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Posted By: Charlie Barokas

In November 1998, the FTC filed a complaint against the above-named defendants, J.P. Cohen (a defendant not part of the settlement package), and the corporate entities through which they did business, U.S. Marketing and North American Charitable Services, Inc. The FTC alleged that in telephone scripts, "thank you" letters, and brochures sent to donors, the defendants and their subcontractors misrepresented that consumers' donations would benefit local purposes - such as holiday parties for sick children in local hospitals - and misrepresented that consumers' donations would support particular programs - such as buying wheelchairs for veterans. According to the FTC, most donations did not support a charitable purpose but instead funded the nationwide telemarketing operation and lined the defendants' pockets. In some instances, the defendants never paid the nonprofits, but simply kept all the money raised in their names.

edited to add: sick kids