SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF ALBANY ------------------------------------------------------------------------ x ELIOT SPITZER, as the Attorney General of the State : of New York, in the name and on behalf of : the People of the State of New York, and on behalf of : ultimate charitable beneficiaries, : : Plaintiff, : : - against : : ALL-PRO TELEMARKETING ASSOCIATES CORP. : and MARK GELVAN, : : Defendants. : ------------------------------------------------------------------------ x Index No. ______________ SUMMONS TO THE ABOVE NAMED DEFENDANTS: YOU ARE HEREBY SUMMONED to appear in this action by serving an answer to the verified complaint on the plaintiff =s attorney within twenty days after the service of this summons, exclusive of the day of service, or within thirty days after completion of service where service is made in any other manner than by personal delivery within the state. In case of your failure to answer, judgment will be taken against you by default for the relief demanded in the verified complaint. Albany County is designated as the place of trial on the basis of the location of the Attorney General=s offices at The Capitol, Albany, New York. Date: Albany, New York October 7, 2002 ELIOT SPITZER Attorney General of the State of New York By _______________________ TIMOTHY B. LENNON Assistant Attorney General The Capitol Albany, New York 12224 Phone: (518) 473-0951 Facsimile: (518) 473-8153 TO: ALL-PRO TELEMARKETING ASSOCIATES CORP. 277 Fairfield Road, Suite 308 Fairfield, New Jersey 07407 MARK GELVAN 5 James Terrace Towaco, New Jersey 07012 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF ALBANY ------------------------------------------------------------------------ x ELIOT SPITZER, as the Attorney General of the State : of New York, in the name and on behalf of : the People of the State of New York, and on behalf of : ultimate charitable beneficiaries, : : Plaintiff, : : - against : : ALL-PRO TELEMARKETING ASSOCIATES CORP. : and MARK GELVAN, : : Defendants. : ------------------------------------------------------------------------ x Index No. ______________ VERIFIED COMPLAINT ELIOT SPITZER, as Attorney General of the State of New York, as and for his Complaint herein, alleges as follows: INTRODUCTION 1.The Attorney General brings this action to recover from defendants All-Pro Telemarketing Associates Corp. ("All-Pro") and Mark Gelvan ("Gelvan") charitable contributions in excess of $5 million fraudulently solicited by the defendants from New York residents in the name of the Fraternal Order of New York State Troopers, Inc. (the "Order"), and permanently to enjoin defendants All-Pro and Gelvan from directly or indirectly soliciting contributions in the State of New York. 2. All-Pro continuously acted as the Order=s exclusive fund raiser from August 1995 through September 2002. 3. Upon information and belief, Gelvan was responsible for overseeing all aspects of All-Pro=s solicitations, including the hiring, training, and supervision of the individuals making solicitations on behalf of the Order. 4. New York residents donated to the Order, in response to All-Pro=s solicitations, an annual average of nearly $1 million. Upon information and belief, All-Pro=s solicitors falsely identified themselves as law enforcement officers, misrepresented that the Order was affiliated with the New York State Police, and misrepresented the purposes for which contributions would be used. 5. Upon information and belief, All-Pro, in the course of soliciting funds for the Order, employed professional solicitors who were not registered with the Attorney General under Executive Law Art 7-A, entered into an agreement with an unregistered professional fund raiser, and repeatedly failed to inform donors that their contributions were not tax deductible. 6. The Attorney General seeks judgment: a) awarding restitution from All-Pro and Gelvan of the donations solicited from New York residents in the name of the Order, totaling more than $5 million; b) permanently enjoining All-Pro from soliciting donations from residents of the State of New York; and c) permanently enjoining Mark Gelvan from acting as a professional fund raiser, professional solicitor, or fund raising counsel (as those terms are defined in Executive Law Article 7-A), or as a director, officer, or employee thereof. 7. The Order is not a party to this action. The Attorney General has addressed the Order=s participation in its solicitations through the execution of a settlement agreement with the Order providing for, inter alia, restitution and the Order=s cessation of solicitations for any purpose. A copy of the Attorney General=s settlement agreement with the Order, dated September 30, 2002, is annexed hereto as Exhibit "A". PARTIES AND JURISDICTION 8. Defendant All-Pro is a for-profit corporation organized and existing under the laws of the State of New Jersey. All-Pro=s principal place of business is 277 Fairfield Road, Suite 308, Fairfield, New Jersey 07407. 