Here's the scam: The "grinder," or greenest guy in the boiler-room - that's how phony telemarketers refer to their operations - gets handed a lead list with the phone numbers of potential victims.
He calls with the script: "Several months ago you authorized a tax-deductible donation for 'Stop Drug Abuse.' Thanks to people like you, the local group will receive thousands of dollars in benefits."
Next comes the shove: "Oh, you don't remember it? But I have it written down right here. We'll be sending a courier over in an hour to pick it up. If you won't be at home, please leave a check under the doormat."
The grinder writes down the name of the victim, the date, the donation amount, and the phony charity's name on an index card. He then hands the card to his boss, the "tapshooter," who files it away according to a call-back schedule. Each month, he calls the victim with a new plea from a different "charity."
Schemes like this are becoming increasingly familiar in the late 1990s. Federal regulators and law enforcement authorities say "faux" charity groups are adopting more aggressive and sophisticated tactics, bilking the public out of billions of dollars a year - particularly the elderly.
Lorethea Hamke of Vincennes, Ind., was one such giver. Over the past two years, the octogenarian wrote 54 checks totaling over $1,500 to several companies, including Tri-State Advertising.
Giving felt good. The candy shop owner, who has hand-dipped chocolates and pulled taffy in her basement for the last 45 years, believed her hard-earned dollars were supporting the community by helping to publish and distribute dozens of guides with titles like: "Gang Alert Digest," "Teens Against Alcohol," and "Prevent Child Abuse."
"They had some nifty names," says Ms. Hamke in her sweet, unhurried voice. "It sounded like they were fighting things that are against our ways of living."
But Hamke never saw any of the guides. Federal officials say she was scammed.
The Federal Trade Commission announced yesterday that it filed a restraining order against Tri-State and two other Indiana telemarketers for defrauding thousands of people - many of them elderly widows like Hamke.
Individuals gave a generous $109 billion to charity last year, according to the American Association of Fundraising Councils. Since most never learn if they've been had, it's impossible to say precisely how large a cut goes to bogus charities. But experts estimate it is a whopping $1 billion to $10 billion a year. The bulk of solicitations occur from now until the end of December - the busiest six weeks of the year for charities.
A survey released yesterday by the American Association of Retired Persons coincides with a sweeping FTC crackdown on fraudulent operators. The study shows that people aged 65 and older receive an average of 338 charity solicitations annually by mail or phone - more than any other age group. Officials believe many of these pleas are bogus.
"Older people are targeted because they're perceived by criminals as easier to rip off," says AARP spokesman Greg Marchildon. In addition, seniors spend more time at home and often have both the disposable income and an altruism molded by the Depression.
The survey also showed that while 79 percent of respondents aged 65 and older were skeptical about a charity's legitimacy, an astounding 65 percent said they've never asked a caller how their donation would be spent.
Federal officials step in
Scam operators are known to move across state lines once local law enforcement gets wise to their operations. In order to combat the problem on a national scale, federal officials have stepped in.
The FTC yesterday announced fines, injunctions, and restraining orders in 39 cases where consumers in 41 states were bilked out of millions of dollars. The federal government is even suing one of the largest operators, which brought in $10 million to $12 million last year.
"Charity fraud is a great harm to the public good," says FTC lawyer Tracy Thorleifson. "The victims, who are totally on the side of the angels, lose confidence in giving."
This consequence is best illustrated by a retired schoolteacher taken for $9,500 over two years - another alleged victim of Tri-State Advertising. Like most seniors who get conned, she's embarrassed and afraid her family will think she's no longer capable of running her own financial affairs - so she prefers to be anonymous.
"We grew up in a different era from modern people," says the woman. "We are more trusting. But I was pestered for two years, and now I'm getting more hard-hearted."
So is Lorethea Hamke. After writing dozens of checks, she began to get fed-up.
When Hamke complained to a telephone solicitor that she had not pledged the money, he countered testily: "But you promised. Aren't you as good as your word?" Intimidated, Hamke continued to hand over the checks, but added little notes in the corner, progressing from "Do not call again" and "Last time" to "Final!" and "NO MORE." But the calls and couriers continued.
Even now that the FTC has issued a restraining order against Tri-State Advertising, Hamke still has no peace. Just the other day a courier from a different company stopped by, claiming she owed them a donation.
"It's nothing to have three or four a day," Hamke laments. "And I still don't know which are real, and which aren't."