FTC says scheming telemarketers will pay record $18 million for duping consumers

FTC: Scheming telemarketers to pay $18 million

WASHINGTON — Telephone fundraisers who duped consumers about their donations to police and firefighters must pay a record fine worth $18.8 million, including surrender of pricey Picasso paintings, luxury cars and a guitar collection.

The Federal Trade Commission announced the fine Wednesday against two New Jersey-based companies accused of misleading consumers wanting to donate to charities for emergency officials and other nonprofits. The accused didn’t explain they were professional fundraisers and that only a fraction of donations was going to charity, the agency said.

The civil penalty is the biggest ever in an FTC consumer protection case.

The complaint named Civic Development Group LLC, CDG Management LLC and owners Scott Pasch and David Keezer.

As part of the settlement, Pasch will turn over a $2 million home, paintings by Picasso and Van Gogh valued collectively at $1.4 million, a guitar collection valued at $800,000 and $270,000 in proceeds from a recently sold wine collection, the FTC said.

Keezer will hand over a $2 million home, a Range Rover, a Cadillac Escalade and a Bentley, the agency said.

The commission did not say how much money the defendants made off the alleged scheme.

The complaint accuses Pasch, Keezer and their companies of misleading consumers by telling them the telemarketers worked directly for the charities for which they were calling and that “100 percent” of consumers’ donations would go to charity. Only about 10 to 15 percent of donations went to charity.

“This scheme packed a one-two punch: It deceived the people who donated, and it siphoned much-needed funds from police, firefighters, and veterans groups,” said David Vladeck, director of the commission’s Bureau of Consumer Protection.

The settlement bans the defendants from further telemarketing and soliciting of charitable donations.

Keezer and Pasch could not be reached for comment. Phone numbers that appeared to be linked to both men were disconnected.

The case against Keezer and Pasch dates to 1998, when the FTC first sued Civic Development Group for false telemarketing claims. A second complaint was filed against them in 2007 and was resolved with Wednesday’s civil penalty.

____

On the Net:

Federal Trade Commission: www.ftc.gov