9. Because of the level of All-Pro=s activities in New York, All-Pro is required to be authorized to do business in New York pursuant to Business Corporation Law ("BCL") ' 1301. All-Pro was so authorized from November 13, 1998 until June 26, 2002, when its authorization was annulled pursuant to Tax Law ' 203-b for failure to file required tax returns with the New York State Department of Taxation and Finance. Upon information and belief, All-Pro has continued to do business in New York after the annulment of its authorization to do business. 10. All-Pro=s activities in New York have, at all relevant times, constituted those of a professional fund raiser as defined in Executive Law ' 171-a(4), i.e., All-Pro planned, managed, or conducted solicitations of New York residents for charitable purposes or for the purposes of a law enforcement support organization in exchange for compensation. Registration as a professional fund raiser with the Attorney General is required, pursuant to Executive Law ' 173, prior to any action as a professional fund raiser. All-Pro has been registered with the Attorney General as a professional fund raiser since June 23, 1994. 11. Upon information and belief, All-Pro solicited donations on behalf of the Order only in the State of New York, and at all relevant times from phones located in Ontario, Canada and New Jersey. Upon information and belief, All-Pro continues to solicit charitable donations from New York residents on behalf of at least fourteen other organizations. 12. All-Pro conducts business in New York and is sufficiently present in the State of New York to be subject to suit in New York on any cause of action. 13. Gelvan resides at 5 James Terrace, Towaco, New Jersey 07012, and has been the sole shareholder, officer, and director of All-Pro at all relevant times. Gelvan=s involvement in All-Pro=s solicitations of New York residents on behalf of the Order constitutes "transacting business" in New York and subjects Gelvan to this Court=s jurisdiction over the causes of action alleged herein arising out of such involvement. AUTHORITY OF THE ATTORNEY GENERAL AND STATUTORY SCHEME 14. Executive Law Article 7-A, comprising sections 171-a through 177, governs the solicitation activities of charities, law enforcement support organizations, and their professional fund raisers. 15. Pursuant to Executive Law ' 175(2), the Attorney General is authorized to bring an action against any charitable organization and persons acting for or on behalf of such organizations to address any violation of Executive Law Article 7-A. In such an action, the Attorney General may seek to restrain the solicitation and collection of funds, cancel any registration statements filed with the Attorney General, seek restitution, and request any other relief the Court may deem proper. 16. Of particular relevance in the instant matter are the following sections of Article 7-A: a) section 172-d(2), prohibiting any fraudulent or illegal act, device, scheme, artifice to defraud or for obtaining money or property by means of a false pretense, representation or promise, transaction or enterprise in connection with any solicitation; b) section 172-d(3), prohibiting the use of materially misleading advertising or promotional material in connection with any solicitation; c) section 174,,,,,1 requiring professional fund raisers and solicitors to disclose in all solicitations (written and telephonic) the name of the individual professional solicitor as on file with the Attorney General, that such individual is compensated for conducting the solicitation, that the solicitation is being conducted by a professional fund raiser, and the name of that professional fund raiser as on file with the Attorney General; d) section 172-d(5), which, as it existed prior to August 1,,,,,,2 prohibited any person or organization from employing or entering into any contract with an unregistered professional solicitor (the individual making a solicitation in the employ of a professional fund raiser) or an unregistered professional fund raiser (the person or entity conducting a professional solicitation campaign); e) section 174-b(2), requiring any solicitation on behalf of a charitable entity to provide a clear description of the programs and activities for which the donation will be used, or disclosing that, upon request, a person may obtain such a description; f) section 174-b(1), which, as it existed prior to August 1,,,,,,3 required any solicitation (written and telephonic) used by a charitable entity required to file financial reports with the Attorney General (such as the Order) to include a statement that, upon request, a person may obtain from such entity or the Attorney General a copy of the last financial report filed, specifying the address of the organization and of the Attorney General to which such a request should be addressed; and g) section 172-d(9), prohibiting a representation, in any manner, that registration with the Attorney General constitutes an endorsement or approval by the State. 