TRENTON – Attorney General Gurbir S. Grewal announced today that a lawsuit filed by New Jersey, the Federal Trade Commission (FTC), and the Attorneys General of New York, Minnesota, and Virginia has permanently shut down a sprawling, New Jersey-based charitable fundraising operation that scammed donors out of millions of dollars.
A complaint and individual settlement agreements filed in U.S. District Court for the Southern District of New York center on deceptive fundraising activities by multiple companies controlled by Mark Gelvan, a Florida resident who once lived in Montville, New Jersey.
Gelvan’s network of sham charities claimed to use donations to help homeless veterans, retired and disabled law enforcement officers, breast cancer survivors and others in need. In fact, these organizations spent almost none of the donations on the promised activities.
In addition to Gelvan, defendants in the lawsuit include several companies and New Jersey residents Thomas Berkenbush of Wanaque, William English of Belvidere and Damian Muziani of Erial. The bogus charities operated principally from office space in Reno, Nevada and Montville, New Jersey.
“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,” said Attorney General Grewal. “It’s intolerable that so much of this nationwide scam was perpetrated from New Jersey. We thank the Federal Trade Commission and our partners in other States for working with us to put an end to the defendants’ scheme and to redirect their ill-gotten funds to real charities that do great work for those in need.”
“This action puts fundraisers on notice: the FTC will not only shut down sham charities, it will aggressively pursue their fundraisers who participate in the deception,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “If you’re giving to charity and want to make sure your donations count, start at ftc.gov/charity to learn how to spot the scams.”
According to the complaint, Gelvan and his associates kept as much as 90 percent of the money they raised for sham charities 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.
Filed on Monday, the complaint alleges that Gelvan and the other defendants orchestrated the deceptive fundraising operations, placing millions of telephone calls soliciting donations, writing fundraising materials and providing other key support to the sham charities.
The defendants knew, or should have known, that the sham charities were not spending the donated funds as promised, and that some of the millions of calls they had placed violated consumers’ do-not-call requests.
According to the complaint, Gelvan and his co-defendants had operated their deceptive fundraising scheme since at least 2010, bilking “tens of millions of dollars” from well-meaning American donors persuaded to give to such sham charities 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.
Through telemarketing and mailings, Gelvan and his associates promised prospective donors 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.
In reality, the complaint alleges, the defendants “fundraised for sham charities, several of which have been shut down through state and federal law enforcement actions.”
The complaint notes that the operators of the sham charities for whom Gelvan and his associates raised funds typically spent the majority of the remaining funds “to pay themselves and family members, and for administrative costs.”
“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. 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, and we at the Division of Consumer Affairs are committed to aggressively pursuing and holding accountable those who violate this trust.”
Under individual settlement agreements filed today, Gelvan and his associates are permanently barred from participating in any charitable fundraising, and from deceiving consumers in any other fundraising effort – including for political action committees (PACs).
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 are not charitable and not eligible for tax deductions. Under today’s settlements, the following terms apply:
Mark Gelvan, Outreach Calling, Inc., Outsource 3000, Inc., and Production Consulting Corp.: These defendants will be 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.
Damian Muziani: 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.
Thomas Berkenbush: 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.
William English: 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.
Under the settlement, monies being surrendered by Gelvan and the other individual and corporate defendants will be paid to the State of New York, on behalf of the participating Attorneys General, for distribution to one or more charitable organizations recommended by the participating Attorneys General that have charitable purposes and missions substantially similar to the purposes for which the defendants obtained charitable contributions.
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.
Deputy Attorney General Monisha A. Kumar of the Division of Law’s Consumer Fraud Prosecution section and Investigator Brian Penn of the Division of Consumer Affairs handled this matter on behalf of the State.
The mission of the Division of Consumer Affairs, within the Department of Law and Public Safety, is to protect the public from fraud, deceit, misrepresentation and professional misconduct in the sale of goods and services in New Jersey through education, advocacy, regulation and enforcement. The Division pursues its mission through its 51 professional and occupational boards that oversee 720,000 licensees in the state, its Regulated Business section that oversees 60,000 NJ registered businesses, as well as its Office of Consumer Protection, Bureau of Securities, Charities Registration section, Office of Weights and Measures, and Legalized Games of Chance section.