WHERE IT STARTED
FIRST SEEN: 19th century; telefunding model from c. 1980 · GOING FOR: Modern telefunding form c. 45 years
Documented in 19th-century Britain and America; the professional telefunding model that dominates today's cases grew in the United States in the 1980s and produced the FTC's first large sweeps in the 1990s.
Sham charities are documented from the 19th century, but the US telefunding boom of the 1980s-90s created the modern model: professional fundraisers keep 80-90 cents of every dollar, and 'charities' named to sound like veterans', cancer or police groups spend almost nothing on the cause. The FTC and state attorneys general brought the largest cases: the Cancer Fund of America family of charities ($187 million, 2015), Help the Vets ($20 million, 2018), and Associated Community Services, which made 1.3 billion robocalls (2021). Disaster appeals after hurricanes, wars and pandemics and fake online fundraisers are the fastest-growing variants.
HOW IT WORKS
Operators register a nonprofit with an emotive name, then hire or own a telemarketing firm that robocalls millions of households with scripted pleas. Donations pass through the fundraiser, which keeps most of the money as 'fees'; what reaches the charity funds salaries, cars and trips for the founder's family, with token gifts-in-kind reported as programme spending. Online variants clone real charities' branding after disasters and solicit through social media or crowdfunding pages.
A charity name that closely resembles a well-known oneRobocalls or high-pressure callers who want an immediate pledgeRefusal to say what share of donations reaches the causeNo listing or a poor rating on Charity Navigator, GuideStar or the state regulatorRequests for gift cards, wire transfers or cash
HOW USEFUL IT IS TO CRIMINALS
Setting up a nonprofit and hiring a robocall vendor costs little, and donors rarely check where money goes. Fundraisers legally keep most of what they raise, so operators earn tens of millions before regulators act; nearly all major cases end in civil settlements with suspended judgments, and only small operators such as Peterson go to prison.
THE DAMAGE IT HAS CAUSED
$187 million
Largest US sham-charity case (Cancer Fund of America group); no annual total published — FTC, May 2015
No body publishes a global total; the FTC's largest cases account for hundreds of millions of dollars, led by the $187 million Cancer Fund of America family (2015) and the $110 million Associated Community Services robocall operation (2021). The harm falls on real charities, which lose donor trust, and on cancer patients and veterans who received nothing.
$187 million Raised by the Cancer Fund of America group of sham charities, 2008-2012 (FTC, May 2015)
1.3 billion Deceptive charity robocalls made by Associated Community Services (FTC, Mar 2021)
100+ Enforcement actions in the 2018 'Operation Donate with Honor' sweep on veterans' charities (FTC, Jul 2018)
WHO USES IT MOST
MOST OF ALL: 🇺🇸 United States ▸
The FTC and state regulators have brought the largest documented cases and the US telefunding industry is the model copied elsewhere.
United States (largest cases, FTC enforcement)United Kingdom (Charity Commission inquiries)Canada (CRA revocations)Australia (ACNC actions)Nigeria (fake disaster appeals online)
GOVERNMENTS LINKED TO IT
No government is documented as using this method.
NOTABLE PEOPLE WHO USED IT — RANKED BY PROFILE ORDER (NOT BY AMOUNT)
#1 James Reynolds Sr. (Cancer Fund of America, Cancer Support Services) SETTLED (FTC AND 50 STATES, MAR 2016)REPORT PENDING
$187M raised by the four charities; $75.8M judgment against Reynolds' two · 2008-2012
Ran a family of four sham cancer charities that raised $187M and spent almost all of it on fundraisers and personal expenses; banned for life from charity management.
SOURCE: FTC press release, 30 Mar 2016; Forbes, 21 May 2015
#2 Dick Cole, Bill Burland and Associated Community Services SETTLED (FTC, 38 STATES AND DC, MAR 2021; BANNED FROM FUNDRAISING)REPORT PENDING
Over $110M collected · 2008-2020
Michigan telefunding operation that placed 1.3 billion deceptive charity robocalls to 67 million consumers, keeping up to 90% of donations.
SOURCE: FTC press release, 4 Mar 2021; New York Attorney General, Mar 2021
#3 Neil G. 'Paul' Paulson Sr. (Help the Vets) SETTLED (FTC AND STATES, JUL 2018)REPORT PENDING
$20.4M judgment (donations 2014-2017) · 2014-2017
Florida operator of 'Help the Vets' and related names that promised medical care and suicide-prevention programmes for veterans while 95% of donations went to fundraising and his pay.
SOURCE: FTC, 'Operation Donate with Honor', 19 Jul 2018
#4 Travis Deloy Peterson (Veterans of America) CONVICTED (3 YEARS 5 MONTHS, MAR 2022)REPORT PENDING
Over $500,000 pocketed · 2013-2018
Utah man who used millions of robocalls under names such as Veterans of America and Vehicles for Veterans to solicit car and boat donations that never reached veterans.
SOURCE: US Attorney NDGA via KSL.com, Mar 2022
SOURCES
FTC press release, sham cancer charities settlement, 30 Mar 2016
Forbes, '$187 Million Cancer Charity Fraud Case Settles', 21 May 2015
FTC press release, 'FTC, 38 States, and D.C. Act to Shut Down Massive Charity Fraud Telefunding Operation', 4 Mar 2021
New York Attorney General press release on Associated Community Services, Mar 2021
FTC, 'Operation Donate with Honor', 19 Jul 2018
KSL.com, Utah man sentenced for fake veterans charities, Mar 2022