving complaints. McNulty said the schemes were able to continue for so long because usually small amounts of money were collected from a large number of people.
Anyone who thinks they might have been a victim is asked to contact Jennifer Stacoffe, an FBI victim specialist, at 455-2649.
September 11 Charity Scam - above was at www.dailypress.com/news/local/dp-41948sy0jan14,0,7084580.story?coll=dp-news-local-final
By Dan Reed - Mercury News
For more than a decade, Armand Tiano and the Kellner brothers counted on the kindness of strangers to raise millions of dollars over the phone.
And why wouldn't people want to give to worthy causes?
Callers, supposedly from local law enforcement associations, talked about donations for widows and orphans, about giving Easter baskets to the poor, sports tickets to needy children -- and even cash to the grieving family of a slain Millbrae police officer.
The problem, according to Santa Clara County prosecutors, is that out of more than $3.6 million raised from 1993 to 2000, less than $50,000 went to such good works.
Tiano, a former Santa Clara County sheriff's lieutenant, and his ex-wife, Lesa Carole Stone, an East Palo Alto police officer, allegedly spent the donations on such luxuries as race cars, trucks, boats and artwork.
Today, Tiano, Stone, George and Matt Kellner, their mother, Lovie Marie Nicoletti, and Joseph Dagna will sit before a jury of six men and six women in a Santa Clara County courtroom, accused of running a bogus charity to defraud donors.
About a half-dozen others have already pleaded guilty to various counts -- including telemarketer Gerrit Buijtendijk, who got the longest term: three years, eight months. All of them are expected to testify against the remaining defendants.
Martha Donohoe, the deputy district attorney prosecuting the case, said the defendants constructed sham organizations with law enforcement names -- the Police Benevolent Fund & Youth Foundation, the Santa Clara County Deputy Sheriffs' Sports Association, the Police & Sheriffs' Athletic League Community Fund, to name a few.
"They were not operating as legitimate corporations," Donohoe said. "They did not have law enforcement members."
The boiler rooms -- phone rooms with about 20 callers a day -- dotted the South Bay, with offices in San Jose, Los Altos and Mountain View.
The Kellners, professional fundraisers for at least two decades, also have run boiler rooms in Walnut Creek and Pleasanton.
Buijtendijk told grand jurors how a typical pitch worked, with the prosecutor role-playing as the target and Buijtendijk peddling tickets to a game staged by the "Deputy Sheriffs' Athletic League":
Buijtendijk: "I was wondering, would you be able to sponsor maybe five children this year?"
Prosecutor: "How much would that cost?
Buijtendijk: "Fifty dollars for the year. Would that be OK?"
Buijtendijk: "And also we will give you the tickets or you can donate them back to us (to) sponsor some children in foster homes, elementary schools and hospitals."
Prosecutor: "The children will get to go to the games if I send my tickets back?"
The telemarketers then send a runner to pick up the check. Donors are labeled as "taps," or those who have given in the past and should be called again.
None of attorneys for the three suspected ringleaders -- Tiano and the Kellners -- returned phone messages Friday.
Tiano is being held in county jail in lieu of $1 million bail. A bit of a showman, Tiano had run unsuccessfully for sheriff twice and had been convicted of molesting Stone's two teenage daughters.
In June, he finished a 16-month sentence for failing to register as a sex offender.
The former lawman and the career telemarketers forged their relationship in 1983, when Tiano was president of the Santa Clara County Deputy Sheriffs' Association.
Soon after Tiano contracted with the Kellners to raise money for his group, the brothers began siphoning off donations "for their own personal use" and "making secret payments" to him to talk up their business to other potential clients, the indictment says.
In the early 1990s, the once-thriving fundraising enterprise -- which, at one point, had spread its tentacles under the Kellners to other states -- had begun to suffer from bad press. Contra Costa County newspapers ran a series of articles exposing their questionable practices.
And the climate worsened, the indictment says, after KTVU (Ch. 2) reported on the Kellners' "unscrupulous fundraising and business practices."
The brothers took cover. They created a new corporation in Nevada with different officers to conceal their roles and dodge the bad publicity -- not to mention "legitimate claims of judgment creditors and taxing authorities."
The foulest of the purported scams came in 1998, after the death of Millbrae police officer Dave Chetcuti, a veteran cop who was shot to death by a motorist.
"Immediately after his death they started calling, `Do you want to make a donation to the children's trust fund for the Chetcuti family?"' Donohoe recalled.
They raised more than $20,000, "probably substantially more," she said. Chetcuti's family saw nothing.
His widow is scheduled to testify at the trial.
Matt Kellner and Tiano are facing more than 25 years in prison; George Kellner could get a dozen.
Counterfeit Cancer Charity Bracelets
01/05 - Eight stores in New York have allegedly been selling imitations of the popular yellow "LiveStrong" wristbands and keeping the money that would otherwise go to the Lance Armstrong Foundation for cancer programs.
The area Consumer Protection Department issued citations against the stores, the latest sign of a counterfeiting trend dogging the foundation by engaging in "unconscionable and deceptive trade practices."
People think their money is going to a charitable program to help those with cancer, but with these phony bracelets, that is not the case.
The foundation has sold 30 million of the rubbery wristbands, which have "LiveStrong" engraved on them, at $1 each from its Internet sites, official Nike retailers and some bike shops. Armstrong, the six-time Tour de France champion, is a cancer survivor.
In recent months, the foundation has received several reports of fake wristbands, especially from the Northeast.
"It is extremely disappointing to learn that individuals are profiting from the sale of counterfeit wristbands," spokeswoman Michelle Milford said in an e-mail message. "It is not only illegal, but it is unethical to profit from the sale of counterfeit LiveStrong wristbands."
She said the foundation has taken "appropriate steps" to battle counterfeit sales. She would not elaborate.
The eight stores are subject to fines of up to $1,000 if the accusation holds up after a hearing.
Excerpt from Questionable Fundraising Practices by Ontario Police Association Telemarketers
Would you give that same dollar.... knowing a minimum of only as 17 centswas guaranteed to go to the Cops and the kids...... while telemarketers guarantee themselves up to 83 cents..... of your dollar which ends up in the coffers of an American company, Millennium Teleservices in Charleston West Virginia!!! 800-423-9411
If you get a call for money, simply ask the person on the phone.
"Are you a volunteer? Is that your real name Bill, or your telemarketing name? Do you work for a telemarketing or promotion company?.... How much money do you make on the telephone Bill?....
"Why can't you tell me Bill, it's my money and if I donate it, why can't you tell me Bill, what you're doing with my money?"