State Conducting Probe of 2 Charities

The state attorney general’s office is conducting a fraud investigation of two cancer charities that are part of a national direct-mail campaign offering sweepstakes awards to potential donors.

James Cordi, deputy attorney general, said Tuesday that the nonprofit firms are being investigated for possible violations of laws governing false advertising. The inquiry was launched three weeks ago after his office received several complaints.

Officials from the American Cancer Society, which has no affiliation with the groups, said they had received thousands of complaints about the mailings, which have triggered investigations and lawsuits in other states.

Cordi said it remains unclear whether the organizations are in violation of any state laws. He said the groups are sending consumers congratulatory letters offering a cash prize of $5,000 in a charity sweepstakes. However, the fine print on the letters reveals that almost all the winners will be paid prizes of just 10 cents, he said.

“We don’t know if they’ve done anything illegal, but it appears that the letters are definitely misleading,” Cordi said.

Officials at the two organizations, the Pacific West Research Fund, based in Seattle, and the Cancer Fund of America, based in Knoxville, Tenn., could not be reached for comment Tuesday.

The organizations are part of a nationwide fund-raising campaign conducted by an Alexandria, Va., direct-mail company that has prompted two lawsuits alleging consumer fraud in Missouri and Illinois and an investigation by the U.S. Postal Inspection Service.

Officials at the direct-mail company, Watson and Hughey Co., could not be reached for comment Tuesday. However, Jerry Watson, a partner with the firm, told the Washington Post recently that the solicitation was similar to others his company has sent out for charities in past years and that they had been reviewed by attorneys who specialize in promotional law. He said the letters were intended to attract attention but were not meant to be misleading.

In a suit filed last month, Illinois Atty. Gen. Neil F. Hartigan charged the Virginia firm with violating consumer protection laws. Missouri Atty. Gen. William L. Webster filed suit in October to stop the solicitation and is seeking refunds for consumers and civil penalties against the direct-mail company.

Dr. Nowell Irwin, president of the California division of the American Cancer Society, the nation’s largest chapter, said that branch offices throughout the state had received thousands of calls about the letters.

“When we have to deal with organizations that go after cancer research money and they aren’t legitimate, it really hurts us,” he said. “Hopefully, the public won’t be fooled by the letters if they read the fine print.”