State Alleges Consumer Fraud in Charitable Fund-raising Calls
DES MOINES. Attorney General Tom Miller filed a lawsuit today alleging deceptive fund-raising practices by the "American Deputy Sheriffs' Association," a not-for-profit corporation headquartered in Louisiana that asks for donations supposedly to help Iowa law enforcement agencies with things like bullet-proof vests and benefits to families of officers killed in duty.
"We allege they use deceptive phone solicitations to make Iowans believe that the caller actually is a local law enforcement person, and that donations are put to good use in the community of the Iowan being called," Miller said.
"The truth, we allege, is that the callers are paid professional fund-raisers, most likely in Wisconsin, making thousands of calls to Iowans who contribute hundreds of thousands of dollars believing their gifts will support law enforcement. And the truth is, less than one-half of one percent of Iowa donations have been used to support Iowa law enforcement," Miller said.
"Our suit says essentially that the American Deputy Sheriffs' Association and its professional fund-raisers mislead Iowa donors, exploit the public's desire to assist local law enforcement, and then divert almost all of the charitable donations to the defendants' own benefit," he said.
The consumer fraud lawsuit was filed Wednesday at Polk County District Court in Des Moines. District Court Judge D.F. Staskal issued an immediate temporary injunction Wednesday prohibiting the defendants from violating the Iowa Consumer Fraud Act - including making any misrepresentations in phone solicitations about the location of the caller, whether the caller is in law enforcement, whether donations will be used by local law enforcement, and so on.
Defendants named in the suit are ADSA, Inc., doing business as the American Deputy Sheriffs' Association, headquartered in Monroe, Louisiana; Michael Croft, past president of ADSA; Ashley Isaac, president of ADSA; Thomas Buchman, internal auditor of ADSA; EulaLee Warner, secretary-treasurer of ADSA; Public Awareness, Inc., a professional fund-raiser business that contracts with ADSA and is based in Eau Claire, Wisconsin; and Duane Kolve, president of Public Awareness, Inc.
The suit asked the Court to issue the immediate temporary injunction ordered by Judge Staskal, to issue a permanent injunction, and to order the defendants to pay up to $40,000 for each violation of the Consumer Fraud Act and $5,000 for each violation against older Iowans.
Miller said: "This suit ultimately alleges that the American Deputy Sheriffs' Association exists primarily to rent its worthy-sounding name to telemarketing operations such as Public Awareness, Inc., which use carefully-crafted deceptions to exploit the public's desire to assist local law enforcement. We are asking the court to prohibit the violations we allege."
Miller announced the lawsuit Wednesday in Des Moines, joined by several Iowa county sheriff officers and leaders of the Iowa State Sheriffs' & Deputies' Association. The suit notes that numerous Iowa sheriff departments have disassociated themselves from ADSA appeals and warned the public that donations to ADSA do not benefit their counties.
Officers scheduled to join Miller included: Marion County Deputy Sheriff Tim Cox, President of the Iowa State Sheriffs' & Deputies' Association; and Neil Shultz, Chief of Administrative Services Div., and Sgt. Dave Knight, both of the Polk County Sheriff's Dept.
The suit alleges that the American Deputy Sheriffs' Association is known to have collected at least $987,586 from Iowans from 2001 through Sept. 2004 - but it alleges that only about $3,900 has been committed to assist local law enforcement in Iowa, or under four-tenths of one percent.
"Telemarketers calling for ADSA stress several worthy purposes, but the money isn't delivered for them in Iowa," Miller said. "Contrary to the representations made to potential donors, we allege that no Iowa family has received a death benefit for an officer killed on duty, no Iowa students have received an ADSA scholarship, and no training events have been held in Iowa."
Miller said phone solicitations stress that ADSA distributes bullet-proof vests and other equipment to officers who need it. "We allege ADSA in reality has committed only $3,900 to provide 15 bullet-proof vests in Iowa."
Nationwide, the suit says, filings with the IRS show ADSA raised $5,104,326 in 2003. Of that amount, ADSA paid $4,754,610 to its professional fund-raisers - 88% of the donations raised - and spent only $108,377, or two percent of total donations, on "program services" to support law enforcement.
Nationwide, for the period from 1998 through 2003, reports showed ADSA collected $28,023,607 in donations, and paid $25,052,918 to its professional fund-raisers - 89%. ADSA spent $1,144,181 on the worthy-cause "program services," or about four percent of total donations.
The lawsuit discusses in detail alleged misrepresentations reflected in telephone solicitation scripts, randomly-sampled tape recordings of solicitation calls, and calls reported by complaining consumers. Alleged misleading representations include that the caller is a member of law enforcement, that donations will benefit local law enforcement, that the solicitations are part of an annual "drive" (when they are made continuously year-around), that "most folks" pledge $35 or $50 (when most who give actually give about $15), and others.
The Attorney General's Office has filed charitable-solicitation lawsuits previously, including against Xentel, Inc., alleging the company deceived Iowans into believing that the callers are fire fighters and that donations will support local fire fighters.
Tips for Consumers:
The Attorney General's Office issues regular Consumer Advisory bulletins called "Donor Beware! How to Avoid Charity Fraud and Make the Most of Your Donations."
The advisory urges consumers to be especially wary of calls from supposed "law enforcement" or "firefighter" charities. Consumers are urged to contact their local sheriff, police or fire department to check out claims that a donation "will be used locally." Consumers should ask for information in writing before they agree to give. They should ask if the caller is a paid professional fund-raiser and ask how much of their gift will go to the charitable purpose and be used in their community.
The full "Donor Beware" Consumer Advisory bulletin is available at the web site: www.IowaAttorneyGeneral.org (click on protecting consumers, and consumer advisories.)
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