Give and Take of Telemarketers

Yet another court has ruled that a San Juan Capistrano telemarketer should be barred from raising funds for charity in California. Unfortunately, Mitchell Gold may not stop any time soon.

Gold’s attorney said his client would appeal the 4th District Court of Appeals’ decision, which was released this month. Although a lower court in 1995 barred Gold and his company from soliciting funds until his company accounted for millions of dollars it had raised, he kept doing business while he appealed the decision, as he could do under the law. The appeals court ruled in a case brought against Gold by California, one of five states that have sued him and his companies.

The need for caution in dealing with solicitations was evident in the findings of the lower court and appeals court that subcontractors hired by Gold’s companies regularly lied to donors. And charities that sounded good in their names and proclaimed intentions, such as helping veterans or fighting drugs, were established mostly to raise funds for Gold’s firms, the courts said.

The striking aspect of Gold’s businesses is the tiny amount of the revenues they turn over to the charities that hire them: typically about 10%. Commercial firms in California raising funds for charities passed on nearly 44% of the money they collected in 1997, according to records. However, there are no laws specifying how much the companies have to turn over. Donors should request that information and ask themselves if the cost of raising funds seems too high.

The Federal Trade Commission filed a civil lawsuit in Santa Ana last November, charging that telephone solicitors and subcontractors of Gold’s firms claimed they were police officers and firefighters when requesting contributions. Gold denied the accusations. The FTC suit is still pending.

Some who were solicited said they were threatened if they did not contribute. One quoted a telemarketer as saying it was the police calling and “we know where you live.”

The appeals court’s ruling is the latest chapter in the saga of Gold and his companies, a serial that unfortunately has gone on too long and always emphasizes the need to be wary, even when it comes to solicitations for charities.