Struggling Las Vegas telemarketer got COVID-19 business loans

This article was originally published by the Center of Public Integrity, a nonprofit newsroom based in Washington, D.C.

A Las Vegas telemarketer whose former businesses were investigated by the Federal Trade Commission for possible ‘unfair or deceptive acts’ has received taxpayer-funded loans intended to support financially struggling small businesses due to the COVID-19 pandemic.

Compliance Consultants LLC and Advanced Telephony Consultants LLC, both led by Las Vegas telemarketer Richard Zeitlin, received Paycheck Protection Program (PPP) loans in May totaling between $500,000 and $1.3 million, according to a database published by the US Small Business Administration, which reports loan totals in ranges instead of exact loan amounts.

The SBA handed out the PPP loans as part of a coronavirus stimulus package passed by Congress in April.

Zeitlin was the subject of a Center for Public Integrity investigation released last year that found its companies, including Compliance Consultants, retained $133.1 million of $153.1 million raised between 2006 and 2019 to US donors on behalf of political and charitable organizations. (Advanced Telephony Consultants was not part of Public Integrity’s investigation.) Zeitlin employees asked donors to help children with leukemia, women with breast cancer, police officers, firefighters and veterans, but very little money went to the causes they were fighting for.

The FTC and various state attorneys general have shut down at least five of the charity clients who contracted with Courtesy Call, one of Zeitlin’s former companies, for allegedly misleading donors. Zeitlin was not a party to any of these lawsuits, and neither he nor his companies have been accused of wrongdoing.

However, the FTC was investigating whether two of Zeitlin’s former companies, Donor Relations and Courtesy Call, “engaged in unfair or deceptive acts or practices,” according to a court document filed by the commission in February 2018.

But the companies did not cooperate, failing to meet deadlines and sending “manifestly inaccurate” documents, according to court documents filed by the FTC. The commission dropped its investigation in late 2018, citing an ongoing grand jury investigation in South Florida involving a courtesy call and donor relations.

“It is clear that the [Paycheck Protection] The program failed to vet loan applicants in any meaningful way and provided loans to businesses that had been the subject of multiple government investigations,” said Brett Kappel, campaign finance attorney at the Harmon Curran law firm.

Zeitlin’s attorney could not be reached in time for publication.

Public Integrity, which has fewer than 50 employees, received $658,000 under the PPP program.

A growing trend

Zeitlin’s telemarketing tactics are part of a growing trend. The United States has seen an increase in the number of political action committees that collect most of their money from small donors before reinvesting much of it in salaries, administrative costs, and raising more money. according to a public integrity analysis of more than 68.7 million campaign finance records compiled by the Center for Responsive Politics.

PACs that contracted with Zeitlin accounted for about half of this increase. Before switching to PACs a few years ago, Zeitlin raised tens of millions of dollars on behalf of charities.

Overall, nonprofit organizations and political committees are allowed to spend almost everything they raise on fundraising. But it’s not legal to mislead potential donors about how their money will be used. He belongs to a patchwork of federal and state investigators, each with different jurisdictions and responsibilities, to police attorneys.

Some of the organizations that have contracted with Zeitlin companies over the years have been or are currently led by people with troubled backgrounds, including a disgraced Florida attorney and a member of the board of directors of a charity that was shut down by regulators. Four of the groups are led by a Las Vegas Metropolitan Police Department officer who was charged in a 2018 federal lawsuit with using “excessive and unreasonable force” when he shot a gunman six times. a knife, killing him. The lawsuit was dropped in 2019.

Following the Public Integrity story, the Las Vegas Police Department said it was “investigating” the work this officer, William Pollock, was doing on behalf of political committees. A department spokesperson said Pollock voluntarily resigned on June 10. It is unclear if he was reprimanded or if his resignation was related to findings regarding his work for the PACs; the department said his personnel file was not a public record.

The feds crack down

Federal regulators have cracked down on charities and political committees that spend most of the money they raise on fundraising and overhead.

In February, a federal judge sentenced political operative Scott B. Mackenzie to 12 months and a day in jail for making false statements to the Federal Election Commission.

Mackenzie — one of Washington’s most prolific and controversial political fundraisers — has served as treasurer for more than 50 federal political action committees. At least a dozen of them claimed to raise money for political and social causes, but they spent most of the money they raised from unsuspecting donors on fundraising, salaries and overhead costs.

In March, the Virginia attorney general’s office shut down two veterans’ charities that allegedly misappropriated $13 million in donations from unsuspecting Americans.

The Circle of Friends for American Veterans and the Center for American Homeless Veterans were the subject of a public integrity investigation in 2017, with Put Vets First! PAC, a related political action committee, all based in the same Falls church office and headed by retired Army Major Brian Arthur Hampton.

The organizations promised to help homeless veterans with food, shelter and job training, but they spent almost all of their money on professional telemarketers, which Public Integrity also investigated.

Hampton has contracted with Zeitlin’s companies for fundraising services.

As part of a settlement agreement with the state, Hampton was permanently banned from soliciting donations and playing a financial role for other nonprofits.

He was also ordered to split $100,000 among three charities “that provide real support” to homeless veterans, according to a press release from the office of Virginia Attorney General Mark Herring.

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