WASHINGTON In a case with implications for nearly every family in America, the Supreme Court has said it will consider when charity telemarketing calls go beyond irritating to fraudulent.
The Court said today it would decide whether telemarketers can be pursued for fraud for asking for cash for a worthwhile charity, when much of the money is being kept by the telemarketer.
The case stems from a fraud action that Illinois brought against a company that raised money for Vietnam veterans.
The charity, VietNow, had an agreement with Telemarketing Associates Inc. in which the charity got 15% of the money and the fund-raiser kept the rest for salaries, expenses and profit.
VietNow had no problem with the arrangement, and the state's complaint was dismissed on free-speech grounds.
The Illinois Supreme Court "transformed the First Amendment into a license for unscrupulous fund-raisers to defraud the public in the name of raising money for charity," Illinois Attorney General James Ryan told the nation's high court in a filing.
State prosecutors want to prove that telemarketers intentionally misled donors.
Michael Ficaro, an attorney for the telemarketing company, said that to allow the lawsuit "would place all charitable fund-raisers at the mercy (of) the attorney general's whims. Potentially any gross fee can be called too high. Potentially any contractor arrangement can be called unreasonable."
He said the company raised money for Vietnow, and educated the public about the needs of veterans.
Ryan said people were told that their donations would be used for food and shelter for hungry and homeless veterans. In reality, just 3% was used for that, he said.
Charity solicitors bring in more than $200 billion a year and many are handled by for-profit fund-raising companies, according to Ryan.
In a series of decisions in the 1980s, the Supreme Court repeatedly ruled against states in disputes over charitable solicitations. In 1988, the Court barred states from placing strict regulations on professional, for-profit organizations that solicit contributions for charities.
Other states that asked the Supreme Court to hear this case were Alabama, Alaska, Delaware, Florida, Indiana, Kansas, Maine, Maryland, Michigan, Mississippi, Missouri, Nevada, Ohio, South Dakota, Tennessee, Utah, West Virginia and Wyoming.
Florida Attorney General Robert Butterworth said states are getting more complaints about solicitors, including some who falsely claim to be raising money for victims of the terrorist attacks.
The case is People of the State of Illinois v. Telemarketing Associates, 01-1806.