PORTLAND, Ore. (CN) -Two fund-raising firms ran scams by “pulling on donors’ heartstrings,” claiming donations would benefit veterans, cancer patients and firefighters, though the firms kept 80 percent or more of the money, and as little as 5 percent of it went to charity, the Oregon attorney general says. Attorney General John Kroger accused Center Stage Attractions, and Community Support of using phone solicitations to rip off thousands of Oregonians.
Both complaints were filed in Multnomah County Court.
Center Stage Attractions claimed it would use donations to provide entertainment to veterans living in hospitals run by the Department of Veterans Affairs. But Kroger says it kept 80 percent the money it collected, and gave as little as 5 percent of it to veterans’ programs.
Kroger claims Center Stage principal Joseph Gehl has long flouted the laws governing charitable solicitations.
In 1999, Kroger says, Gehl consented to an administrative order requiring his company, The Gehl Group, to refrain from asking Oregon residents for donations for 2 years, “based on its violations of the laws governing charitable solicitations.”
But 3 months before Gehl signed the consent order, Kroger says, Gehl had hired his own subsidiary to continue soliciting donations for The Gehl Group. Gehl was president of the subsidiary, Xentel DM, according to the complaint.
In 2003, Kroger says Gehl left Xentel to form Center Stage.
That year, The Veterans Fund hired Center Stage to solicit donations. Veterans Fund was supposed to pay Center Stage according to the hours worked by its telemarketers, but in reality, Kroger says, Center Stage kept a percentage of donations, grabbing up to 80 percent of them.
Center Stage also regularly called Oregonians whose telephone numbers are listed on the state and National Do Not Call Registry, Kroger says. For that reason and because Center Stage “often fails to disclose its status as a professional fund raiser,” Kroger says the Oregon Department of Justice fined Gehl $45,000 and had him sign an assurance of voluntary compliance in 2008.
But Gehl “fell far behind” on payments, Kroger says, so the state investigated Gehl’s business practices.
Kroger says it found “continued and widespread violations of Oregon’s Telephone Solicitation Act, Oregon’s Charitable Solicitation Act, and Oregon’s Unlawful Trade Practices Act.”
Kroger demands fines, restitution for Oregon donors and an injunction stopping Gehl and Center Stage from operating charitable organizations.
In the second lawsuit, Kroger accused fund-raising firm Community Support of shady practices while soliciting donations on behalf of the National Vietnam Veterans Foundation, the United States Navy Veterans Association – Oregon Chapter, Firefighters Support Foundation, American Breast Cancer Foundation, Woman to Woman Breast Cancer Foundation, Cancer Center for Detection and Prevention and Medical Support Association.
Kroger claims Community Support “employs an aggressive and illegal fund-raising scheme to maximize donations to its clients and [its] own profits.” He says the company keeps 80 to 90 percent of the donations.
Kroger says Community Support telemarketers regularly claim they are employed by the charitable organizations they represent.
In one instance, Community Support told donors “their $15 donations ‘go a long way to help’ to ‘make advanced training in life saving and firefighter programs available, help under funded fire departments with equipment grants, as well as provide assistance to families of firefighters killed in the line of duty,'” according to the complaint.
But for every $15 donation in 2008, Kroger says, less than 75 cents actually made it to Firefighters Support Foundation, Community Support’s client.
Kroger says Community Support also called Oregonians listed on the National Do Not Call Registry.
The Oregon Department of Justice fined Community Support in 2007 for falsely telling donors their contributions to its client, Police Officers Safety Association, would benefit police officers.
Kroger says Community Support filed an Assurance of Voluntary Compliance in lieu of a $20,000 fine.
But the company continued to violate Oregon law, Kroger says, harassing several women by calling up to four times a night until they agreed to make a donation.
Kroger demands restitution, fines and an order barring Community Support from future violations of Unlawful Trade Practices Act and the Charitable Solicitations Act.