Boiler Rooms Producing $9-Million Smoke Screen : Telemarketers Prey on the Generous and Deprive Legitimate Charities of a Full Share of Holiday Pie

It seemed like such a good idea at the time. Make a donation and send a troubled child to an Angels game, a patient at Childrens Hospital of Orange County to the circus, a disabled child to a wheelchair basketball game.

Small businesses are supposed to have community spirit, support the customers that support them, right? At least that is what representatives of John Wilson Framing Co. in Brea, BFC Marketing in Newport Beach and Aqua Pool Center in San Juan Capistrano thought.

But this time they were wrong, for all three companies ended up as victims of a charity telemarketing scheme, the sort of operation that preys on small business throughout the county, according to the district attorney’s office.

Charity telemarketers, who may or may not have contracts with legitimate charities, raise about $9 million each year by calling businesses and individuals and asking for donations, said Gay Geiser-Sandoval, a deputy district attorney specializing in consumer fraud.

“They call businesses during the day and residents at night, and they get a lot of money,” she said. “Small businesses are hit more . . . and they give more. Residents give $25 to $50 on average. Most small businesses give between $50 and $100.”

In fact, an estimated 75% of the money raised through telephone charity solicitations comes from small businesses, Geiser-Sandoval said.

Although the district attorney’s office does not have statistics on the numbers of victims or the breakdown between businesses and private individuals hit up for money, it estimates that 15 to 20 charity boiler rooms operate in the area.

While telemarketing charity operations run year-round, they really cash in big around the holidays, Geiser-Sandoval said, when their “marks” are feeling generous and don’t look very hard at where their money is going.

Their schemes are simple: Telephone solicitors will call businesses and homes and say they are raising money to put on a variety show, a magic show or a circus, or to send sick or abused children to an athletic event. They ask for money and generally send a runner over within a day to pick up the donation in person.

The problems occur when solicitors make false or misleading statements, do not disclose on request how much of the money they raise actually goes to charity and misrepresent legitimate charities that have no dealings with them.

When a telephone solicitor called John Wilson Framing, asking for money to support a wheelchair basketball league and treat troubled children to a game at the same time, office manager Dalyn Dailey wrote out a company check for $100.

Debbie Simon, a manager at BFC Marketing, sent a check for $650 from her company to a telephone solicitor to take a busload of handicapped children to the circus, court records show.

And Rick Flamson, owner-operator of Aqua Pool Center in San Juan Capistrano, made repeated donations on behalf of his firm to send handicapped children to baseball games, records state.

According to court records, all were called on behalf of a variety of charities by J&H; Productions of Garden Grove, owned by John C. Feldman and Hoa Adams, or Caltel Productions of Anaheim, headed by James Harris, an associate of Feldman and Adams.

Not all charity boiler rooms operate illegally, and some small charities do give their names to telephone solicitors, Geiser-Sandoval said. Those charities depend on the money--rarely more than 10% of the take--that solicitors give them.

But Feldman and Adams were convicted earlier this year on 92 counts of theft, making false or misleading statements and violating a court order to obey the law that requires solicitors to tell donors how much of their money will actually go to charities. The case is on appeal.

Although the charities for which they raised money existed and some of the charity events they touted were indeed held, Adams and Feldman were accused of promoting other events that did not happen and of keeping nearly half of the $439,000 they raised from July 1, 1986, to Jan. 20, 1988.

Harris disappeared, Geiser-Sandoval said, and a bench warrant for his arrest has been issued.

John Wilson Framing Co. found out that something was amiss soon after the firm donated to a wheelchair basketball league they thought was legitimate. In spring of 1987, the firm bought tickets to support the league and to send disabled children to a game. It also kept two wheelchair basketball tickets for employees.

But when payroll clerk Clarryn Dailey went to the game at Cerritos College, “there wasn’t anything going on,” she said. “I talked to a security guard who said there was no game scheduled.”

The experience has made the company wary of donating to charity, said Dalyn Dailey, office manager and Clarryn’s sister.

“We no longer will give to anything that isn’t in writing in the mail,” Dalyn Dailey said. “If we feel a charity that calls us is legitimate, we make them send something in the mail. Most of the illegitimate ones won’t do that. They hang up on you.”

But unwitting businesses and individuals are not the only victims of charity scams. Legitimate charities also suffer because unscrupulous charities get donated dollars that might otherwise have gone to legitimate organizations.

In court documents filed in 1985, Geiser-Sandoval asked for a temporary restraining order to stop J&H; Productions from operating:

“It sickens (the) plaintiff to think of the effect the defendants have had on those who are most in need, the handicapped children or adults, or other charitable organizations,” the documents said. “These are the ultimate losers! . . . When the valid charity calls up after the con man has gotten his bite, the public will decide to stop giving at all. That is the ultimate harm.”

No Phone CHOC Spiels

Childrens Hospital of Orange County is one organization that does not use telephone solicitors to raise money, but the hospital’s name is often used without permission and has seen evidence of the “ultimate harm” of which the district attorney spoke.

“For years, (solicitors) have used our name, for years,” said Maureen Williams, a spokeswoman for Childrens Hospital. “They’re still using our name. . . . It doesn’t get us a damn thing, but people think they gave money to CHOC.”

And the few times that telemarketing firms did send tickets to CHOC, the hospital could not use them, she said.

“The truth is that we sometimes get the tickets, and when we do it’s within just a few days of the event,” Williams said. “We have to arrange transportation, which we can’t do. And our children are sick. That’s why they’re in the hospital. So they generally couldn’t go anyway.”