Statewide Investigation Shows Telemarketers Routinely Lie to Donors During High-Pressure Calls

NEW YORK, NY (January 20, 2010) - Attorney General Andrew M. Cuomo today announced that his office has filed lawsuits to shut down four professional fundraising companies that lie, manipulate, and deceive to get charitable donations. During telemarketing calls, these four companies consistently violated New York laws by disguising their status as paid professional fundraisers and lying about the programs that the donations would support.

The lawsuits against the four companies - Caring People Enterprises, Inc., Marketing Squad, Inc., Stage Door Music Productions, Inc., and Suffolk Productions, Inc. - are part of the Attorney General’s ongoing initiative to fight fundraising scams and to make sure generous donations from New Yorkers are being properly collected and used. Over the past three years, these companies have collectively reported raising $16 million. On average, they keep seventy-six percent of the funds raised.

“These fundraisers manipulate sympathetic donors in order to raise money for the only cause they truly care about - themselves,” said Attorney General Cuomo. “Exploiting generous New Yorkers, especially in these times of economic distress, is reprehensible, and we must put these operations out of business. However, we cannot let a few rotten apples spoil the whole bunch. As we continue to aggressively pursue fraudulent fundraisers, New Yorkers should feel even more confident in giving now.”

It is illegal to fundraise in New York using deceptive or misleading practices. Anyone soliciting for charities in New York must, among other things, provide a clear description of the programs and activities for which donations are requested or state that such information is available from the charity, disclose the name of the professional fundraising company, disclose the name of the individual professional telemarketer, and disclose the fact that the telemarketer is being paid. In addition, professional fundraisers are required to register and file reports with the Attorney General’s office.

As part of the Attorney General’s investigation, undercover investigators secured jobs with fundraising companies, where they were trained to carry out fraudulent practices and where they observed employees making false statements to the public during phone solicitations.

The investigation revealed that at times the telemarketers:

* Used aliases and illegally failed to disclose that they were paid fundraisers to make it seem that donors were giving directly to a charity
* Changed the names of charities so they sounded similar to well-known charities or causes, and were thus more appealing to donors
* Lied about the programs client charities actually provided
* Created the false impression that they were law enforcement officials
* Filed false annual documents with the Attorney General’s office containing fake scripts that were made to seem like the ones used by their telemarketers; however, telemarketers actually ignore the scripts and engage in deceptive practices

Attorney General Cuomo’s lawsuits seek to shut down the companies, cancel their registrations as professional fundraisers, and prevent them from further soliciting the public. The lawsuits also seek penalties and restitution. The four lawsuits were filed today in Albany county (Stage Door Music Productions, Inc.), Monroe county (Caring People Enterprises, Inc.; Marketing Squad, Inc.), and Suffolk county (Suffolk Productions, Inc.).

Chuck Bell, Programs Director for Consumers Union, said, “During these tough economic times, charities and the services they provide become even more vital. Unfortunately, the Attorney General has found that certain professional fundraising companies are preying on the good will of generous New Yorkers. This despicable behavior is an insult to both the donors and the charities that are truly in need. On behalf of Consumers Union, I am glad that Attorney General Cuomo is leading the fight to protect donors.”

Daniel Borochoff, president of the American Institute of Philanthropy, said, “By far most charitable organizations perform vital services to those in need and they depend on generous donations to fund their important work. The troubling findings of Attorney General Cuomo’s investigation show that some professional fundraisers misrepresent how contributions will be used and exploit the good intensions of donors in the process. These professional fundraisers have no place in the world of not-for-profits and I am glad that Attorney General Cuomo is taking action to shut them down.”

Today’s action is part of Attorney General Cuomo’s ongoing efforts to safeguard donors. Last November, the Attorney General released his annual “Pennies for Charity” report, which shows the percentage of donations collected by charities that actually go toward charitable purposes. Recently, the Attorney General shut down the United Homeless Organization for deceiving donors.

The cases are being handled by Assistant Attorneys General Alan Berkowitz, Benjamin Bruce, Nathan Courtney, and Patricia Northrop, under the supervision of Charities Bureau Chief Jason Lilien, Senior Trial Counsel Kathryn Diaz, and Deputy Attorney General for Social Justice James Rogers.

Donors who suspect they have been a victim of charitable solicitation fraud should contact the Attorney General’s office through his website or by calling (212) 416-8402.