Ruling Against Fund-Raiser Upheld

An appellate court has upheld a lower court ruling that barred a controversial San Juan Capistrano telemarketing fund-raiser from doing business in California, adding that the businessman and his associates “have no shame.”

Mitchell Gold, 41, and his Orange County-based fund-raising outfits have raised millions of dollars nationwide for purported charities which receive only a small portion of the proceeds.

Government agencies in at least five states and the Federal Trade Commission have sued Gold and his companies for deceptive business practices, including lying to donors about how contributions would be spent. Four states won injunctions against Gold and the companies, and the FTC lawsuit, filed in November, is still pending.

Gold’s attorney, Robin Moest, said Thursday that his client will appeal the recent decision of the 4th District Court of Appeal to the state Supreme Court, and if necessary, to the U.S. Supreme Court.

“The appeals court was very sloppy in its analysis,” Moest said.

In 1995, an Orange County Superior Court judge barred Gold and his Irvine-based Orange County Charitable Services from soliciting any more funds until the company accounted for nearly $15 million it had raised since 1988.

Gold appealed the decision and has continued to do business in California under different company names, including U.S. Marketing Inc. and North American Charitable Services. According to records filed with the state’s Registry of Public Trusts, Gold and his family-run companies raised nearly $7 million between 1995 and 1997.

Gold could not be reached for comment Thursday, but in an interview with The Times in May, he blamed his legal problems on overzealous government officials.

He denied any wrongdoing and said charities that contract with him receive only a small portion of the funds raised, typically about 10%, because of the high costs of telemarketing.

He maintained that the instances of telephone operators misleading potential donors were rare and blamed them on rogue subcontractors.

But the Court of Appeal in Santa Ana on Tuesday agreed with the trial judge’s finding that Gold’s companies through their subcontractors regularly lied to donors and set up charities whose main purpose was to serve as sales pitches for Gold’s fund-raisers.

In one instance, a donor was told in 1993 that her contribution would go to build a homeless shelter for veterans in Redondo Beach. There was no evidence there was ever any plan to build such a shelter, the appeals court said.

In other instances, Gold formed charities with partners and later had those charities contract with him for fund-raising, the court said. The charities, with compelling names like American Veterans Assistance Corp., United Citizens Against Drugs and Stop the Pain, paid Orange County Charitable Services 90 percent or more in commissions.

The court called the appeal of the case “without merit” and chastised Gold and his associates for “shamelessly” distorting the facts.

Deputy Atty. Gen. Chester Horn Jr., who litigated the case and argued the appeal, said he was pleased with the decision.

“We think this is a significant victory for the citizens of California,” he said.

The case is the first involving fraud charges against a telemarketing fund-raising operation to reach an appellate court in California, Horn said. Lower courts normally look to higher courts for guidance in judging similar cases, but Tuesday’s decision is not precedent-setting because the justices opted not to publish it.

Horn said he will petition the court to reverse that. He said state laws regulating commercial fund-raising are vague and that the recent decision could set guidelines for future cases.

“It is unfortunate, but these cases are very complex,” he said. “The courts are already overwhelmed” with other types of lawsuits.

It was not clear Thursday whether Gold will be allowed to stay in business while the appeals process continues, but his attorney, Moest, vowed his client will carry on.