N.Y. Shuts Down Charity Telemarketer

The landmark Cancer Fund of America lawsuit by all 50 states and the Federal Trade Commission (FTC) continues to pay off for regulators seeking to shut down illicit charities and the fundraising companies that keep most of the money raised for them.

The New York Attorney General’s Office today announced a settlement to shut down a Brooklyn-based telemarketing firm that solicited on behalf of sham charities and other shell nonprofits and kept most of the money raised.

Menacola Marketing, Inc., solicited for the National Vietnam Veterans Foundation (NVVF), which New York Attorney General Eric Schneiderman shut down in 2016 after an investigation by the Charities Bureau revealed that it raised millions of dollars through deceptive solicitations while providing almost no help to veterans. From 2010 to 2016, Menacola raised almost $190,000 from New Yorkers for NVVF, using paid solicitors who made telemarketing calls from phone rooms in Brooklyn.

As part of the settlement, Menacola will dissolve and its principals, Joseph and Katherine DeGregorio, are permanently barred from fundraising for charity in New York State. Menacola first registered with the AG’s Charities Bureau as a professional fundraiser in 2006 and began fundraising for NVVF in 2010 after being introduced to the charity by Mark Gelvan, a New Jersey-based professional fundraiser who is permanently barred from fundraising directly or indirectly in New York. Menacola retained 85 percent of the funds raised, with another 4 percent going to companies controlled by Gelvan, leaving 11 percent for charities.

The DeGregorios were aware that Gelvan was prohibited from fundraising in New York but claimed they were not aware that he was also prohibited from brokering contracts for fundraising in the state, according to the 16-page Assurance of Discontinuance (AOD). The investigation found that Menacola took no steps to verify the claims that its callers made about NVVF. In fundraising for NVVF, Menacola used scripts provided by Gelvan.

The DeGregorios also will pay $100,000, which will be distributed to reputable charities supporting veterans. The settlement is part of the AG’s Operation Bottomfeeder initiative, which addresses fraud networks of shell charities, abusive professional fundraisers, and accountants and other professionals who knowingly aid and assist their activities. The effort previously has led to the shut down of the Breast Cancer Survivors Foundation.

Callers for Menacola also used an alternative name, “American Veterans Support Foundation,” claiming that it was a “special project” of NVVF. The investigation found that there was no such special project, and that the use of two names was just a way to raise more money. Potential donors also were told that their donations would be used to pay for help for veterans, including personal care packages, guide books of essential services, donations to food pantries, and transportation to and from medical appointments.

In December 2016, Schneiderman sued to compel Menacola to comply with the fraud investigation after the DeGregorios refused to cooperate. The AG sought an accounting of the money raised from New Yorkers, producing its bookers and records, and ordering the DeGregorios to sit for examinations. From 2010 to 2015, Menacola reported raising more than $5 million from New York donors for the approximately 20 charities it represented, retaining 85 percent, or about $4.4 million.

Menacola also raised money for Cancer Fund of America, which was shut down in 2016 after a landmark suit filed by all 50 states, the District of Columbia, and the Federal Trade Commission (FTC). In November 2017, 24 state AGs joined together to shut down the VietNow National Headquarters, Inc., which used deceptive telemarketing solicitations falsely claiming the charity funded services, medical facilities, and treatment for veterans, while only sending 5 percent of donations to charitable programs.