AG HEALEY JOINS
FEDERAL AND STATE COALITION TO SHUT DOWN ILLEGAL ROBOCALL AND CHARITY FRAUD
OPERATION
Defendants Made more than 1.3 Billion Deceptive Fundraising
Calls—Mostly Illegal Robocalls—Claiming to Support Various Groups including
Veterans, Children, and Firefighters
BOSTON
– Attorney General Maura Healey, along with the Federal Trade
Commission (FTC) and 38 states and the District of Columbia, has stopped a
massive telefunding operation that bombarded 67 million consumers with 1.3
billion deceptive charitable fundraising calls—mostly illegal robocalls. Nearly
54 million calls were made to Massachusetts phone numbers in less than four
years through this telefunding operation. Overall, the defendant companies collected
more than $110 million using their deceptive solicitations.
Associated Community
Services (ACS) and a number of related defendants have agreed to settle charges
by the FTC and state agencies that they misled generous Americans into donating
to charities that failed to provide the services they promised. The complaint
names ACS and its sister companies Central Processing Services and Community
Services Appeal; their owners, Dick Cole, Bill Burland, Barbara Cole, and Amy
Burland; and ACS senior managers Nikole Gilstorf, Tony Lia, John Lucidi, and
Scot Stepek. In addition, the complaint names two fundraising companies
allegedly operated by Gilstorf and Lia as spin-offs of ACS—Directele, and The
Dale Corporation.
“These companies
inundated consumers with more than one billion deceptive and illegal robocalls
in order to exploit their generosity and trick them into giving to sham
charities,” said AG Healey. “We have worked with our federal and state
partners to shut down this operation and protect our residents from being duped
by scammers looking to profit.”
“Deceptive charitable
fundraising can be big business for scammers, especially when they use illegal
robocalls,” said Daniel Kaufman, Acting Director of the FTC’s Bureau of
Consumer Protection. “The FTC and our state partners are prepared to hold
fraudsters accountable when they target generous consumers with lies.”
According to the complaint,
the defendants knew that the organizations for which they were fundraising
spent little or no money on the charitable causes they claimed to support—in
some cases as little as one-tenth of a percent. The defendants kept as much 90
cents of every dollar they solicited from generous donors on behalf of the
charities.
The defendants
allegedly made their deceptive pitches since at least 2008 on behalf of
numerous organizations that claimed to support homeless veterans, victims of
house fires, breast cancer patients, children with autism, and other causes
that well-meaning Americans were enticed to support through the defendants’
high-pressure tactics. ACS was also the major fundraiser for the sham Cancer Fund charities that were shut down by the
FTC and states in 2015.
In many instances, the
complaint alleges, ACS, and later Directele, knowingly violated the
Telemarketing Sales Rule (TSR) by using soundboard technology in telemarketing
calls. With that technology, an operator plays pre-recorded messages to
consumers instead of speaking with them naturally. Use of such pre-recorded
messages in calls to first-time donors violates the TSR. Use of the technology
in calls to prior donors also violates the TSR unless call recipients are
affirmatively told about their ability to opt out of all future calls and
provided a mechanism to do so. The defendants did not make that disclosure.
Most of Directele’s soundboard calls originated from call centers in the
Philippines and India.
The complaint also
charges ACS with making harassing calls, noting that ACS called more than 1.3
million phone numbers more than ten times in a single week and 7.8 million
numbers more than twice in an hour. More than 500 phone numbers were even
called 5,000 times or more.
The ACS defendants were
the subject of 20 prior law enforcement actions for their fundraising
practices. The ACS defendants stopped operating in September 2019. Gilstorf
purchased Directele and Dale Corp in October 2019 and, with Lia, the Directele
defendants allegedly continued the deceptive fundraising and illegal
telemarketing practices. The complaint alleges the defendants violated
Massachusetts General Laws chapters 68 § 32 and 93A § 2, the FTC Act, the TSR,
and numerous other state laws.
