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November 14, 2008

Professional Fundraiser Company Ordered Not to Make Deceptive Calls in Iowa

Midwest Publishing-DN, Inc., also pays $30,000 to the State.
Deceptive fundraising calls to Iowans must cease under court order.

Des Moines. Attorney General Tom Miller said Friday that Midwest Publishing-DN, Inc. -- a paid professional fundraising company based in Phoenix -- has been ordered to stop abusive and misleading practices in its fundraising calls and solicitations to Iowans.

Two principals of the operation also were named in the court injunction: president and owner John F. McCallum of Phoenix, AZ, and vice-president Stanislaw Burzynski of Woodbury, MN.

Midwest Publishing makes many thousands of telemarketing calls each year into Iowa on behalf of Operation Lookout, the Firefighters Charitable Foundation, and the Iowa Narcotics Officers Association. Solicitation calls to Iowa are made from a phone room in St. Paul, MN.

“Midwest Publishing is prohibited from implying that its telemarketers are members of the charitable organization, rather than paid fundraisers, and from misrepresenting that donations will be used locally,” Miller said.

The court order imposes many other restrictions designed to prevent deception, Miller said. The consent judgment also provides that local law enforcement or fire departments that experience citizen complaints or other problems with Midwest Publishing’s fundraising can ask the company to terminate solicitations in that community, and Midwest must grant the request. Midwest Publishing also must pay $30,000 to the State under the Court’s Order.

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More background and detail:

The court order was entered Friday, November 14, by Polk County District Court Judge Douglas F. Staskal. The Consent Judgment and order resolves a consumer fraud lawsuit also filed Friday by the Attorney General’s Office against Midwest Publishing, McCallum, and Burzynski. [Go to Consent Judgment (court order). Go to consumer fraud lawsuit Petition.]

“We alleged that Midwest Publishing provided scripts and training that encouraged deception and abuse,” Miller said. “We alleged that the rate of pay of their telemarketers was tied to the volume of donations, and that the solicitors freely misled Iowa donors. This concern was amplified by the fact that a majority of Midwest’s telemarketers were on parole or probation for various offenses, including drug offenses and theft-related crimes,” Miller said.

Miller noted that although the callers stressed that donations would be put to good use, Midwest Publishing kept 85 cents of every dollar donated as compensation for its telemarketing services, and gave only 15 cents of each dollar to the charitable organizations.

Miller said that the Consumer Protection Division first learned last year that the company was engaged in deceptive fundraising practices in Iowa. After investigating further, Miller’s office prepared the lawsuit and presented it to the defendants, who agreed to an injunction and other terms to settle the impending lawsuit. Once the settlement terms were final, the AG’s Consumer Protection Division filed the lawsuit and presented the consent judgment for court approval Friday.

In addition to the $30,000 the defendants must pay to the State, the judgment provided that a further payment of $100,000 would come due if the defendants violate the Court’s order in the next three years.

Terms of the Court order and injunction include:

  • Midwest must not imply that a telemarketer is an officer, firefighter, volunteer, or anything other than a paid professional fundraiser.
  • Midwest must not insinuate or say the charitable organization has more of a connection to the potential donor’s community or to the state of Iowa than the organization really has.
  • Midwest must not misrepresent how donated funds will be used.
  • Midwest must not tie telemarketer pay to the volume of donations extracted without regard to whether the callers may be misleading donors.
  • Midwest must not mislead consumers as to any material fact.

Miller said Midwest Publishing routinely tape-recorded solicitation calls made by its telemarketers at the time the AG’s Office began investigating deceptive practices by the company, and that his office was able to subpoena recordings to investigate and demonstrate wrongdoing. But Midwest Publishing stopped recording its calls, in what Miller believed was an effort to keep proof of deceptive conduct from being preserved.

“Now we have insisted and the Court has ordered Midwest to resume taping at least 20 percent of all its fundraising calls made into Iowa, without the telemarketers knowing which calls are being recorded,” Miller said. “That way we’ll have a window into what Iowans are really being told, and whether the Court’s injunction is being followed.”

“Donor Beware!”
Tips for making the most of your donations:

“Iowans give generously and are to be commended for that,” Miller said. “But we have to make sure devious operators don’t tap into Iowans’ generosity under false pretenses. This judgment is part of that continuing effort.”

Miller encouraged Iowans to continue to give generously to charities of all kinds -- but to protect the value of their donations by following basic wise-giving tips:

  • Give to reputable local charities.
  • Ask questions about how donations will be used -- where, and what percentage for the charitable purpose.
  • Ask telephone solicitors to send information in writing.
  • Don’t give credit card or checking account numbers over the phone.

For more information see the "Consumer Advisory" bulletin titled "Donor Beware!" at (click on "Protecting Consumers" and "consumer advisories.")

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