Even the most charitable-sounding appeal can turn out to be a wrong number. In Oklahoma, a charity operation collecting used cell phones for battered women has been charged with fraud, with authorities charging it duped thousands of well-meaning Oklahomans.
Domingo Frias-Payan, 24, and Heather Frias-Payan, 25, owners of Oklahoma City-based Save a Life Give a Phone Foundation, Inc., are charged with one felony count of racketeering and 11 counts of violating the Oklahoma Solicitation of Charitable Contributions Act.
Domingo Frias-Payan was also charged with one count of violating the Oklahoma Securities Act and one count of offering forged or false instruments for record. The state also filed a separate civil action asking the court for a temporary injunction prohibiting the company from conducting business while the state seeks legal remedies to permanently shut down the allegedly fraudulent business.
"Our investigation determined and we allege that cell phones solicited on behalf of battered women's shelters, domestic violence victims, the elderly or disabled were actually sold for the couple's personal profit," Oklahoma Attorney General Drew Edmondson said.
"Preliminary numbers show the couple solicited about 100,000 cell phones on the premise that the phones would be distributed to these vulnerable groups for emergency use. We allege that only about 300 phones were actually donated and the others were sold for about $1.2 million, which was deposited into accounts controlled by the couple."
The attorney general's office alleges the Frias-Payans were misleading in their solicitations by failing to disclose to donors that only a small portion of the cell phones would actually be donated.
"These people were bold in their solicitations," Edmondson said. "They allegedly called on individuals, businesses, cell phone companies, cities and even police departments for donations. In all, Save a Life received used cell phones from businesses or individuals in 41 different states."
Edmondson alleged the couple also falsely represented that donations to Save a Life would be used to maintain a shelter for victims of domestic violence.
"The only shelter run by the defendants has been shut down because it was not licensed and operated in violation of municipal ordinances," Edmondson said. "The couple allegedly required residents to either pay $125 per month or work four hours a day in a telemarketing boiler room soliciting cell phones and donations."
The attorney general said a boiler room refers to a facility equipped for telemarketing solicitation calls.
The state's complaint also alleges a violation of the Oklahoma Securities Act. According to the complaint, a woman formerly employed by Domingo Frias-Payan paid him $4,500 in exchange for stock in the company. Frias-Payan allegedly never issued stock certificates to the employee and has not refunded the employee's money.
The final alleged violation stems from Domingo Frias-Payan's failure to properly register as a charity with the Oklahoma Secretary of State's Office.
"We allege Frias-Payans represented through telephone solicitations, in print and on the Internet that donations made to Save a Life would be distributed and used to help others," Edmondson said. "After the Frias-Payans became aware of our investigation, they added a disclaimer to the Save a Life website saying that a portion of the proceeds were donated to charity. It's a little late for that."
According to the state's complaint, the couple also did business as Domingo Group Telecom, Inc., Givafon, Inc., and Recycleable (sic) Cellular Network, Inc.
Edmondson said his Consumer Protection Unit is continuing its investigation to determine the exact number of donated phones and contributions.