Firm must halt its charity fraud


POSTED: Thursday, May 21, 2009

A federal-state crackdown on charity fraud is targeting dozens of organizations across the country, including a telemarketing firm that authorities say deceived Hawaii residents into giving money it claimed would benefit veterans and firefighters.





        If someone asks for a donation, take your time and get to know the charity:

» Ask for the charity's name, address, and phone number, and written information about its programs.


» Ask whether the person contacting you is a professional fundraiser and how much of your contribution will go to fundraising costs.


» Check the charity's track record by visiting Hawaii's online charity registry at ag.ehawaii.gov/charity.


» Beware of warning signs of a scam such as high-pressure pitches and requests for cash


» Be skeptical when you are thanked for a pledge you don't remember making. Scam artists will lie to get your money.


» Beware of charities that spring up overnight.


» Call the Hawaii Attorney General's office at 586-1470 if you are solicited by a charity that is not registered in the state.





        » www.ftc.gov/charityfraud

» ag.ehawaii.gov/charity


Sources: Federal Trade Commission, Hawaii Attorney General's office




As part of “;Operation False Charity,”; the state sued Community Support Inc., a professional solicitor based in Milwaukee, in Circuit Court in Honolulu.

Hawaii joined other states in reaching a settlement with the company, announced yesterday, in which the telemarketer agreed to stop its deceptive and illegal activities and pay $10,000 for any future violation.

The suit was one of 76 law enforcement actions taken against fundraising companies, nonprofits and individuals nationwide that were announced yesterday by the Federal Trade Commission. The agency also released new guidelines to help consumers avoid charity fraud.

“;Donors want to be sure their contributions benefit the causes they support, but unfortunately some false charities and telemarketers try to take advantage of consumers' goodwill and generosity,”; state Attorney General Mark Bennett said yesterday. “;We encourage donors to make informed decisions about their charitable giving, and we will continue to vigorously enforce the laws that help protect consumers.”;

Community Support Inc. solicited contributions for numerous charities, including the U.S. Navy Veterans Association, the Association for Firefighters and Paramedics Inc., the American Foundation for Disabled Children and the Reserve Police Officers Association.

The telemarketing firm told residents that 100 percent of their donations would go to charitable programs, and the money would be used in Hawaii. In fact, 85 percent to 90 percent of the money collected went to the fundraisers themselves and none supported charities in Hawaii, according to the suit.

The company's tactics were revealed in audio recordings it had to relinquish during the investigation. Its telemarketers, who were not in Hawaii, used a local post office box to collect donations here. It isn't clear how many local residents were solicited, but financial reports filed this year show that the company raised close to $100,000 in Hawaii.

Solicitors would tell prospective donors that they had previously supported the charity, when that wasn't the case, the suit alleged.

Callers would also pretend that donors had made new pledges, then follow up by sending documents that looked like bills and harassing them with collection calls, according to the lawsuit.


As part of the stipulated judgment, which has yet to be entered in Circuit Court, the company has agreed to cease its objectionable tactics and regularly report information on its activities. It will also reimburse the states a total of $200,000 for the cost of the investigation. Hawaii will get $7,000.

“;The judgment carries up to a $10,000 penalty for any additional violation, so it is a very robust injunction against future misbehavior,”; said Hugh Jones, deputy attorney general.

The FTC announced yesterday that federal and state authorities were taking action against 32 fundraising companies, 22 nonprofits and purported nonprofits, and 31 individuals. The commission itself filed suit against the American Veterans Relief Foundation Inc. and the Disabled Firefighters Fund, among others.