Diabetes Charity Banned From Iowa For 10 Years

The Defeat Diabetes Foundation is a Florida-based charity that raises money to fight the disease. But the way it raises money has resulted in it being banned from raising money in Iowa for the next 10 years.

Iowa Attorney General Tom Miller has secured a consent judgment against the group, its president, Andrew P. Mandell, and its treasurer, Jerald Y. Mandell, formally resolving a consumer fraud lawsuit.

“We alleged that numerous deceptive fundraising calls were made on behalf of Defeat Diabetes Foundation by Lino’s, Inc., a Des Moines-area professional fundraiser that the Foundation hired to solicit donations,” Miller said. “After arranging for the telemarketer to call for contributions in the charity’s name, the Foundation made little or no effort to ensure that money was being solicited fairly and honestly.

In fact, the Foundation even gave its approval to misleading telemarketing scripts.”

Weeks ago Miller informed the charity of his intent to file a consumer fraud lawsuit against it and gave the group the opportunity to reach an out of court settlement. That settlement, in which the foundation denies wrongdoing, will keep it out of the state for a decade.

In addition to the ten-year total ban, the consent judgment provides that the Foundation can resume fundraising after 2021 only if it first notifies the Attorney General, answers the Attorney General’s questions about its activities, and pays the State of Iowa $10,000.00 to reflect the costs associated with monitoring the Foundation’s activities.

The Consent Judgment also required an immediate payment of $2,500.00 for the administration and implementation of Iowa’s Consumer Fraud Act.

Looking the other way

“We believe that a charity can’t look the other way when it knows or should know it is benefiting financially from misleading fundraising conducted in its name,” Miller said. “This consent judgment includes a permanent injunction requiring Defeat Diabetes to take the steps reasonably necessary to ensure that the solicitations carried out in its name comply with the law.”

Miller's office has, for the last few months, operated an undercover telephone monitoring station in Iowa. The telephone number was, until recently, registered to an elderly citizen and therefore, appeared on a number of fundraising and scam target phone lists.

The telephone is handled by a member of Miller's staff and is equipped with a recording device. It has ensnared at least one other telemarketer in recent weeks.

Miller said the undercover phone line recorded several Defeat Diabetes solicitation calls, and the lawsuit alleged that they were uniformly deceptive. According to Miller, the solicitors were misleading about who was calling, how much of the donated funds would go to the charitable mission, whether contributions would be devoted to Iowa relief, and whether the caller was a volunteer instead of a paid telemarketer, according to the lawsuit.

Telemarketer shut down

Lino’s, the West Des Moines telemarketer that made the calls for Defeat Diabetes, shut down last fall after the Attorney General’s office executed a search warrant on the operation.

Defeat Diabetes’ fundraising contract with the telemarketer provided that 80 cents of every dollar raised would go to the for-profit telemarketer, and only 20 cents to the charity. The lawsuit alleged that this disparity was part of the reason organizations that rate charities have given the Defeat Diabetes Foundation failing grades.

“When so little of each donation actually goes to a charitable purpose, it’s vital that solicitations are not misleading, and that consumers are told the truth when they ask probing questions,” Miller said. “Truth was definitely a casualty in these Defeat Diabetes fundraising calls.”