17. Internal Revenue Code of 1986, as amended, ("IRC") ' 6113 is also applicable to the solicitations conducted on behalf of the Order. As contributions to the Order were not deductible by donors as charitable contributions under IRC ' 170, section 6113 required solicitations conducted on behalf of the Order to disclose conspicuously to prospective donors such fact. While section 6113 required such a disclosure in all solicitations made on behalf of the Order, All-Pro=s telephonic solicitations failed to make the required disclosure. FACTS A.Execution and Violation of Statutory Assurance of Discontinuance 18. In 1996, the Attorney General instituted an investigation into All-Pro and the Order due to public complaints regarding All-Pro=s solicitation campaign. 19. As a result of the investigation, the Attorney General concluded that All-Pro had, inter alia, persistently and repeatedly misrepresented that the Order was affiliated with, or calling on behalf of, the New York State Police, and persistently and repeatedly misrepresented the purposes for which solicited funds would be used. 20. The Attorney General=s 1996 investigation was resolved through the execution of an Assurance of Discontinuance (the "1996 Assurance"), a statutory settlement agreement that the Attorney General is authorized to enter into pursuant to Executive Law ' 63(15). A copy of the 1996 Assurance is annexed hereto as Exhibit "B". 21. The 1996 Assurance was executed on or about October 9, 1996 by All-Pro (signed by Gelvan), the Order, and the Attorney General. 22. The 1996 Assurance summarized the Attorney General=s allegations that All-Pro was violating Executive Law ' 172-d(2) by using fraudulent acts, devices, schemes or artifices to defraud or to obtain money or property by false pretense, representation or promise. 23. The 1996 Assurance also summarized the Attorney General=s allegations that All-Pro was violating Executive Law ' 172-d(5) by entering into contracts or agreements with, or employing, unregistered professional fund raisers and professional solicitors. 24. The 1996 Assurance provided, inter alia, that All-Pro would not solicit funds other than through the use of an approved script, and that All-Pro would, upon demand, provide to the Attorney General a list of the Order=s donors. 25. The 1996 Assurance, by its express terms, remained in full force and effect through June 2001. 26. Upon information and belief, All-Pro violated the 1996 Assurance by soliciting funds other than through the use of a script approved by the Attorney General, and by refusing to provide a list of the Order=s donors after receiving the Attorney General=s demand for the same. B. The Status of the Order 27. All-Pro, under Gelvan=s management, solicited donations on behalf of the Order. The Order was incorporated on or about May 26, 1981, listing in its Certificate of Incorporation the following purposes: a) to promote the general welfare of all its members, to aid its members in their need for mutual benefits and protection, to improve the social and financial condition of its members and to improve the terms and conditions of their employment; b) to promote greater acknowledgment of its members= professionalism, improvement of their working conditions and security for individual members and their dependants; and c) to participate, at the Board of Directors= discretion, in state and international organizations and propose and support legislation beneficial to its members= welfare. 28. The Order is a Type A not-for-profit corporation (i.e., formed for non-business purposes such as fraternal, social, or professional) under section 201 of the Not-for-Profit Corporation Law (the "N-PCL"). 29. The order is not exempt from federal income taxation under IRC ' 501(c)(3). It has been determined by the Internal Revenue Service to be exempt from federal income taxation under IRC ' 501(c)(5) as a labor organization. Contributions to the Order are not deductible by donors as charitable contributions under IRC ' 170. 30. The Order is a "law enforcement support organization," as defined in Executive Law ' 171-a(11), as it purports to be a union or conference of current or former law enforcement officers. 