FTC Bans Nonprofit Fundraising Family on Fraud ChargesThe Federal Trade Commission banned a family of nonprofit fundraisers, including two men and their wives, on charges of committing fraud in their solicitations for police, firefighters, veterans and sick-children groups.
In an out-of-court settlement announced late March 19, Mitchell and Herbert Gold, along with their spouses, Patricia and Celia, agreed to refrain from fundraising and telemarketing activities. The two couples, based in Santa Ana, CA, employed about 70 subcontractors in a fundraising scheme that raised $24 million between 1995 and early 1999 but delivered "only a small amount to the nonprofits," the FTC said in a statement.
The FTC said the Golds operated through a corporate entity, U.S. Marketing and North American Charitable Services Inc., which misrepresented to consumers that donations would benefit particular local purposes, such as parties for sick children or wheelchairs for veterans. The donations funded the telemarketing operation and "lined the defendants' pockets," and in some cases the nonprofits received nothing, the agency said.
Mitchell Gold and a co-defendant, J.P. Cohen, pleaded guilty to federal criminal charges of wire and mail fraud and are serving time in prison, the FTC said. Mitchell Gold received a sentence of 96 months, and Cohen received 37 months.
The FTC's civil case against Cohen is pending. Another defendant in the civil case, Steve Chinarian, agreed to a ban from fundraising activities but may continue telemarketing so long as he posts a $100,000 bond.