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Alleged scam charity group banned from soliciting donations in Minnesota

Minnesota AG Keith Ellison joined the FTC and three other state AGs in suing the group.

A group that allegedly "bilked" American residents out of millions of dollars has been permanently banned from charitable fundraising after a lawsuit was brought by four states including Minnesota.

A Federal Trade Commission complaint describes a "sprawling fundraising operation" spread across four "sham charities" – Gelvan; Outreach Calling, Inc.; Outsource 3000, Inc.; and Production Consulting Corp. – under the control of Mark Gelvan, and his associates Thomas Berkenbush, William English, and Damian Muziani.

The FTC and the four states allege that the organizations claimed to use consumer donations to help homeless veterans, retired and disabled law enforcement officers, breast cancer survivors, and others in need.

The complaint alleges they solicited donations, created fundraising materials, and placed calls misrepresenting how donations would be used, some of which violated consumers' "do-not-call" requests.

"In fact, these organizations spent almost none of the donations on the promised activities," an FTC statement reads, with around 90% of donations going to the four men.

"What little money the charities did receive was rarely spent on any of their supposedly charitable missions, sometimes less than two percent."

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The four men, who have been the subject of "numerous" law enforcement action dating back to 1996, will be banned from taking part in any charity fundraising in the U.S. under a settlement proposed by the FTC.

They will also have to pay out $847,000 between them, which will go to actual charities. The four organizations are also subject to a penalty of more than $56 million, but this is partially suspended "based on their inability to pay."

Of the $847,000 settlement, $800,000 of it will come from Gelvan, who will also be required to sell two New Jersey properties.

AG Ellison's office said that the men also operated Community Support, Inc., which was banned in 2009 from operating in Minnesota.

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