31. Because it is a "law enforcement support organization," the Order is treated as, and is subject to, the registration and other legal obligations of a "charitable organization" within the meaning of Executive Law ' 171-a(1). C. All-Pro=s Solicitation on behalf of the Order 32. Upon information and belief, All-Pro entered into a "Host Agreement" with the Order dated August 10, 1995, which was effective September 1, 1995 through August 31, 1997. All-Pro thereby contracted to solicit funds on behalf of the Order, bear all expenses relating to the solicitations, arrange (at its own expense) fifteen puppet shows "of an educational nature designed to promote an anti-drug message to children," and guarantee the Order the greater of $250,000 or 15% of the gross contributions. In exchange, the Order agreed to lend its name to all aspects of the solicitations and pay All-Pro 85% of the gross contributions received (subject to the $250,000 minimum). 33. Upon information and belief, the Order and All-Pro entered into a further "Host Agreement" dated December 23, 1997 (the "1997 Contract"), effective January 1, 1998 through December 31, 2000. All-Pro thereby contracted to solicit funds on behalf of the Order, bear all expenses relating to the solicitations, arrange (at its own expense) twenty puppet shows "of an educational nature designed to promote an anti-drug message to children," and guarantee the Order the greater of $300,000 or 15% of the gross contributions. In exchange, the Order agreed to lend its name to all aspects of the solicitations and pay All-Pro 85% of the gross contributions received (subject to the $300,000 minimum). 34. Upon information and belief, on or about December 13, 2000, the Order and All-Pro entered into an "Extension Agreement" whereby the 1997 Contract was extended to apply from January 1, 2001 through December 31, 2003. The terms of the Extension Agreement are the same as that of the 1997 Contract, except that the Order was guaranteed the greater of $336,000 or 15% of the gross contributions received. 35. Upon information and belief, the Order terminated its contract with All-Pro on or about September 9, 2002. 36. As indicated in the following table, and according to the reports filed with the Attorney General, New York residents contributed a total of $5,829,376.48 to the Order in response to All-Pro=s solicitation campaign in the years 1996 through 2001, of which $4,956,355.43 was retained by All-Pro and $873,021.05 was paid to the Order: Year Total Donations Paid to All-Pro Retained by Order 1996 1997 1998 1999 2000 2001 $819,522.10 $766,360.12 $817,820.82 $963,564.72 $1,176,922.80 $1,285,185.92 $710,138.63 $653,051.62 $695,147.70 $819,030.01 $1,001,185.06 $1,077,802.41 $109,383.47 $113,308.50 $122,673.12 $144,534.71 $175,737.74 $207,383.51 Totals $5,829,376.48 $4,956,355.43 $873,021.05 D. Fraudulent and Unlawful Solicitations 37. Upon information and belief, in the course of soliciting contributions on behalf of the Order from residents of the State of New York, All-Pro=s telephone solicitors repeatedly misrepresented that they were law enforcement officers. 38. Upon information and belief, in the course of soliciting contributions on behalf of the Order from residents of the State of New York, All-Pro=s telephone solicitors repeatedly misrepresented that the Order was the New York State Police or was affiliated with the New York State Police. For example, upon information and belief, All-Pro=s solicitors requested donations purportedly on behalf of the "New York State Police," "the State Troopers," and "the New York State Troopers," and All-Pro used a solicitation script representing that the "Troopers are having their annual Fund Drive" (emphasis added). 39. Upon information and belief, in the course of soliciting by telephone contributions on behalf of the Order, All-Pro utilized the services of unregistered professional solicitors. 40. Upon information and belief, from 1995 through 1998, inclusive, in the course of soliciting contributions from New York residents on behalf of the Order and other entities, All-Pro entered into an agreement with an unregistered professional fund raiser known as Great White North Marketing, which is incorporated in Canada, and which used solicitation scripts provided by All-Pro. 41. Upon information and belief, in the course of soliciting contributions on behalf of the Order, All-Pro=s professional solicitors repeatedly failed to disclose: a) their names as on file with the Attorney General; b) that they were being compensated for conducting solicitations; c) that the solicitation was being conducted by a professional fund raiser; and d) the name of All-Pro as on file with the Attorney General. Such disclosures were required to be made by Executive Law ' 174-b(3). 42. Upon information and belief, in the course of soliciting contributions on behalf of the Order, a professional solicitor employed by All-Pro misrepresented to a prospective donor that All-Pro=s solicitation on behalf of the Order was "legal" and that the Attorney General knew of and had authorized it. 43. Upon information and belief, in the course of soliciting contributions on behalf of the Order, All-Pro misrepresented that donations would be used for an "emergency fund" that "helps to support families and widows of the members" and of State Troopers in general, whereas no such fund existed. 