FTC Targets Charity Scams About Veterans, Cancer, Police, and Disabled

The Federal Trade Commission and the Attorneys Generals in New York, Minnesota, Virginia, and New Jersey have filed suit against Outreach Calling, Market Process Group, Outsource 3000, Production Consulting Corp, 7 Production Consulting, Thomas Berkenbush, William English, Mark Gelvan, and Damian Muziani.

The suit filed states, “Since at least 2010, Defendants, led by Mark Gelvan, have operated a deceptive fundraising scheme that solicits donations on behalf of sham charities. Defendants have bilked tens of millions of dollars from well-meaning American donors on behalf of sham charities, including the National Vietnam Veterans Foundation, Inc.; Breast Cancer Survivors Foundation, Inc.; Reserve Police Officers Association; Disabled Police and Sheriffs Foundation, Inc.; Center for American Homeless Veterans, Inc.; and Crisis Relief Network, Inc.

Defendants, through telemarketing and mailings, promise prospective donors that their charitable contributions will support worthy causes, such as care packs to Vietnam veterans in need, transitional facilities for homeless veterans, and grants to family members of fallen officers. In truth, the Defendants have fundraised for sham charities, several of which have been shut down through state and federal enforcement actions. Only a fraction of each donated dollar—typically no more than 5%, if that—is spent on the stated charitable programs, while 85- 90% is distributed to for-profit companies that primarily benefit Gelvan. The operators of the sham charities for which Defendants fundraise typically spend the majority of the remaining funds to pay themselves and family members, and for administrative costs.”

The lawsuit filed alleges the fundraising was conducted for sham charities. We’ve all probably received calls for charities that sound like they are worthy and patriotic causes. But are they really? The complaint filed paints a different picture.

“From 2010 to September 2016, Defendants provided fundraising services to the National Vietnam Veterans Foundation, Inc. also doing business as American Veterans Support Foundation (“NVVF”). NVVF was formed as a nonprofit corporation in the District of Columbia in 1992. Its corporate headquarters was located in Alexandria, Virginia in the personal residence of its President and Chairman of the Board, John Thomas Burch, Jr. NVVF’s stated mission was “Veterans helping Veterans with the generous support of the American people.”

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In their fundraising campaigns, Defendants represented that NVVF provided “assistance with care packs for hospitalized veterans as well as food programs for homeless veterans.” In the mailers, Defendants represented that NVVF provided: (1) “Personal care packs and free long distance telephone cards so hospitalized veterans can call and hear the voice of a loved one;” (2) “televisions and personal care packs for patients in VA hospitals;” (3) “funding to veteran Food Pantry Programs for unemployed and homeless veterans and their families;” and (4) “financial grants to Operation Stand-Downs which benefit homeless or unemployed veterans.”

These representations were false and misleading. In truth and fact, from 2012 to 2014 NVVF raised over $20 million from all of its professional fundraisers and spent less than 1.5% of the funds raised on its charitable programs. For example, in 2014 NVVF reported in its IRS Form 990 that it raised $8,657,816 but only provided $122,333 in purported “contributions to various veterans organizations, charities and educational programs.” Of that amount, NVVF purportedly provided 35 grants for necessities to veterans or families of veterans, amounting to $35,104 in total. One of the veteran organizations that received a grant from NVVF in 2012 was Center for American Homeless Veterans, Inc., another one of Defendants’ sham charity clients.”

“Of the small percentage of the funds that NVVF retained, the bulk was spent on funding its President’s, John Burch’s, lavish lifestyle. Such expenditures included weekly expenses at nightclubs in Baltimore, expensive food and drink at the country’s top restaurants, foreign and domestic travel, parking for two automobiles in downtown Washington, D.C. where he worked full-time at another job, and paying for his medical expenses, his life and medical insurance policies, and the utilities for his home.”

It Gets More Disgusting

The listing of charities that were allegedly used to extract money out of well-intentioned people that care about veterans, law enforcement, military members, people with cancer, and children is disgusting.

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You can read the entire complaint below.

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