ATTORNEY GENERAL HERRING SHUTS DOWN SHAM CHARITY FUNDRAISING OPERATION THAT BILKED MILLIONS FROM CONSUMERS

~ Virginia joins FTC, Minnesota, New Jersey and New York in settlement that will permanently prohibit defendants from charity fundraising business, require them to pay back money for use by legitimate charities ~

RICHMOND (September 16, 2020) – 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,” said Attorney General Herring. "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, Attorney General 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.

Attorney General 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. In addition, the defendants will be subject to significant monetary judgments and required to surrender assets as follows:

Gelvan, Outreach Calling, Inc., Outsource 3000, Inc., and Production Consulting Corp.: These defendants will be subject to a monetary judgment of $56,023,481, which is partially suspended based on their inability to pay. The corporate defendants will be required to surrender $45,386. Gelvan will be required to surrender $800,000, and will be required to sell two New Jersey properties that he has a stake in and surrender any net proceeds of those sales.

Damian Muziani: Muziani will be subject to a monetary judgment of $484,172, which is partially suspended due to his inability to pay. He will be required to surrender $12,369.

Thomas Berkenbush: Berkenbush will be subject to a monetary judgment of $1,132,155, which is partially suspended due to his inability to pay. He will be required to surrender $5,000.

William English: English will be subject to a monetary judgment of $873,293, which is partially suspended due to his inability to pay. He will be required to surrender $30,000. The terms of his settlement also prohibit him from participating in any fundraising activity of any kind.

The funds being surrendered by the defendants will be paid to the State of New York, which will contribute the funds on behalf of New York, Virginia, and New Jersey to legitimate charities that perform services that mirror those promised by the sham charities.

In the event any of the defendants either fails to surrender the amounts they owe or is found to have misrepresented their ability to pay, the full amount of their judgment would become payable immediately.

Virginia, the FTC and the other states filed the matter in the U.S. District Court for the Southern District of New York, and the court will need to approve the settlements.

Overall, Attorney General Herring's Consumer Protection Section has recovered more than $334 million in relief for consumers and payments from violators. The Section has transferred more than $61 million to the Commonwealth's General Fund, and following a major reorganization and enhancement in 2016 the Section has been even more effective in fighting for Virginia consumers.

Before giving to a charity, remember these tips:

• Give to charities you know and trust
• Watch out for groups with names that sound like other well-known, reputable charities
• Don't give to someone pressuring you to make a quick donation or requiring that you give cash or wire money
• Ask for detailed information about programs and services in writing
• Find out how much of your donation will go to the charity's programs and services
• Check if the charity and its fundraiser are registered with the Office of Charitable and Regulatory Programs in the Virginia Department of Agriculture and Consumer Services - (804) 786-1343 or http://www.vdacs.virginia.gov/food-charitable-solicitation.shtml

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