44. Upon information and belief, in the course of soliciting contributions on behalf of the Order, All-Pro misrepresented that donations would be used for an "emergency fund" to "support members, their families and charitable organizations," whereas no such fund existed. 45. Upon information and belief, in the course of soliciting contributions on behalf of the Order, All-Pro=s telephone solicitors omitted facts essential for the public to understand the true manner in which contributions would be utilized, i.e., that some portion of the donations remitted to the Order would be used not for charitable purposes, but to assist the Order=s members with their personal "legal needs," to improve the working conditions of the Order=s members, and to promote greater acknowledgment of the professionalism of the Order=s members. Upon information and belief, these purposes were not disclosed in All-Pro=s telephone solicitations, but were disclosed only in written materials mailed to donors after a pledge was made. 46. In the course of soliciting contributions on behalf of the Order, All-Pro=s solicitors and written solicitation materials misrepresented that donations would be used to fund drug and alcohol awareness performances "throughout the State." Instead, the program of puppet shows was limited in geographic area. From 1996 through 2001, inclusive, a total of twenty-three shows were performed in only seven out of New York=s sixty-two counties. The shows were performed in only the mid- to southeastern part of the State, and no shows were performed west or north of Schenectady County. Thus, the representation that donations funded shows "throughout the State" was false. 47. Upon information and belief, in the course of soliciting contributions on behalf of the Order, All-Pro=s telephone solicitors and written solicitation materials fraudulently omitted facts essential for the public to understand the true nature of the Order=s purported program of anti-drug and anti-alcohol performances. Upon information and belief, All-Pro=s solicitors fraudulently failed to advise prospective donors that only twenty such shows would be performed over three years regardless of the amount of any single donation or even the total of all donations received. Upon information and belief, All-Pro =s solicitors also fraudulently failed to advise prospective donors of the limited scope of the program of shows, i.e., that b) c) d) e) f) 48. a) in 2001, only four shows were performed on two successive days, despite the collection that year of $1.28 million in donations; in 2000, only five shows were performed on four successive days, despite the collection that year of $1.17 million in donations; in 1999, only three shows were performed, one in April and two in November, despite the collection that year of $963,564 in donations; in 1998, only three shows were performed on four successive days, despite the collection that year of $817,820 in donations; in 1997, only eight shows were performed, three in June and five in October, despite the collection that year of $766,360 in donations; and in 1996, no shows whatsoever were performed, despite the collection that year of $819,522 in donations. Upon information and belief, in the course of soliciting contributions on behalf of the Order, All-Pro=s telephone solicitors fraudulently omitted facts essential for the public to understand the true nature of the Order itself, i.e., that the Order is a labor organization and not a charity, and, most significantly, that donations to it were not tax deductible. 49. Upon information and belief, in the course of soliciting contributions on behalf of the Order, All-Pro mailed written materials to persons who had pledged donations telephonically. These materials bore the name and logo of the Order, contained a written "thank you" note, and bore a pre-printed signature of Alfred J. Donahue as "president" of the Order. The written materials contained a request for a contribution, thus the materials constituted a solicitation by All-Pro separate and distinct from its telephonic requests for aid. 50. Upon information and belief, All-Pro repeatedly and persistently mailed such written materials to persons who had either refused to make a pledge or who had not received any telephone solicitations on behalf of the Order. In such cases, the written materials misrepresented that a specific sum was pledged to the Order, that a donation was pledged on a specific date, and that a conversation occurred with an identified person. 