The Federal Trade Commission announced a $500,000 settlement last week with a Phoenix-based fundraiser that the FTC said was fraudulently soliciting donations in the name of several nonprofit law enforcement, firefighting and veterans' organizations. This marks the first time that the FTC has litigated against a professional fundraiser in federal court.
According to the FTC, Leon Saja, who was conducting business as Southwest Publishing since 1995, and a number of his subcontractors would solicit donations in the names of various nonprofits, which would receive compensation for allowing Saja to use their names. Stealth Publications, one of the subcontractors hired by Saja, and its former president, Donald Ritta, also were named in the settlement.
“After the subcontractors would receive donations from consumers, they would then send them to Saja, who would deposit them into his own account,” said Tracy Thorleifson, an attorney at the Seattle regional office of the FTC. “He would then take whatever prearranged percent he had worked out with these subcontractors and mail that back to them. He then paid the nonprofit their fee and kept the rest.”
The proposed $500,000 settlement stated that the FTC would “file a satisfaction of judgment” if Saja were to pay $75,000 in monthly installments of $3,000, which Saja has agreed to do. On Aug. 7, a judge in the U.S. District Court in Arizona approved the settlement.
Thorleifson said the FTC never put a total dollar amount on what Saja made and that the FTC didn't think it was feasible to return the money to everyone who made donations.
“Most of the donations made by people were between $5 and $20,” she said. “The FTC's authority here only allows us to do three things. We can either give the money back to the consumers, use it to educate those that were involved or turn it over to the U.S. Treasury Department.”
The FTC decided to create and send to the consumers who made donations educational brochures discussing the do's and don'ts of giving monetary gifts.
As part of the settlement, Saja and Ritta will have to make certain disclosures in connection with future fundraising solicitations. Saja also will have to post a $100,000 bond if he wishes to continue as a professional fundraiser. In a separate settlement, Ritta is required to pay $50,000 to the FTC by the end of December.