A.G. Schneiderman Announces Suit Against Brooklyn Telemarketing Firm Under Investigation For Possible Deceptive Fundraising Practices And Harassment

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
December 21, 2016

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A.G. SCHNEIDERMAN ANNOUNCES SUIT AGAINST BROOKLYN TELEMARKETING FIRM UNDER INVESTIGATION FOR POSSIBLE DECEPTIVE FUNDRAISING PRACTICES AND HARASSMENT

A.G.’s Office Seeks Accounting From Telemarking Operation That Retained At Least 85% Of Donations Collected From New Yorkers

Schneiderman: I Encourage All New Yorkers To Think Carefully About The Organizations They Donate To This Holiday Season In Order To Ensure Their Money Is Going To A Worthwhile Cause

NEW YORK – Attorney General Eric T. Schneiderman today announced a suit to compel Brooklyn professional fundraiser, Menacola Marketing, d/b/a Neighborhood Outreach (“Menacola”), and the husband and wife team that ran it -- president and owner, Katherine DeGregorio, and Joseph DeGregorio, vice president – to comply with an ongoing fraud investigation. From 2010 to 2015 Menacola reported raising donations of $5.04 million from New York donors from the approximately twenty charities it represented.  During this same period Menacola retained, on average, 85% of the donations, or at least $4.4 million, for its fundraising services. 

The Attorney General’s seeks details about Menacola’s conduct over the past several years, including an accounting of the money Menacola raised from New Yorkers, compelling Menacola to produce its books and records, and ordering Mr. and Ms. DeGregorio to sit for examinations. Menacola and the DeGregorios have refused to cooperate in the Attorney General’s investigation, prompting this lawsuit. This investigation is part of a larger ongoing effort by the Attorney General’s Charities Bureau to review the activities of a network of telemarketing and direct mail charities and professional fundraisers operating in New York, and the network of companies that assist them.  These fundraisers receive 85% or more of the contributions they solicit, and focus their solicitations on landline telephone customers.

“It is shameful for telemarketers to take advantage of the generosity of New Yorkers. Unfortunately, many fundraisers are only looking out for themselves, retaining the majority of the donations to fund their own operations,” said Attorney General Schneiderman. “I encourage all New Yorkers to think carefully about the organizations they donate to this holiday season in order to ensure their money is going to a worthwhile cause.”

The complaint makes clear that the Office of the Attorney General is investigating several allegations of misconduct by Menacola, including that its telemarketers sent mail to New Yorkers including invoices for pledges that they never made, made repeated, high-pressure calls on behalf of charities to individuals who had previously requested to be placed on the charity’s Do-Not-Call List, and misrepresented to the Attorney General that it had not been the subject of disciplinary actions in other States. The investigation is also examining whether Menacola funneled a portion of the donations its charities received to a for-profit company controlled by a fundraiser, Mark Gelvan, who has already received a lifetime ban from soliciting funds in New York.  

Menacola served as a fundraiser for numerous charities, including the National Vietnam Veterans Foundation, Inc. (“NVVF”).  Pursuant to settlement agreement with the Office of the Attorney General, NVVF recently shut down and its founder, J. Thomas Burch, Jr., was forced to repay unlawful gains.  Those settlements can be found here .  According to the complaint, NVVF admitted that direct mail distributed by Menacola was misleading in that it stated that donations would be applied to the provision of care packs, printing guide books with essential services and hospital information, food pantry funding and donations to stand downs, when in fact most of the money was spent by NVVF on fundraising expenses, overhead, and to finance the lavish lifestyle and entertainment pursuits of its president and chairman.  

This lawsuit highlights the importance of AG’s Charities Bureau’s Tips for Charitable Giving, available here, during a season when many attempt to take advantage of the generosity of New Yorkers.  Charitable donations obtained by many professional fundraisers are largely spent on fundraising and administrative expenses, with only a small fraction left for charitable work. The Attorney General’s office also encourages charities to do their due diligence before they retain fundraisers with high percentage contracts and a history of noncompliance with laws protecting donors.

This lawsuit is being handled by Assistant Attorney General Elizabeth Ann Fitzwater and Co-Chief of the Charities Bureau Enforcement Section, Yael Fuchs.  The Charities Bureau is led by Bureau Chief James Sheehan and Deputy Bureau Chief Karin Goldman.  Alvin Bragg is Executive Deputy Attorney General for Social Justice.

More information about the Attorney General’s Charities Bureau and organizations regulated by the Bureau may be found at www.charitiesnys.com.