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FTC announces operation Tele-PHONY
MADISON - A Wisconsin case was highlighted today as part of the Federal Trade Commission's sweep targeting telemarketing fraud. The case, prosecuted by the Eau Claire County District Attorney Richard White and Assistant Attorney General John Greene of the Wisconsin Department of Justice, involved an extensive three-year investigation and criminal prosecution of fraudulent charitable telephone solicitation practices engaged in by a group of Eau Claire businesses operated by Duane Kolve. The Wisconsin Department of Agriculture, Trade, and Consumer Protection also participated in the investigation of the case.
In the Kolve case, potential donors were led to believe that their donations would be put to good use right away for charitable purposes such as purchasing needed safety equipment for law enforcement officers, funding children's burn camps, providing housing assistance to homeless veterans and financially assisting disabled firefighters and law enforcement officers.
In reality, the charities for whom Kolve's companies were raising funds received only pennies on the dollar. Eighty-five percent of the donations raised went to fraudulent telephone solicitation businesses run by Kolve. Individuals who ran the claimed charities located in Louisiana, California and Wisconsin took further amounts of the donated sums, leaving behind only between 35 cents and $2.92 of every $100 donated, which was then actually utilized for the charitable purpose.
Kolve was convicted of Racketeering earlier this year based upon his ownership or control of telephone solicitation businesses which fraudulently obtained over $10,000,000 in donations to claimed charities from over 450,000 separate donations during the period of 2002 through 2005.
At the time Kolve was convicted, Attorney General Van Hollen noted that "nationally, criminal prosecutions of individuals engaging in this extreme fraud are infrequent. But this conduct is criminally culpable, and civil remedies may not adequately deter this conduct and punish this wrongful behavior. I would like to think that this successful criminal prosecution will encourage prosecutors and regulators from other states to fully consider criminally prosecuting these extraordinary fraudulent practices so that individuals like Kolve will not be able to simply sidestep civil penalties, re-incorporate their businesses in a new name, and re-initiate their fraudulent practices."
The Federal Trade Commission, together with more than 30 law enforcement partners from the United States and Canada announced the results of Operation Tele-PHONY' this morning at a press conference at the FTC's Headquarters in Washington, D.C. The sweep includes a range of cases targeting telemarketing fraud such as pitches for advance-fee loans and credit cards, supposedly free gifts and prize promotions, medical prescription drug plans, tax rebates, magazine subscriptions, and "low-cost" household products.
Operation Tele-Phoney is the biggest sweep of telemarketing fraud cases ever coordinated by the Federal Trade Commission, with more than 180 actions being announced today. It is a comprehensive attack on telemarketing fraud by the FTC, the U.S. Department of Justice, the U.S. Postal Service, state Attorneys General and the Competition Bureau in Canada.
The Commission also announced a new consumer education campaign that includes a Web site (www.ftc.gov/phonefraud) and other materials designed to help people avoid becoming victims of telemarketing fraud.
The Who's Calling? Campaign encourages consumers to recognize the signs of telemarketing fraud, report fraud to the FTC and the Wisconsin Department of Agriculture, Trade and Consumer Protection and register phone numbers on the National Do Not Call Registry.
You can report phone fraud to the FTC online at FTC.gov or by phone at 1-877-FTC-HELP or to the Wisconsin Consumer Protection Hotline at 1-800-422-7128.