51. The written materials included a representation, made conspicuous by type face, size, and color, that "[s]ince your promised pledge I have already received more requests for Drug Awareness and Alcohol Prevention performances. Please take a moment to return your check in the envelope provided today!" Upon information and belief, it was not true that Alfred J. Donahue, the Order=s president, received requests for performances between the time that each pledge was made and the mailing of the materials to each person making the pledge. In fact, Alfred J. Donahue testified that he was not familiar with the quoted statement, and that it was added to the materials by All-Pro acting alone. 52. Furthermore, the statement quoted in paragraph "51" above falsely implied that the prompt payment of pledges would allow an expansion of the program of drug awareness and alcohol prevention performances. As All-Pro was required to provide only a fixed number of performances pursuant to all of its successive contracts with the Order, regardless of the total level of donations, there is absolutely no connection between the prompt payment of donations and the performance of shows in excess of those required by contract. E. Involvement of Defendant Gelvan 53. Upon information and belief, defendant Gelvan was a personal participant in the fraudulent and unlawful solicitations described herein. 54. As the sole shareholder of All-Pro, Gelvan had a direct financial interest in the contributions solicited by All-Pro on behalf of the Order. As a compensated officer and director of All-Pro, Gelvan had a direct financial interest in the contributions solicited by All-Pro on behalf of the Order. 55. Upon information and belief, as the sole shareholder, director, and officer of All-Pro, Gelvan controlled All-Pro and was responsible for overseeing all aspects of its solicitation activities conducted in the name and on behalf of the Order. 56. Upon information and belief, Gelvan was, at all relevant times, responsible for the hiring, training, and supervision of the persons conducting fraudulent and unlawful solicitations in the name and on behalf of the Order. 57. Upon information and belief, Gelvan supervised the hiring of unregistered professional solicitors by All-Pro. 58. Upon information and belief, Gelvan created and/or supervised the creation of the fraudulent telemarketing sales scripts and written materials used by All-Pro on behalf of the Order. 59. Upon information and belief, Gelvan caused All-Pro to enter into an agreement with Great White North Marketing, an unregistered professional fund raiser. CAUSES OF ACTION AS AND FOR A FIRST CAUSE OF ACTION [AGAINST DEFENDANT ALL-PRO] PURSUANT TO EXECUTIVE LAW ' 63(15)-PRIMA FACIE VIOLATION OF EXECUTIVE LAW ' 172-d(2) 60.Executive Law ' 63(15) provides that proof of a violation of an assurance of discontinuance entered into with the Attorney General constitutes prima facie proof of a violation of the applicable law in any civil action. 61. Defendant All-Pro violated the 1996 Assurance during the term of its pendency by, inter alia, soliciting funds other than through the use of a script approved of by the Attorney General. 62. Defendant All-Pro violated the 1996 Assurance during the term of its pendency by, inter alia, failing and refusing to provide to the Attorney General, upon demand, with a list of the Order=s donors. 63. All-Pro=s violation of the 1996 Assurance constitutes prima facie proof that All-Pro engaged in a scheme to defraud in violation of Executive Law ' 172-d(2). AS AND FOR A SECOND CAUSE OF ACTION [AGAINST DEFENDANT ALL-PRO] PURSUANT TO EXECUTIVE LAW ' 175-VIOLATION OF EXECUTIVE LAW ' 172-d(2) 64. Defendant All-Pro engaged in a scheme to obtain money fraudulently on behalf of the Order by means of a false pretense, representation, and enterprise in connection with solicitations for the Order, in violation of Executive Law ' 172-d(2). All-Pro=s fraudulent scheme was accomplished, as set forth in paragraphs "37" through "52" above, through, inter alia, the use of professional solicitors employed by All-Pro to solicit for the Order who: a) unlawfully failed to disclose that they were professional solicitors and that the solicitations were being conducted by a professional fund raiser called "All-Pro Telemarketing Associates Corp."; b) falsely represented themselves as law enforcement officers and the Order as an affiliate of the New York State Police; c) falsely stated that donations would be used for charitable purposes; and d) omitted details essential for the public to understand the true nature of the Order and its purported program of drug and alcohol awareness performances. AS AND FOR A THIRD CAUSE OF ACTION [AGAINST DEFENDANT GELVAN] PURSUANT TO EXECUTIVE LAW ' 175-VIOLATION OF EXECUTIVE LAW ' 172-d(2) 65. Because of Gelvan=s complete control of All-Pro, as set forth above in paragraphs "53" through "59," Defendant Gelvan is liable for the violations alleged in the second cause of action. AS AND FOR A FOURTH CAUSE OF ACTION [AGAINST DEFENDANT ALL-PRO] PURSUANT TO EXECUTIVE LAW ' 175 -VIOLATION OF EXECUTIVE LAW ' 172-d(3) 66. Executive Law ' 172-d(3) prohibits the use of materially misleading advertising or promotional material in connection with any solicitation on behalf of a law enforcement support organization. 