Regulators go after charity schemes that make deceptive claims

Tuesday, May 20th 2003, 12:00 am
By: News On 6

WASHINGTON (AP) _ Government fraud fighters are going to court against fund-raising operations accused of swindling people out of millions of dollars with deceptive promises that donations would help police, firefighters, veterans and sick children.

The Federal Trade Commission said Tuesday it has filed complaints against five of these operations and is joining with 34 states in an education campaign to warn consumers about charity fraud. Agencies from 16 states also announced law enforcement actions against charity schemes.

``These are particularly heartless scams,'' said Howard Beales, director of the FTC's Bureau of Consumer Protection. ``By diverting donors' charitable dollars, these scam artists undermine the public's confidence in legitimate charitable fund raising.''

In one of the five cases highlighted by the FTC, six nonprofit corporations based in Anaheim, Calif., were banned from telemarketing under a settlement agreement completed Monday.

The FTC said the organizations _ American Veterans' Council, Children's AIDS Council, Children's Relief Services, Disabled Children's Charity, Firefighters' Assistance Foundation, and Police and Sheriffs' Support Fund _ were fakes controlled by ``unscrupulous fund-raisers for their personal profit.''

The organizations, which collected millions of dollars, provided telemarketers with scripts and brochures filled with false claims that donations would fund scholarships for veterans and their families and provide needy children with braces and wheelchairs, the FTC's civil complaint said.

The FTC said Tamara Bell, director of the six organizations, continued to deceive donors after she took over the operation from fund-raisers indicted in California last year on criminal fraud charges. The agency said Bell had no money to return to consumers.

Robert Moest, an attorney for Bell, said the settlement is reasonable and Bell ``took over the operation of the organizations without fully understanding what they were and what they were doing.''

The FTC complaints also include one against Community Affairs Inc., based in Pompano Beach, Fla., which solicits donations for more than 75 nonprofit groups, including the Virginia Firefighters Foundation and the Texas Fraternal Order of Police. Community Affairs keeps between 75 percent and 90 percent of the donations it collects, the FTC said.

The government's complaint said Community Affairs telemarketers falsely claimed they were members of law enforcement or firefighter organizations and most or all the money raised would go to charity.

Nabil Kassem, an attorney for Community Affairs, said the company did nothing wrong.

``The FTC is basically out on a witch hunt,'' he said. ``It's going to hurt not only the charities, but it's going to cost the taxpayers a substantial amount of money on a frivolous litigation.''

The other FTC complaints involve operations making false claims that they were connected with hospitals or law enforcement and firefighter organizations. The FTC said it didn't know how much money each operation took from consumers.