The terms of the
settlements with the defendants are as follows:
Associated
Community Services Defendants
Each of these
defendants will be permanently prohibited from conducting or consulting on any
fundraising activities and from conducting telemarketing of any kind to sell
goods or services. In addition, they will be prohibited from using any existing
donor lists and from further violations of state charitable giving laws, as
well as from making any misrepresentation about a product or service. The
defendants will also be subject to the following monetary judgments:
- Associated
Community Services, Inc.; Community Services, Inc.; Central Processing
Services, Inc.; and Richard “Dick” Cole are subject to a monetary judgment of
$110,063,843, which is suspended due to an inability to pay.
- Community
Services Appeal, Inc. and Barbara Cole are subject to a monetary judgment of
$110,063,843, which is partially suspended due to an inability to pay.
Barbara Cole also will be required to turn over the proceeds of the sale
of a vacation home in Michigan.
- Robert W.
“Bill” Burland and Amy J. Burland are subject to a monetary judgment of
$110,063,843, which is partially suspended due to an inability to pay. Amy
Burland will be required to turn over $450,000.
Directele Defendants and ACS
Senior Managers Scot Stepek and John Lucidi
Each of these
defendants will be permanently prohibited from any fundraising work or
consulting on behalf of any charitable organization or any nonprofit
organization that claims to work on behalf of causes similar to those outlined
in the complaint. They’ll also be prohibited from using robocalls for any form
of telemarketing, using abusive calling practices, or making any
misrepresentation about a product or service. In addition, the defendants will
be required to clearly and conspicuously disclose when a donation they are
requesting is not tax deductible and the two corporate defendants—Directele
Inc. and The Dale Corporation—will be required to cease operations and
dissolve. The defendants will also be subject to the following monetary
judgments:
- Scot Stepek will be
subject to a monetary judgment of $110,063,843, which is partially
suspended due to an inability to pay. Stepek will be required to sell a
ski boat in his possession and turn over the net proceeds from the sale.
- Directele
Inc., The Dale Corporation, Nikole Gilstorf, and Antonio Lia
will be subject to a monetary judgment of $1.6 million. Gilstorf and Lia
also will be subject to a judgment of $110,063,843. The judgments are
partially suspended due to an inability to pay. Gilstorf and Lia will each
be required to turn over $10,000.
- John Lucidi will be subject to a judgment of
$110,063,843, which is partially suspended due to an inability to pay. He
will be required to turn over $25,000.
Other state agencies joining the
case with the Massachusetts AG’s Office and the FTC include the attorneys
general of Alabama, California, Colorado, Connecticut, Delaware, the District
of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, Maryland, Michigan, Missouri, Montana, Nebraska, Nevada, New
Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma,
Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia, Washington, West
Virginia, Wisconsin, and Wyoming; the secretaries of state of Colorado,
Georgia, Maryland, North Carolina, and Tennessee; and the Florida Department of
Agriculture and Consumer Services and the Utah Division of Consumer Protection.
The complaint and stipulations were
filed in the U.S. District Court for the Eastern District of Michigan.
The funds being surrendered by the defendants will be paid to an escrow fund
held by the State of Florida and, following a motion by the participating
states and approval by the court, be contributed to one or more legitimate
charities that support causes similar to those for which the defendants
solicited.
Consumers with questions about this settlement can contact the
FTC’s Consumer Response Center.
AG Healey’s Office encourages potential donors to
consider the following points when they are contacted by a solicitor for
charitable donations:
- Is the solicitor calling
your home a volunteer or a professional fundraiser?
- How much of every dollar
donated will go to the charity?
- Confirm the charity’s
name and the services it offers.
For
additional tips on donating, consumers may also review our Giving Wisely Advisory and
the Donating Dos and Don’ts: A Guide to Charitable Giving.
For Massachusetts, the case was handled by
Assistant Attorney General Matthew Lyons of AG Healey’s Non-Profit
Organizations/Public Charities Division.
