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Consumer News Release

For immediate release - Tuesday, November 18, 2003.
Contact Bob Brammer - 515-281-6699.

State Sues Professional Fundraiser -- Xentel, Inc.

Consumer fraud suit alleges telemarketers trick Iowans into believing the callers are fire fighters, that donations will support local fire fighters, and that most of donated money helps fire fighters.

DES MOINES. Attorney General Tom Miller filed a consumer fraud lawsuit today alleging that a Florida-based professional fundraiser company uses misleading telemarketing pitches designed to exploit the public's support for fire fighters in order to line its own pockets.

"Our suit alleges that Xentel telemarketers trick Iowans into believing that the callers are themselves fire fighters, when they are not," Miller said. "We allege they trick Iowans into believing that donations will support local fire fighters, when that is not the case. And we allege they trick Iowans into believing that most or all of the money donated goes to help fire fighters, when that is not the case."

"The truth is that the callers are professional telemarketers, not fire fighters," Miller said. "Little or no support typically goes to a donor's local fire department, and about 75% of the money donated is kept by Xentel and never supports any fire fighters."

Xentel, Inc., has headquarters in Ft. Lauderdale, Florida. The company solicits donations from Iowans under a contract between Xentel and the Iowa Professional Fire Fighters Association. The Consumer Protection Division filed the lawsuit today in Polk County District Court. The suit asks the court to prohibit the alleged deceptive and misleading practices, order restitution, and assess civil penalties up to $40,000 for each violation of the Iowa Consumer Fraud Act.

Background:

The suit states that Xentel solicits charitable donations in the name of the Iowa Professional Fire Fighters Association (IPFF), pays IPFF $12,000 monthly, and keeps all donations over that amount. (IPFF is not named a defendant in the lawsuit.) Financial disclosure forms show that Xentel collected more than $591,811 in 2002 in donations on behalf of IPFF, and thus Xentel received $447,811, or 76% of the money donated by Iowans.

Rick Roe, Chief of the Clive Fire Department in suburban Des Moines, and head of the Polk County Fire Chiefs' Association, appeared with Miller at a news conference announcing the suit. Roe himself received a Xentel/IPFF fundraising call in which the telemarketer falsely claimed that donated funds would go to the local fire department. Other chiefs and individuals reported similar calls.

The suit also cites evidence gathered when Xentel telemarketers called an "undercover line" that rings into the state Consumer Protection Division. (The line originated when an elderly West Des Moines woman changed her phone number to protect her from fraudulent telemarketing calls - and her former phone number was then assigned to the Consumer Protection Division.)

Three different Xentel telemarketers made calls to the line since last fall. "All three of the taped telemarketers sought to create the misleading impression that the call was actually placed by fire fighters," the suit alleges.

All three callers "sought to create the impression that donations would directly benefit local fire fighters in West Des Moines" (the supposed location of the woman.) In fact, neither the West Des Moines Fire Department nor any individual WDM fire fighters are members of IPFF.

And "all three callers sought to create the false impression that most or all of the money donated went to fire fighters or programs supporting fire fighters," the suit says.

Miller said: "In sum, we allege that Xentel uses carefully crafted deceptions and the justifiably positive public image of fire fighters to divert charitable dollars to its own benefit - dollars that might otherwise go to far more worthy recipients, including local fire departments."

The suit also asks the court to assess additional civil penalties up to $5,000 each for violations committed against older Iowans, and additional penalties for alleged intentional violations of a consumer fraud injunction entered in Polk County District Court against the Gehl Group, Inc. in 1997. That injunction, part of a 1997 consent judgment signed by Joseph E. Gehl for the Gehl Group, prohibited that company and its successors from misrepresenting how proceeds would be used or the caller's affiliation. Xentel acquired the Gehl Group in 1999, and Joseph Gehl has served as Xentel's president.

"Donor Beware!" Tips for making the most of your donations:

Miller encouraged Iowans to continue to give generously to charities of all kinds - but to protect the value of their donations by following tips such as giving to reputable local charities, asking questions about how donations will be used, asking telephone solicitors to send information in writing, and not giving credit card or checking account numbers over the phone. For more information see the "Consumer Advisory" bulletin titled "Donor Beware!" at www.IowaAttorneyGeneral.org.

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