A New Jersey-based telemarketing operation that misled consumers into believing they were giving directly to legitimate charities serving police, firefighters, and veterans has to pay a record $18.8 million and leave the donation business, said the Federal Trade Commission.
The civil penalty against Civic Development Group, LLC; CDG Management LLC; and owners Scott Pasch and David Keezer is the largest ever in an FTC consumer protection case, the FTC said.
The operators of the scheme settled charges that they violated an FTC order by telling consumers that they worked directly for the charities, and that “100 percent” of the consumers’ donations would go to the charities. In fact, the FTC said, “only a small slice of the donations actually went to these charities.”
“This scheme packed a one-two punch: it deceived the people who donated, and it siphoned much-needed funds from police, firefighters, and veterans groups,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “The court’s final settlement order packs a one-two punch of its own: a record-breaking financial penalty for violating an FTC order and a lifetime ban on soliciting charitable donations.”
Under the settlement agreement, the Pasch and Keezer are permanently banned from telemarketing and soliciting charitable donations, and prohibited from making false claims “about anything they sell.”
Pasch and Keezer are required to turn over assets to a court-appointed liquidator.
Pasch will turn over a $2 million home; paintings by Picasso and Van Gogh valued collectively at $1.4 million; a guitar collection valued at $800,000; $270,000 in proceeds from a recently sold wine collection; jewelry valued at $117,000; three Mercedes, a Bentley, and various other assets.
Keezer will turn over a $2 million home, a Range Rover, a Cadillac Escalade, and a Bentley, among other assets.
Civic Development Group has been on FTC’s radar since at least 1998, when it charged telemarketers working for the company’s corporate predecessor with misleading consumers by falsely claiming that donations would be used to buy bullet-proof vests and provide death benefits for deceased officers’ surviving family members.