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Lying charity telemarketers? States can sue


© St. Petersburg Times
published May 6, 2003

WASHINGTON - In a decision hailed as a victory for consumers, the U.S. Supreme Court on Monday ruled that states can sue professional telemarketers for misleading donors about how much of their contributions actually go to the charity.

The unanimous decision overturned an Illinois Supreme Court ruling that dismissed, on free speech grounds, a fraud lawsuit brought by state prosecutors against a company that kept the vast majority of the money contributed by donors.

"The First Amendment protects the right to engage in charitable solicitation but does not shield fraud," Justice Ruth Bader Ginsburg wrote for the high court.

The court's decision will allow Illinois to bring a lawsuit against Telemarketing Associates, a Chicago company that was under contract with the veterans support group VietNow to solicit donations for the charity.

From 1987 to 1995, the company raised $7.1-million in donations. What the donors did not know was that Telemarketing Associates kept 85 percent of the money, or $6-million, with the remaining $1.1-million going to VietNow.

In 1991, the Illinois attorney general's office sued Telemarketing Associates for fraud, saying the company misled consumers by failing to tell donors during the solicitation call that most of their donations went to the telemarketing company.

In 2001, the Illinois Supreme Court dismissed the suit against Telemarketing Associates, ruling that it would violate the company's right to communicate freely with the public.

Lawyers for the state appealed the ruling, saying the decision would deal a "crippling blow to one of the state's principal weapons against telemarketing fraud."

Ginsburg said that the Constitution does not protect businesses that knowingly mislead the public.

Calling the high court's decision a "victory for consumers," Melissa Merz, spokeswoman for Illinois Attorney General Lisa Madigan, said donors deserve to know that most of their money will be spent for charitable work and not given to telemarketers. She added that the ruling would not affect telemarketers who dealt honestly with potential donors.

"This opinion will affect telemarketers who are making misrepresentations about how money is being used," she said in a statement.

Each year, Americans give an estimated $200 billion to charities through telemarketers.

"DO NOT CALL' LIST: People fed up with unwanted telemarketing can sign up in July for a national do-not-call list that will block many sales calls.

The Federal Trade Commission will launch a Web site July 1 so consumers can register online for the free service, the agency has said. The commission also will begin an eight-week rollout of a toll-free phone number by which people also can register for the list. The number will spread across the country until it is available nationwide by the end of August.

In other cases . . .

UNFAIR CONFESSION: The Supreme Court sharply criticized Texas police on Monday for tactics used to get a teenager to confess in a murder case: waking him at 3 a.m. and taking him clad only in underwear to the crime scene.

Police in suburban Houston had maintained that 17-year-old Robert Justin Kaupp willingly went with officers and that his constitutional rights were not violated. The officers had been unable to get approval of a warrant to question Kaupp and they didn't have enough evidence to arrest him.

The high court, in an unsigned opinion, said that the teen's January 1999 confession probably should be thrown out.

"A group of police officers rousing an adolescent out of bed in the middle of the night with the words "we need to go and talk' presents no option but to go," the court said.

The Supreme Court sent the case back to a Texas court to consider any other evidence.

VINCE FOSTER AND PRIVACY: The Supreme Court on Monday resurrected a nearly decade-old dispute over the suicide of White House attorney Vincent Foster, agreeing to decide when the government must release sensitive or gruesome law enforcement records.

The government had asked the court to back its decision to withhold postmortem pictures of Foster.

The high court must balance the privacy interest of Foster's family with the rights of others who sued to get the photos under the Freedom of Information Act.

Foster's death, in the first year of Bill Clinton's presidency, spawned a legion of conspiracy theories that he was murdered in a White House coverup. Foster was a kindergarten friend of Clinton and former law partner of Sen. Hillary Rodham Clinton.

FINANCE LAW APPEAL: The most prominent critic of the McCain-Feingold campaign finance law has taken his battle to the Supreme Court, sending the justices the first of what are expected to be many appeals of a three-judge district court ruling that struck down some portions of the statute and upheld others.

In a 25-page document delivered late Friday and made available by the court Monday, Sen. Mitch McConnell, R-Ky., told the justices that the law "constitutes a frontal assault on First Amendment values, the likes of which have not been seen since the republic's infancy."

The brief, signed by McConnell's attorney, former independent counsel Kenneth Starr, urged the court to strike down the law's ban on unregulated "soft money"; its provisions regulating so-called "issue ads" paid for by unions, corporations and interest groups; and its limitations on expenditures that are "coordinated" between parties or groups and candidates.

Information from the Washington Post, Hearst Newspapers and the Associated Press was used in this report.

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