Suit leads to shutdown of sham charity operation that bilked millions from consumers
A sprawling fundraising operation that allegedly scammed consumers out of millions of dollars will be permanently banned from charitable fundraising along with its owner and others involved in its operation as a result of a lawsuit brought by Attorney General Mark R. Herring, the Federal Trade Commission, and Attorneys General of New York, Minnesota, and New Jersey.
The fundraising operation is made up of multiple companies all under the control of owner Mark Gelvan, along with his associates Thomas Berkenbush, William English, and Damian Muziani.
The complaint filed by the Office of the Attorney General of Virginia, the FTC, and partner states alleges that the defendants served as the primary fundraisers for several sham charities that were the subject of numerous law enforcement actions.
“Sham organizations that solicit funds from kind-hearted Virginians, who think they are giving to important causes like veterans charities or cancer survivors, are despicable and must be held accountable for their deceptive practices,” Herring said. “I am glad we were able to permanently ban this operation from fundraising anymore and I hope that this settlement will send a strong message to others who are raising money for sham charities that this kind of fraudulent conduct will not be tolerated in Virginia.”
In their complaint, Herring and his colleagues allege that the sham charities claimed to use consumers’ donations to help homeless veterans, retired and disabled law enforcement officers, breast cancer survivors and others in need. In fact, these organizations spent almost none of the donations on the promised activities.
Herring and his colleagues further allege that as much as 90 percent of the money raised by the defendants for these sham charities went to the defendants themselves as payment for their fundraising services. What little money the charities did receive was rarely spent on any of their supposedly charitable missions, sometimes less than two percent.
According to the complaint, the defendants orchestrated the sham charities’ fundraising operations by soliciting donations, writing fundraising materials, and providing other key support to the sham charities. Defendants placed calls misrepresenting how donations would be used, and in many instances, the calls violated consumers’ do-not-call requests.
The defendants in the case, who have worked with each other for as long as 30 years, have been subject to numerous law enforcement actions dating back as far as 1996.
Under the proposed settlements, all the defendants will be permanently prohibited from participating in any charity fundraising, and from deceiving consumers in any other fundraising effort, including for political action committees (PACs). The defendants will be required to clearly inform consumers at the time they ask for money that any donations are not charitable and not eligible for tax deductions.