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Attorney General Ellison shuts down alleged sham charity fundraiser that bilked millions from consumers

Joins FTC, three other states in settlements that permanently prohibit defendants from charity fundraising business, require them to pay back nearly $900K for use by legitimate charities

 

September 17, 2020



September 16, 2020 (SAINT PAUL) –A sprawling fundraising operation that allegedly scammed consumers out of millions of dollars will be permanently banned from charitable fundraising, along with its owner and others involved in its operation, as a result of a lawsuit that Minnesota Attorney General Keith Ellison brought with the Federal Trade Commission and the attorneys general of New York, Virginia, and New Jersey.

The operation is made up of Outreach Calling, Inc. and multiple companies all under the control of owner Mark Gelvan, along with his associates Thomas Berkenbush, William English, and Damian Muziani. The complaint filed by the Minnesota Attorney General’s Office, the FTC, and the states alleges that the defendants served as the primary fundraisers for a number of sham charities that were the subject of numerous law enforcement actions.

Thecomplaintalleges that the sham charities claimed to use consumers’ donations to help homeless veterans, retired and disabled law enforcement officers, breast-cancer survivors, and others in need. In fact, these organizations spent almost none of the donations on the promised activities.

“Charities and their fundraisers have a responsibility to use the donations they solicit in the manner that donors intend,” said Attorney General Ellison. “Mark Gelvan and his associates exploited the generosity of Minnesotans through deception to enrich themselves. It’s my job to ensure Minnesotans aren’t taken advantage of. We will continue to pursue deceptive charitable fundraisers so that Minnesotans can be confident that the money they give is helping people in need.”

“This action puts fundraisers on notice: the FTC will not only shut down sham charities, it will aggressively pursue their fundraisers who participate in the deception,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “If you’re giving to charity and want to make sure your donations count, start at ftc.gov/charity to learn how to spot the scams.”

The complaint alleges that as much as 90 percent of the money the defendants raised for these sham charities went to the defendants themselves as payment for their fundraising services. What little money the charities did receive was rarely spent on any of their supposedly charitable missions, sometimes less than two percent.

According to the complaint, the defendants orchestrated the sham charities’ fundraising operations by soliciting donations, writing fundraising materials, and providing other key support to the sham charities. Defendants placed millions of calls misrepresenting how donations would be used. In many instances, the calls they placed violated consumers’ do-not-call requests.

The defendants in the case, who have worked with each other for as long as 30 years, have been subject to numerous law enforcement actions dating back as far as 1996. On May 18, 2009, the Minnesota Attorney General’s Office permanently banned another company that some of the defendants operated, Community Support, Inc., from making misrepresentations when soliciting charitable donations in Minnesota. Community Support, Inc., was also required to pay $200,000.

Under the proposedsettlements, all the defendants will be permanently prohibited from participating in any charity fundraising, and from deceiving consumers in any other fundraising effort, including for political action committees (PACs). The defendants will be required to clearly inform consumers at the time they ask for money that any donations are not charitable and not eligible for tax deductions. In addition, the defendants will be subject to significant monetary judgments and required to surrender assets as follows:

• Mark Gelvan, Outreach Calling, Inc., Outsource 3000, Inc., and Production Consulting Corp .: These defendants will be subject to a monetary judgment of $56,023,481, which is partially suspended based on their inability to pay. The corporate defendants will be required to surrender $45,386. Gelvan will be required to surrender $800,000, and will be required to sell two New Jersey properties he owns and surrender any net proceeds of those sales.

• William English:English will be subject to a monetary judgment of $873,293, which is partially suspended due to his inability to pay. He will be required to surrender $30,000. The terms of his settlement also prohibit him from participating in any fundraising activity of any kind.

• Damian Muziani: Muziani will be subject to a monetary judgment of $484,172, which is partially suspended due to his inability to pay. He will be required to surrender $12,369.

• Thomas Berkenbush: Berkenbush will be subject to a monetary judgment of $1,132,155, which is partially suspended due to his inability to pay. He will be required to surrender $5,000.

The funds being surrendered by the defendants will be paid to the State of New York, which will contribute the funds to legitimate charities that perform services that mirror those promised by the sham charities.

In the event any of the defendants either fails to surrender the amounts they owe or is found to have misrepresented their ability to pay, the full amount of their particular judgment — a total of $58,513,101 across all defendants — will become payable immediately.

Attorney General Ellison, the FTC, and the attorneys general of New York, Virginia, and New Jersey filed the complaint and final ordersin the U.S. District Court for the Southern District of New York.

Attorney General Ellison encourages anyone who is considering donating to charity to do their homework before they give. The Attorney General’s Office has severalpublicationson its website that contain tips and information you should know before giving. If you would like to report a complaint about deceptive charitable solicitations to the Minnesota Attorney General’s Office, you may do so by calling (651) 296-3353 or (800) 657-3787. You may also download a Complaint Form by clicking here.For more information,contact the Attorney General’s Office, as follows:

Office of Minnesota Attorney General Keith Ellison

445 Minnesota Street, Suite 1400

St. Paul, MN 55101

(651) 296-3353 (Twin Cities Calling Area)

(800) 657-3787 (Outside the Twin Cities)

http://www.ag.state.mn.us

 

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