Spitzer Sues To Ban New Jersey Fund Raiser From Soliciting In New York
Attorney General Spitzer today announced a lawsuit against a New Jersey-based telemarketer for operating a deceptive multi-year telemarketing campaign that raised $5.8 million while violating numerous donor protection statutes.
Spitzer's suit targets All-Pro Telemarketing Associates Corp. (All-Pro) and Mark Gelvan, of Towaco, New Jersey, All-Pro's sole shareholder, officer, and director, for engaging in deceptive solicitation practices on behalf of the Fraternal Order of New York State Troopers. The Fraternal Order is a 240-member organization comprised of active and retired law-enforcement officers. In the early 1980s the organization was the collective bargaining unit for the New York State Police. Since that time, however, its focus has been limited to serving its membership.
All-Pro retained 85 percent of all donations raised on behalf of the Fraternal Order, approximately $4.93 million. The remaining $870,000 went to the Order and was used for administrative expenses and to benefit favored organizations and individuals.
"This fundraiser took cynical advantage of New Yorkers' desire to support law enforcement," said Spitzer. "Such exploitation simply will not be tolerated."
State Police Superintendent James W. McMahon said: "The New York State Police receives its funding through the state budget and does not solicit public donations. The only organization authorized to accept donations on behalf of the New York State Police is the not-for-profit Trooper Foundation, however, it does not engage in telephone solicitations to the public."
The Attorney General's complaint alleges that, starting in August of 1995, All-Pro's solicitors called New York residents, sometimes pretending to be New York State Troopers, and failed to comply with their legal obligation to identify themselves as paid solicitors.
Allegedly, donors were told that their contributions would be used for anti-drug and alcohol presentations in elementary schools throughout the state, and for an emergency fund to benefit charitable organizations, widows and orphans of the Order's members, and State Troopers.
The Attorney General alleges that between 1995 through 2001, All-Pro staged a total of 30 educational anti-drug programs in only nine of New York's sixty-two counties, despite a statewide solicitation and promises of a statewide anti-drug education campaign. Programs were performed in Albany, Dutchess, Kings, Nassau, Rensselaer, Richmond, Schenectady, Suffolk and Westchester counties. It is further alleged that the "emergency fund" for which donations were collected did not exist.
While All-Pro's callers solicited for charitable purposes, the Fraternal Order is not a charity; rather, it is a labor organization, and donations to it are not income tax deductible. All-Pro failed to disclose the Order's true tax-status.
The Attorney General conducted an initial investigation of All-Pro and the Order in 1996, concluding that similar misconduct had occurred. That investigation was settled in October 1996, with All-Pro and the Order paying a $30,000 penalty and agreeing to use a pre-approved script for telephone solicitations. The Attorney General's current complaint against All-Pro charges that the company violated that agreement.
The suit against All-Pro seeks restitution from All-Pro and Gelvan of donations made to the Order. The suit also seeks permanently to bar All-Pro and Gelvan from soliciting charitable funds from New York residents on behalf of any client. All-Pro continues to solicit charitable contributions in New York on behalf of fourteen entities.
In a related matter, Spitzer also announced the settlement of an investigation into the Fraternal Order's participation in All-Pro's fraudulent solicitations.
The Order's president, Alfred J. Donahue, is a retired State Trooper and served as Mayor of the Town of Buchanan from 1994 to 2002. The Order used its donations to pay its operating expenses and to benefit favored political campaigns, labor organizations and individuals. These contributions included $2,850 given to political campaigns and other labor organizations. In addition, Donahue's mayoral campaign committee received a total of $2,250 from five of the same organizations to which the Fraternal Order had previously contributed.
Under the settlement, the Fraternal Order has terminated its contract with All-Pro and agreed permanently to cease soliciting funds from the public. In addition, it will turn over the remaining balance of $210,000 to the Trooper Foundation, State of New York, Inc. The Trooper Foundation is a non-profit, tax-exempt charity that supports the New York State Police and its members. In addition, Donahue has agreed personally to pay $5,100 to the Foundation for funds he directed to projects far outside the scope of the purposes for which the funds were collected.
The Order and Alfred J. Donahue cooperated fully with the Attorney General's investigation.
The case is being handled by Assistant Attorney General Timothy B. Lennon of the Charities Bureau, under the direction of Assistant Attorney General Robert Pigott and William Josephson, Assistant Attorney General-in-Charge of the Charities Bureau.