Welcome to the Department of Justice, Iowa Attorney General Tom Miller

For immediate release - Friday, November 19, 2004

Contact Bob Brammer - 515-281-6699

Professional Fundraiser "Xentel" Ordered Not to Make Deceptive Calls in Iowa

"Iowans should see an end to this operation's deceptive telemarketing for the Iowa Professional Fire Fighters Association and others," Miller said.

DES MOINES.   Attorney General Tom Miller announced today that an Iowa District Court judge has entered a consent judgment and order against Xentel, Inc., requiring the Ft. Lauderdale-based company to stop abusive and misleading practices in its professional fundraising calls and solicitations to Iowans.

Xentel makes tens of thousands of telemarketing calls each year into Iowa on behalf of the "Iowa Professional Fire Fighters Association."

"Xentel is prohibited from implying their telemarketers are fire fighters or misrepresenting that money will be used locally," Miller said. "There are many restrictions to prevent deception."

The consent judgment also provides that local law enforcement or fire departments that experience citizen complaints or other problems with Xentel's fundraising can ask the company to terminate fundraising in that community, and Xentel must honor the request.

Xentel, which denied any wrongdoing, also must pay $30,000 to the state. The consent judgment and order resolves a lawsuit filed by the Consumer Protection Division last year.

"Our lawsuit alleged that Xentel telemarketers claimed that they themselves were fire fighters, that donations would benefit the donor's own community, and that most or all of the funds raised would go to help fire fighters," Miller said. "In reality, the callers were professional fundraisers calling from outside Iowa. Donations did not go to local departments, and about 76% of donated dollars went to the telemarketers rather than to the Fire Fighters Association."

The lawsuit filed last year stated that in 2002 Xentel paid $12,000 monthly to Iowa Professional Fire Fighters, and kept all donations over that amount. (IPFF was not named a defendant in the lawsuit.) Financial disclosure forms showed 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. Xentel collected similar amounts in 2003.

Rick Roe, Chief of the Clive Fire Department in suburban Des Moines, and past president of the Polk County Fire Chiefs' Association, appeared with Miller at a news conference Friday. 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 reported similar calls.

Miller said the case relied heavily on tape recordings created when Xentel telemarketers called the Consumer Protection Division's "undercover" phone line. The phone numbers of cooperating citizens who were repeat victims of telemarketing fraud are re-routed to ring in the Consumer Protection Division, where investigators answer the phones, listen to "pitches," and tape-record the calls. The undercover line caught Xentel telemarketers in various specific misrepresentations and provided the basis for the State's lawsuit, along with consumer complaints.

"And this wasn't the first time around for this crew," Miller said. "We obtained an injunction in 1997 against The Gehl Group, an earlier fundraiser for the Iowa Professional Fire Fighters Association. Our suit this time alleged that when Xentel bought the Gehl Group from Joseph Gehl and made him Xentel's president, Xentel became bound by the earlier injunction."

Miller said the new injunction issued today PROHIBITS Xentel from:

  • Implying the telemarketer is a fire fighter. (This also was prohibited by the 1997 injunction.)
  • Exaggerating the portion of donations that help fire fighters (also in the 1997 injunction.)
  • Indicating that the fund-raising appeal is a local call, rather than a call from another state.
  • Telling consumers who ask how donations are used that checks are sent directly to the worthy cause -- falsely implying that is where the money stays, when in fact most is paid over to Xentel.
  • Sending pledge-collection mailings to consumers who Xentel knows never made a pledge.
  • Paying commissions or bonuses to their telemarketers based on the volume of donations they extract from consumers, unless any such pay boost is forfeited for any misrepresentations.
  • Making any false representation of a material fact.

Under the order, Xentel also MUST:

  • Properly train and monitor its telemarketers to ensure legal compliance - and have telemarketers identify themselves to consumers as professional fundraisers.
  • Tape-record all solicitation calls and provide tapes to the Attorney General upon request.

"Iowans should see an end to Xentel's deceptive telemarketing in Iowa," Miller said.

"Iowans are generous by nature, and especially so when it comes to supporting local fire fighters and law enforcement," he said. "This resolution should help protect Iowans from fundraising fraud, and we hope these standards set the bar high for other fundraisers that tap the generosity of our citizens."

Last week, the Consumer Protection Division of Miller's office sued the "American Deputy Sheriffs' Association," alleging that the Louisiana-based corporation uses deceptive phone solicitations to make Iowans believe -- wrongly -- that the callers actually are local law enforcement personnel, and that donations are put to good use in the community of the Iowans being called.

"We want Iowans to keep giving to good causes and to be generous," Miller said. "And we'll do all we can to protect the integrity of the system of charitable giving."

"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 (click on "Protecting Consumers" and "consumer advisories.")

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