Help the Vets: Five Names, Phantom Programs, and an Order to Destroy the Donor Lists

Who Sued Whom

On July 18, 2018, the Federal Trade Commission (FTC) and the Attorneys General (AGs) of Florida, California, Maryland, Minnesota, Ohio, and Oregon filed a complaint in the U.S. District Court for the Middle District of Florida, Orlando Division (Case No. 6:18-cv-01153). The defendants were Help the Vets, Inc. (HTV), and its founder and president Neil G. "Paul" Paulson, Sr. Maryland's Secretary of State joined in the lawsuit.

The case was part of "Operation Donate with Honor," a crackdown on fake veterans charities that the FTC announced with officials from 70 offices in every state, the District of Columbia, American Samoa, Guam, and Puerto Rico. It included more than 100 actions.

The Many Faces of HTV

HTV didn't just use its own name. According to the FTC, it also operated as American Disabled Veterans Foundation, Military Families of America, Veterans Emergency Blood Bank, Vets Fighting Breast Cancer, and Veterans Fighting Breast Cancer. Under those names, it claimed to fund medical care, a suicide prevention program, retreats for veterans recovering from the stress of war, and help for veterans fighting breast cancer. It also falsely claimed a "gold" rating from GuideStar.

How the Money Moved

According to the complaint:

• HTV hired for-profit fundraisers to solicit by telemarketing and direct mail, including sweepstakes mailers. Paulson signed contracts with telemarketers including Courtesy Call and Donor Relations.
• Telemarketers were paid 85% to 90% of every dollar they raised.
• Paulson approved the websites, telemarketing scripts, pledge letters, and mailers.
• Donors gave more than $11 million in cash from 2014 through 2016. More than 95% wasn't used to help veterans.

The scripts piled on the emotion. Reluctant donors heard, "Many of these vets have spent years in the hospital. They need our support." Donation tiers had names like "Warrior," "Hero," and "Life Saver."

The TSR Angle

The complaint charged HTV and Paulson under Section 310.3(b) of the Telemarketing Sales Rule (TSR), the provision that covers giving substantial assistance to telemarketers you know, or consciously avoid knowing, are breaking the rule. All six AGs also used the Telemarketing Act, which allows state AGs to enforce the TSR in federal court, and their own state laws.

The Settlement

The stipulated judgment was entered by the court on November 21, 2018. It did the following, according to the FTC:

• Banned HTV and Paulson from soliciting charitable contributions
• Banned Paulson from charity management and from overseeing charitable assets
• Required HTV and Paulson to destroy all donor lists and notify their fundraisers to do so
• Imposed a $20.4 million judgment, representing donations from 2014 through 2017, partially suspended once Paulson pays $1.75 million and HTV pays its remaining $72,000 to legitimate veterans charities

The FTC pointed out that Paulson's $1.75 million was more than double what HTV had paid him.

Why Call Centers Should Care

That donor list order is a big deal. Lists are valuable, and HTV had to tell its fundraisers to destroy their copies too. If you call for a nonprofit client, the scripts and the data you're using can end up in the case.