Court halts the fundraising and freezes bank accounts.
Professional fundraiser is suspected of diverting hundreds of thousands of dollars of charitable contributions made by Iowans.
DES MOINES. Attorney General Tom Miller has filed a consumer fraud lawsuit alleging that a professional fundraiser diverted charitable donations made by consumers into the fundraiser's own account, instead of depositing the donations into the charities' accounts.
"We believe the hired fundraiser may have funneled hundreds of thousands of dollars of contributions into a secret personal account, instead of providing the money to accounts of AmVets and other charities," Miller said at a news conference Friday morning in Des Moines.
The suit names Paul D. Ackerman of Sioux City, who does business as A&A Marketing. The business makes telemarketing solicitation calls from offices in Sioux City and Waterloo. After the suit was filed Thursday at Polk County District Court, Judge Joel D. Novak immediately entered an order requested by the Attorney General to halt all A&A fundraising and freeze its bank accounts.
"We allege that Ackerman solicited donations in the name of AmVets and another veterans organization called Vietnow," Miller said. "But then he funneled thousands of checks into an unauthorized personal account instead of to the charitable organizations."
"The Court has granted our request to immediately stop Ackerman's fraudulent fundraising and diversion of charitable funds - and to freeze any unauthorized accounts where Ackerman was funneling people's donations."
The suit asks the court to enter permanent injunctions and assess civil penalties up to $40,000 for each violation of the Iowa Consumer Fraud Act.
The 80/20 contract to raise funds for AmVets: The lawsuit indicates that Ackerman contracted to do telephone fundraising from the mid-1990s to October 2003 for a non-profit organization called "Iowa Department of AmVets." Phone solicitors would tell consumers the call related to AmVets' "annual drive to provide housing, food, transportation and home medical equipment to our vets," according to a solicitation script filed with the lawsuit. (Consumers were asked to support the organization by purchasing items such as light bulbs, trash bags, or soap, or by making a contribution to pay for a holiday food basket for a needy family, for example.)
By contract, A&A was to receive 80% of all moneys raised in AmVets' name, and AmVets 20%. All proceeds were to be deposited first into AmVets' Wells Fargo Bank account.
Activity for October 2003: In October 2003, AmVets discovered that a consumer's check solicited by A&A Marketing had been written to AmVets but deposited into an account at Pioneer Bank of Sergeant Bluff, Iowa, just south of Sioux City -- rather than the Wells Fargo account. AmVets terminated its contract with Ackerman later in October 2003.
Review of the Pioneer Bank account for October 2003 indicated there were 17 deposits totaling $27,679.50. (For example, a deposit of $4,784 made October 24, 2003, consisted of 120 checks written to AmVets, mostly in amounts of $25 to $50, and many had memo notations referring to "donation," "Thanksgiving Food Basket," and the like.)
Review of the account also indicated 17 checks were written on the Pioneer account totaling $27,345 -- all written by and to Paul Ackerman. Most if not all were deposited into another Ackerman account at the Dakota County State Bank in South Sioux City, Nebraska.
Meanwhile, according to the suit, Ackerman's last deposit in the Wells Fargo account, for October 1 to October 27, when his contract ended, resulted in $507.78 being shared between A&A and AmVets. Of that amount, $406.22 or 80% went to Ackerman, and $101.56 or 20% to AmVets, consistent with the 80/20 fundraising contract.
Activity for all of 2003: Consumer donations and payment checks deposited into the unauthorized Pioneer account totaled $234,896.99 for calendar year 2003. AmVets' 20% share of that would have been $46,979.40. However, in reality, AmVets' total amount received in 2003 was $4,938.18 -- 20% of net deposits to AmVets' Wells Fargo account of $24,690.88.
"A modus operandi that extends back to 1994": The lawsuit said the state believes: "Ackerman's diversion of consumer donations to the secret Pioneer account, his transfer of funds from that account to an account controlled by him and his wife, and his deposit into the Wells Fargo account of a mere fraction of the funds raised in AmVets' name, constitute a modus operandi that extends back to 1994, and may involve the diversion of hundreds of thousands of dollars from the charitable purposes that induced consumers to provide the financial support in question."
Vietnow: The suit alleges that A&A entered into another fundraising contract on October 24, 2003, with "Vietnow National Headquarters" based in Rockford, Illinois. In January 2004, Ackerman began depositing consumer checks to "Vietnow" into the Pioneer account, which was not authorized by Vietnow.