Chicago telemarketer is shut down after Tribune investigation of charity law violations
Telemarketer Safety Publications Inc., housed in the 5900 block of North Milwaukee Avenue in Chicago, has agreed to cease operations in Illinois.
Telemarketer Safety Publications Inc. has agreed to cease operations in Illinois after the state’s attorney general alleged the firm misled donors to raise millions of dollars on behalf of war-torn veterans and other charitable causes.
Safety co-founder Arthur Olivera also signed a lifetime ban from raising charity funds in Illinois, while Safety’s other co-founder Adam Herdman agreed to a three-year prohibition. Illinois Attorney General Lisa Madigan additionally is seeking $159,255 in penalties from the firm.
"The owners of Safety Publications are serial con artists who have shown complete disregard for the law over and over again," Madigan said. "Today’s order should put an end to their serial fraud in Illinois."
Madigan filed civil court fraud charges against Safety Publications last year in response to a 2015 Chicago Tribune investigation that found Safety failed to disclose Olivera’s felony arson conviction and also did not properly report the funds it raised for the charity VietNow National Headquarters of Rockford, among other breaches of state charity laws.
Safety, which has offices in Chicago and the area, reported raising $4.9 million for VietNow and an array of other U.S. charities from 2008 through 2014 but gave the nonprofits only about 15 cents of every dollar raised in those seven years and kept the rest for itself, a Tribune analysis of government records found. Many of those charities in turn spent large sums on administrative overhead, leaving pennies for those in need, the records show.
Following the Tribune reports, Missouri Attorney General Josh Hawley filed a civil court lawsuit that seeks $221,600 in penalties against Safety, Herdman and Olivera.
Safety contacted Missouri consumers who were on that state’s No-Call list, and its misleading pitches said donations were going directly to charities, according to Loree Anne Paradise, spokeswoman for Hawley. That suit is pending.
And in Michigan, Attorney General Bill Schuette in March revoked VietNow’s charitable solicitations registration, saying none of the funds it raised in that state went to Michigan vets or to promised medical facilities.
Olivera and Herdman did not respond to requests for comment Wednesday, and phone numbers for Safety were disconnected. The Missouri and Illinois attorneys general are not coordinating their enforcement actions, according to officials from both states, and it is unclear how much if any money either will be able to collect from the firm.
Carl Metz, an attorney for VietNow, said that charity is "working with Michigan officials to resolve their issues."
"The charity does good work and intends to keep doing good work," Metz said.
The current Illinois consent decree is the third since 2002 that Madigan’s office has imposed on Herdman and Olivera after alleged breaches of Illinois charity laws. The two men and their companies agreed to pay a total of $60,000 to resolve the attorney general’s 2002 and 2007 consumer protection lawsuits without admitting wrongdoing, and signed agreements stating they would uphold Illinois charity laws in the future.
Herdman and Olivera launched Safety and several linked companies in the mid-1990s. In a faded brown brick building at 5944 N. Milwaukee Ave. and several satellite centers, Safety’s minimum-wage telemarketers sought charity donations that would purportedly help veterans, police officers and sick kids.
The Tribune reported in 2015 that Safety and a linked charity telemarketer had employed at least 10 callers who served prison terms for bank robbery, forgery, child rape and other felonies since 2007, despite Illinois’ prohibition against using felons to raise charity money. The law is designed to ensure the trustworthiness of nonprofit solicitors.
VietNow, which now also goes under the name VeteransNow, pledges to help former service members overcome joblessness and post-traumatic stress disorder. Safety gave that charity only 10 percent of the $1.6 million in donations the telemarketer collected for it from 2010 through 2015, the Tribune found.
Safety is one of 35 telemarketers that VietNow used to raise more than $20 million between 2003 and 2014, the Tribune’s 2015 analysis of charity records found. The telemarketers collectively kept more than 80 percent of the donations as their fees, the Tribune found.
Metz said Wednesday he did not want to comment on past shortfalls, but he added that the charity is willing to work with Madigan’s office or any governmental agency’s to resolve problems they identify.