Jonathan P. Cohen, the last remaining individual defendant named in a Federal Trade Commission lawsuit involving fundraising fraud, is banned from further fundraising and telemarketing activities as part of a settlement with the FTC. According to the FTC, the Santa Ana, California-based defendants orchestrated a massive fraudulent fundraising operation involving deceptive solicitations for police, fire, and veterans' groups. In March of this year, Mitchell Gold, Patricia Gold, Herbert Gold, Celia Gold, and Steven Chinarian, individuals who operated a for-profit fundraising business with Cohen, also settled FTC charges. The settlement bans each of the defendants, except Chinarian, from fundraising and telemarketing activities. The settlement with Chinarian enjoins him from fundraising and requires him to post a bond before engaging in telemarketing activities. The settlement with Cohen announced today further bans him from making misrepresentations in connection with the sale of goods or services.
According to the FTC, the defendants and their more than 70 fundraising subcontractors allegedly engaged in deceptive telephone solicitations for nonprofit organizations purporting to support police, fire fighters, veterans, and sick children. The defendants allegedly raised more than $24 million between 1995 and early 1999, but contrary to their representations, provided only a small amount to the nonprofits. In November 1998, the FTC filed a complaint against the above-named defendants, 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 or bulletproof vests for law enforcement officers. 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 allegedly never paid the nonprofits, but simply kept all the money raised in their names.
Following a criminal referral by the FTC in September 2001, a federal grand jury indicted defendants Mitchell Gold and Cohen for wire fraud and mail fraud in connection with their fundraising business. Gold also was indicted for money laundering. They pled guilty and are now in prison. Gold was sentenced to 96 months in prison, and Cohen was sentenced to 37 months.
The stipulated order for permanent injunction announced today resolves the litigation against Cohen. The order bans him from further fundraising activities, and from engaging in future telemarketing, and it prohibits Cohen from making misrepresentations in connection with the sale of goods or services. Based on financial information submitted to the court in his criminal case, the order does not require Cohen to pay consumer redress. However, the order includes an avalanche clause that imposes a $10 million judgment against Cohen if it is found that he lied on his financial statements. The settlement also contains various recordkeeping requirements to assist the FTC in monitoring Cohen's compliance.
The Commission vote to authorize the staff to file the proposed stipulated order for permanent injunction as to Jonathan P. Cohen was 5-0.
Judge David O. Carter of the U.S. District Court, Central District of California, Southern Division signed the stipulated order on April 28, 2003. The FTC's Northwest Region - Seattle handled this matter.
NOTE: This stipulated permanent injunction are for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated permanent injunctions have the force of law when signed by the judge.
Copies of the stipulated permanent injunction is available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
(FTC Matter No. X990005)
(Civil Action No. SACV-98-968-DOC (RZx))