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Operation False Charity Law Enforcement Sweep

SC Secretary of State Hammond joins Federal Trade Commission in Washington for nationwide sweep

5/20/2009
 Washington, DC -- In a nationwide, federal-state crackdown on fraudulent charitable solicitors claiming to help police, firefighters, and veterans, South Carolina Secretary of State Mark Hammondjoined the Federal Trade Commission (FTC), other Secretaries of State, Attorneys General, and other law enforcers in 48 states and the District of Columbia today to announce Operation False Charity. Federal and state enforcers together announced 76 law enforcement actions against 32 fundraising companies, 22 nonprofits or supposed nonprofits, and 31 individuals. Also, the FTC and state agencies released new education materials in English and Spanish to help consumers recognize and avoid charitable solicitation fraud.        

“South Carolina is one of the most charitable states in the nation and protecting the charitable donor is a top priority of the Secretary of State’s Office,” said Secretary Hammond.  

Hammond was invited to speak at the press conference by FTC chairman Jon Leibowitz.   Hammond related the success the Secretary of State’s Office has had in taking action in recent years against four professional fundraisers: Courtesy Call, Associated Community Services, Center Stage Attractions, and T&T Enterprises.

Courtesy Call, Inc. entered into contracts with the US Deputy Sheriff’s Association, Association for Police and Sheriffs, and Association for Firefighters and Paramedics. Because of alleged violations of the South Carolina Solicitation of Charitable Funds Act, Courtesy Call was formally issued a Notice of Imposition of Fine. The Secretary of State’s office and Courtesy Call then entered into an Assurance of Voluntary Compliance (or an AVC) that resolved all outstanding issues concerning nondisclosures and misrepresentations made by Courtesy Call on behalf of the aforementioned badge-related charities. Under the terms of the AVC, Courtesy Call, in brief, would cease all outbound calling for the solicitation of South Carolina residents until they had installed a system to record the calls; they would provide a copy of recorded calls within five business days to the office upon request; Courtesy Call agreed to provide a copy of all proposed scripts and written materials to be used for solicitations to the Secretary of State’s Office prior to the campaigns; and they agreed to pay the Secretary of State’s Office $36,000 in fines for non-disclosure, and to reimburse 81contributors who donated to the Reserve Police Officer’s Association who Courtesy Call solicited on behalf of during a period of non-registration in the office.

Associated Community Services used unregistered individual professional solicitors calling on behalf of the Foundation for American Veterans. Associated Community Services signed a Letter of Understanding with the Secretary of State and paid a fine of $2,500.

Center Stage Attractions used individual professional solicitors who failed to make statutorily-required disclosures when calling on behalf of the Columbia Fire Fighters Association. The callers failed to disclose to the public that they were “paid” or “professional” solicitors; they did not give the true name of the professional fundraising company; and the Notice of Solicitation was not filed prior to the solicitation campaign. As a result Center Stage Attractions signed an Assurance of Voluntary Compliance with the South Carolina Secretary of State and is paying a fine of $15,000.

T&T Enterprises failed to make disclosures while calling on behalf of the South Carolina Wildlife Law Enforcement Officers Association. T&T paid a $4,000 fine to the South Carolina Secretary of State’s Office.

The FTC cases announced today include actions against several defendants who allegedly tricked consumers into giving by claiming they were affiliated with law enforcement or veterans groups or misleading consumers about how much of the money would go to those groups. According to the FTC, the defendants used legitimate sounding names to give their sham organizations a veneer of credibility. Their real goal, however, was to trick consumers into contributing money that they used overwhelmingly just to support themselves and their fundraisers.

FTC Chairman Liebowitz cautioned generous contributors to be careful when giving, even to badge-related charities. “Simply having the words “police,” “firefighter” or “veteran” in an organization’s name doesn’t mean that these groups will benefit from the money raised, said Liebowitz.  “If you want to give to one of these causes, use a charity that has a good track record. Charities that pop up overnight can disappear just as quickly.” For tips on how to avoid charity fraud, visit the FTC website at http://www.ftc.gov/charityfraud/

For the full text of the Federal Trade Commission’s press release on today’s event, go to http://www.ftc.gov/

The FTC also issued today a new consumer alert providing tips about charities that solicit donations on behalf of veterans and military families. According to the alert, which can be found on the agency’s Website at http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt157.shtm while many legitimate charities are soliciting donations to support the nation’s military veterans, not all “charities” are legitimate; some are operators whose only purpose is to make money for themselves. Others are paid fundraisers whose fees can use up most of the donor’s contribution.

Giving confidently is now easier than ever in South Carolina. The South Carolina Secretary of State’s Office recently upgraded its charities database with enhanced information that the public can access.  Previously, users could determine if the charity was active or suspended, exempt or registered, and could view the percentage of program expenses to total expenses.  If the charity is registered, the user can now also view the charity’s fundraising costs and net assets.  Viewing information in this detail assists the donor in making well-informed decisions when giving charitable contributions.

“The Secretary of State's Office has the duty of enforcing the Solicitations of Charitable Funds Act,” said Secretary of State Mark Hammond.  “But we have an obligation to make reporting as efficient as possible for the charity while providing the charitable donor with the most up-to-date information available regarding the charitable organization. Please research charities on our Website at http://www.scsos.com/Search%20Charities. This online service is available 24-hours a day.”

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