67. Defendant All-Pro used misleading advertising or promotional material in connection with the solicitations conducted on behalf of the Order, as set forth in paragraphs "49" through "52" above, by repeatedly and persistently mailing to identified persons written materials representing that such persons pledged and owed a fixed sum, when, in fact, no such sum was pledged or owing. 68. Defendant All-Pro used misleading advertising or promotional material in connection with its solicitations conducted on behalf of the Order, as set forth in paragraphs "49" through "52" above, by distributing written materials containing a false implication that the prompt payment of contributions allowed the Order to expand its program of drug awareness and alcohol prevention performances. All-Pro distributed such promotional material despite its knowledge of its contractual obligation to arrange for only twenty shows over three years, regardless of the prompt payment or total amount of donations. 69. AS AND FOR A FIFTH CAUSE OF ACTION [AGAINST DEFENDANT GELVAN] PURSUANT TO EXECUTIVE LAW ' 175 -VIOLATION OF EXECUTIVE LAW ' 172-d(3) Because of Gelvan=s complete control of All-Pro, as set forth above in paragraphs "53" through "59," Defendant Gelvan is liable for the violations alleged in the fourth cause of action. AS AND FOR A SIXTH CAUSE OF ACTION [AGAINST DEFENDANT ALL-PRO] PURSUANT TO EXECUTIVE LAW ' 175 -VIOLATION OF EXECUTIVE LAW ' 174-b(3) 70. Executive Law ' 174-b(3) requires each professional solicitor to disclose in all solicitations, written and telephonic, the name of the professional solicitor as on file with the Attorney General, that the professional solicitor is being compensated for conducting the solicitation, that the solicitation is being conducted by a professional fund raiser, and the name of the professional fund raiser as on file with the Attorney General. 71. In the course of soliciting contributions on behalf of the Order, All-Pro=s telephone solicitors failed to disclose, clearly and unambiguously, their names as on file with the Attorney General, that they were being compensated for conducting the solicitation, that the solicitation was being conducted by a professional fund raiser, and the name of the professional fund raiser as on file with the Attorney General. AS AND FOR A SEVENTH CAUSE OF ACTION [AGAINST DEFENDANT ALL-PRO] PURSUANT TO EXECUTIVE LAW ' 175 -VIOLATION OF EXECUTIVE LAW ' 172-d(5) 72. Executive Law ' 172-d(5), as it existed prior to August 1, 2002, prohibited any person or entity from employing or entering into any contract or agreement with an unregistered professional solicitor or an unregistered professional fund raiser. 73. Defendant All-Pro employed unregistered professional solicitors in the course of conducting solicitations of New York residents on behalf of the Order. 74. Defendant All-Pro entered into an agreement or agreements with an unregistered professional fund raiser in the course of conducting solicitations of New York residents on behalf of the Order. AS AND FOR AN EIGHTH CAUSE OF ACTION [AGAINST DEFENDANT ALL-PRO] PURSUANT TO EXECUTIVE LAW ' 175 -VIOLATION OF EXECUTIVE LAW ' 174-b(2) 75. Executive Law ' 174-b(2) requires that any solicitation used on behalf of any charitable organization shall provide either a clear description of the programs and activities for which the organization has requested and has expended or will expend contributions, or, alternatively, a statement that, upon request, a person may obtain from the organization such a description. 76. All-Pro=s telephone solicitations and written materials soliciting donations for the Order failed to provide a clear description of the programs and activities for which the Order had requested and had expended or would expend contributions, as set forth more fully in paragraphs "43" through "47" above. The solicitations misrepresented that donations would be applied to certain charitable purposes that were not actually served and failed to disclose facts essential to understand the true nature of the Order=s programs. 77. All-Pro=s telephone solicitations and written materials soliciting donations for the Order also failed to include a statement that, upon request, a person could obtain a description of the programs and activities for which the organization had requested and had expended or would expend contributions. AS AND FOR A NINTH CAUSE OF ACTION [AGAINST DEFENDANT GELVAN] PURSUANT TO EXECUTIVE LAW ' 175 -VIOLATION OF EXECUTIVE LAW ' 174-b(2) 78. Because of Gelvan=s complete control of All-Pro, as set forth above in paragraphs "53" through "59," Defendant Gelvan is liable for the violations alleged in the eighth cause of action. AS AND FOR A TENTH CAUSE OF ACTION [AGAINST DEFENDANT ALL-PRO] PURSUANT TO EXECUTIVE LAW ' 175 -VIOLATION OF EXECUTIVE LAW ' 174-b(1) 79. Executive Law ' 174-b(1), as it existed prior to August 1, 2002, required any solicitation, written or telephonic, on behalf of a charitable entity required to file financial reports with the Attorney General (such as the Order) to include a statement that, upon request, a person may obtain from such entity or the Attorney General a copy of the last financial report filed, specifying the address of the organization and of the Attorney General to which such request should be addressed. 