State others, reach settlement with telemarketing scammers

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FRANKFORT, Ky. (WTVQ) – A telemarketing firm and its operators have agreed to not harass Kentucky residents as part of a deal with the Federal Trade Commission and 46 agencies from 38 states and the District of Columbia.

Associated Community Services, its sister companies, owners, and managers settles claims of operating a fraudulent charity telefundraising scheme and for consumer protection violations related to abusive telemarketing practices and deceptive claims on behalf of non-profit clients.

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In the complaint, the FTC and the coalition allege the ACS defendants made deceptive pitches on behalf of numerous organizations that claimed to support homeless veterans, victims of house fires, breast cancer patients, children with autism, and other causes.

They also contend the defendants knew 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 one percent.

The complaint also alleges that ACS, later Directele, knowingly violated the Telemarketing Sales Rule (TSR) by using soundboard technology in telemarketing calls. The technology allows an operator to play pre-recorded messages to consumers instead of speaking with them in real time.

Using this technology in calls to first time donors or with prior donors without an option to opt out of future calls violates the TSR.

In addition to the listed allegations, ACS was also charged with making harassing calls by dialing over 1.3 million phone numbers more than 10 times a week and 7.8 million numbers more than twice an hour. The defendants called 1.1 million unique Kentucky phone numbers and over 7,000 were dialed more than 100 times a year.

The settlement was reached with ACS, Central Processing Services (CPS), and Community Services Appeal (CSA); their owners, Dick ColeBill BurlandBarbara Cole, and Amy Burland; and ACS senior managers Nikole GilstorfTony LiaJohn 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.

Under the terms of the settlement agreement, ACS is:

  • Permanently prohibited from conducting or consulting on any fundraising activities and from conducting telemarketing of any kind to sell goods or services.
  • Prohibited from using any existing donor lists and from further violations of state charitable giving laws.
  • Not permitted to make any misrepresentation about a product or service.

Under the settlement agreement, Directele and ACS Senior Managers Scot Stepek and John Lucidi are:

  • Permanently prohibited from any fundraising work or consulting on behalf of any charitable or nonprofit organization that claims to work on behalf of causes similar to those outlined in the complaint.
  • Prohibited from using robocalls for any form of telemarketing, using abusive calling practices, or making any misrepresentation about a product or service.
  • Required to clearly and conspicuously disclose when a donation they are requesting is not tax deductible.

ACS and Directele defendants will also be subject to monetary judgments of over $661.9 million, some of which will be partially suspended due to insolvency.

Payments from the defendants will be held in an escrow fund so that states can request the court make donations to charities whose mission closely aligns with the purpose of the charities the defendants claimed to represent.

Attorney General Daniel Cameron joined the FTC and state agencies from Alabama, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, 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.