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NJ, NY, Feds Shut Down Sham Charity Operation That Scammed Donors Out Of Tens Of Millions

LEARN HOW TO SPOT SCAMS: ftc.gov/charity
LEARN HOW TO SPOT SCAMS: ftc.gov/charity Photo Credit: Pixabay

Kind-hearted donors in New Jersey and New York were scammed out of tens of millions of dollars by a telephone soliciting operation that claimed to raise money for homeless veterans, retired and disabled law enforcement officers, breast cancer survivors and others in need, authorities said Wednesday.

A joint lawsuit filed by the state of New Jersey, the Federal Trade Commission and the attorneys general of New York, Minnesota and Virginia has permanently shut down the operation headed by Mark Gelvan, a telemarketing consultant who'd been banned for life from raising funds for charity more than 25 years ago.

Meanwhile, individual settlement agreements reached with those accused along with Gelvan in the suit promise to recover nearly $1 million to be redirected to “real charities that do great work for those in need,” state Attorney General Gurbir S. Grewal said.

They include Thomas Berkenbush of Wanaque, William English of Belvidere and Damian Muziani of Erial, who Grewal said operated a sprawling group of sham charities from office space in New Jersey and Reno, Nevada.

The suit -- filed in U.S. District Court for the Southern District of New York -- accuses Gelvan and his associates of keeping as much as 90% of the donations as payment for their fundraising services.

“Comparatively little of the money raised – sometimes less than two percent – went to the so-called charities’ charitable missions,” Grewal said.

“It’s disgraceful that the defendants in this case persuaded people to donate their money to help cancer survivors, disabled law enforcement officers and homeless veterans, only to keep most of that money for personal use,” the attorney general said.

“It’s intolerable that so much of this nationwide scam was perpetrated from New Jersey,” he added.

Gelvan, who once lived in Montville and now is in Florida, previously was accused of making false claims to donors, including saying that donations to a police charity would be used to benefit families of slain troopers.

While admitting no wrongdoing, Gelvan agreed in 2004 to a lifetime ban on raising funds for charity in New York 

Grewal said Gelvan and his co-defendants operated the latest “deceptive fundraising scheme” since at least 2010, bilking tens of millions of dollars from well-meaning American donors who were persuaded to give to sham charities with names such as:

  • National Vietnam Veterans Foundation, Inc.;
  • Breast Cancer Survivors Foundation, Inc.;
  • Reserve Police Officers Association;
  • Disabled Police and Sheriff’s Foundation, Inc.;
  • Center for American Homeless Veterans, Inc; and Crisis Relief Network.

The defendants “placed millions of telephone calls soliciting donations, wrote fundraising materials and provided other key support to the sham charities,” Grewal said.

They promised prospective donors that their charitable contributions would “support worthy causes,” such as care packages to Vietnam veterans in need, transitional facilities for homeless veterans, and grants to the family members of fallen officers, the attorney general said.

State and federal authorities have shut down most of the bogus charities, he noted.

The individual settlement agreements reached with those name in the suit permanently prohibits them from participating in any charitable fundraising, and from deceiving consumers in any other fundraising effort -- including for political action committees (PACs), the attorney general said.

If involved in non-charitable fundraising, the defendants will be required to clearly inform consumers at the time they ask for money that any donations aren’t charitable or eligible for tax deductions.

Under the settlements:

  • Gelvan, Outreach Calling, Inc., Outsource 3000, Inc., and Production Consulting Corp. are 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 (one in Montville and one in Wayne) and surrender any net proceeds of those sales;
  • 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;
  • 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;
  • 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.

“Should any of the defendants fail to pay what they owe or be found to have lied about their ability to pay, the full amount of their judgments will be due immediately.” Grewal said.

“The profound generosity of New Jersey residents is a hallmark of our state,” said Paul R. Rodríguez, acting director of the New Jersey Division of Consumer Affairs. “Each year over a million residents donate to causes they believe will improve the lives of others.

“Charitable scams target this kindness, defrauding donors and depriving those who need a helping hand of the funds they desperately need,” Rodriguez said. “Preying on this generosity is a cruel transgression, not only of our laws, but of the goodness that we see in each other as people.”

Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said the lawsuit and agreements combined "puts fundraisers on notice: The FTC will not only shut down sham charities -- it will aggressively pursue their fundraisers who participate in the deception."

If you want to make sure your donations go to those in need, visit ftc.gov/charity to learn how to spot the scams.

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