80. The professional solicitors employed by All-Pro to solicit funds telephonically in the name of the Order failed to disclose that the Order=s last financial report was available from the Order or from the Attorney General, and failed to disclose the addresses where such a report may be requested, as evidenced by the scripts used by All-Pro to solicit funds on behalf of the Order. AS AND FOR AN ELEVENTH CAUSE OF ACTION [AGAINST DEFENDANT GELVAN] PURSUANT TO EXECUTIVE LAW ' 175 -VIOLATION OF EXECUTIVE LAW ' 174-b(1) 81. Because of Gelvan=s complete control of All-Pro, as set forth above in paragraphs "53" through "59," Defendant Gelvan is liable for the violations alleged in the tenth cause of action. AS AND FOR A TWELFTH CAUSE OF ACTION [AGAINST DEFENDANT ALL-PRO] PURSUANT TO EXECUTIVE LAW ' 175 -VIOLATION OF EXECUTIVE LAW ' 172-d(9) 82. Executive Law ' 172-d(9) prohibits any person from representing in any manner that registration with the Attorney General constitutes an endorsement or approval by the State. 83. All-Pro impliedly represented that registration with the Attorney General constituted an endorsement or approval by the State. An All-Pro solicitor advised a prospective donor that All-Pro=s solicitation on behalf of the Order was "legal" and that the Attorney General knew of and had authorized it. RELIEF REQUESTED WHEREFORE, plaintiff Eliot Spitzer, on behalf of the People of the State of New York, respectfully requests judgment for the following relief: a) directing defendants All-Pro and Gelvan to make restitution for all monies fraudulently and unlawfully solicited from residents of the State of New York by or on behalf of the Order, in an amount to be established at trial; b) permanently enjoining All-Pro from soliciting donations from residents of the State of New York; c) permanently enjoining Mark Gelvan from soliciting donations from residents of the State of New York, and from acting as a director, officer, or employee of any professional fund raiser or fund raising counsel registered in the State of New York; d) directing defendants All-Pro and Gelvan to reimburse the Attorney General for the costs, including attorney=s fees, associated with investigating and prosecuting the instant action; and e) any such further and additional relief as the Court deems just and reasonable. DATED: Albany, New York October 7, 2002 ELIOT SPITZER Attorney General of the State of New York By _______________________ TIMOTHY B. LENNON Assistant Attorney General The Capitol Albany, New York 12224 Phone: (518) 473-0951 Facsimile: (518) 473-8153 CHARITIES BUREAU WILLIAM JOSEPHSON Assistant Attorney General-in-Charge JAMES ROBERT PIGOTT, JR. TIMOTHY B. LENNON Assistant Attorneys General VERIFICATION STATE OF NEW YORK COUNTY OF ALBANY ) ) ss.: ) TIMOTHY B. LENNON being duly sworn, deposes and says: That I am an Assistant Attorney General in the offices of Eliot Spitzer, Attorney General of the State of New York, and am duly authorized to make this verification; and I am acquainted with the instant action and I have read the foregoing Complaint, and the same is true to my knowledge, except as to those matters alleged on information and belief, and as to those matters, I believe them to be true. This verification is made by me, pursuant to CPLR Section 3020(d)(2), because the respondent is an officer of the State of New York, and I am acquainted with the facts of this matter. _______________________ TIMOTHY B. LENNON Sworn to before me this 7th day of October, 2002 _____________________ Notary Public ,,,,,eral sections of Executive Law Article 7-A were amended effective August 1, 2002. Section 174-b(3) was not substantively changed, but was renumbered, having formerly been enacted as section "174-b(2-a)." ,,,,,ective August 1, 2002, section 172-d(5) was amended to prohibit a person from entering into any agreement with or otherwise employing or engaging any professional fund raiser or professional solicitor required to be registered unless such professional fund raiser or solicitor has provided to such person a sworn statement that it is registered and in compliance with all filing requirements of Article 7-A. ,,,,,tion 174-b(1) was amended, effective August 1, 2002, but the change was not substantive as it related to the allegations in this complaint.