Inside the HBO Doc Exposing the Biggest Fundraising Scammers

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Days after HBO released its new Telemarketers documentary series—which raises the curtain on decades of political, police, and charity telemarketing fraud—the producers got a major PR boost from an unexpected place: the Department of Justice.

Last week, federal prosecutors in the Southern District of New York indicted two of the country’s most notorious fundraising fraudsters—Richard Zeitlin and Robert Piaro—alleging that the duo had defrauded donors out of tens of millions of dollars over several years.

Zeitlin and Piaro allegedly ran “scam PAC” schemes, fraudulent fundraising operations that have plagued donors for years—despite civil suits, regulatory action, and numerous exposés from investigative journalists.

Scam PACs are the latest iteration of good old-fashioned charity fraud, with the operators exploiting loopholes in tax and election law that allow the groups to operate in what’s largely been seen as a legal gray area.

The Secret Website Behind a $140 Million ‘Scam PAC’ Network

These political action committees in name only solicit money on behalf of groups with names that sound like charities—references to law enforcement, disabled veterans, firefighters, breast cancer victims, even autism—but in reality they plow almost all of the funds right back into the pockets of the telemarketers. Many of the targeted donors are elderly, though not all of them.

The stakes are not small potatoes. For instance, Zeitlin’s indictment contains the surreal allegation that, over the last 30 years, his call centers have raised “at least approximately hundreds of millions of dollars” for charities and PACs, through “at least approximately hundreds of thousands of calls to donors and potential donors.”

Zeitlin has been charged with wire fraud and obstruction of justice, after allegedly destroying evidence upon learning of the federal investigation. Piaro, a PAC treasurer, is alleged to have raised approximately $28 million through his groups between 2017 and 2022, and also faces wire fraud charges.

Zeitlin, whom the government classified as a flight risk in court documents, is being detained pending trial, and Piaro posted a $2 million bond and surrendered his passport. They each face potentially decades in prison.

Earlier this year, The Daily Beast revealed a secret call center website whose PAC clients had raised more than $140 million over the last two election cycles alone. Almost all of those groups appeared to bear ties to Zeitlin or Piaro.

For perspective on how much money that is, Donald Trump’s flagship fundraising group—his “Save America” leadership PAC—has raised a total of $156 million.

In 2021, The Daily Beast found that the top 25 PACs representing themselves as law enforcement and veterans support groups had raised more than $85 million over the prior four years; that’s $18 million more than the two top-raising U.S. House campaigns combined over that same time period.

Attorneys for Zeitlin and Piaro didn’t return The Daily Beast’s request for comment.

‘Scam’ Political Groups Try New Tricks—and Rake In Millions

But one-off arrests, no matter how significant, won’t stop scam PACs without legislative reform on a federal level. However, congressional lawmakers have tried and failed for years to make any headway on this bipartisan issue, a barrier that the filmmakers behind Telemarketers also confronted.

They know as well as anyone how maddeningly persistent these fraudsters can be—because they were once part of the con.

Sam Lipman-Stern, one of the two self-taught investigative journalists who bootstrapped the Telemarketers documentary series, worked in a New Jersey sham charity call center for years during the early 2000s. He told The Daily Beast that these scammers have dodged accountability for a number of reasons, including poorly written laws, lack of political willpower, and protection from law enforcement entities themselves.

“Every single person I told about this during the production process, literally every single one, would say, ‘Aren’t you scared they’ll come after you?’” Lipman-Stern recalled. “They’re talking about the owners of the companies, but they’re also talking about the police.”

He means that literally. Lipman-Stern and his sidekick Patrick J. Pespas met on the job, when both worked the phones for the since-shuttered Civic Development Group, raising money on behalf of fraternal orders of police officers and fake cancer charities.

“There’s definitely a dark irony to the whole thing,” Lipman-Stern told The Daily Beast. “You have all these people working with you there in the prison pipeline, who are now literally in the pocket of the police. These groups are holding back positive police reform around the country and they’re using ex-cons to raise money, and with the threat that if they don’t go along with it then they’ll say they’ve violated their probation.”

In return, the offices allow lawlessness. The documentary shows what at times seems like pure chaos in the call center—prostitution in the bathroom, shooting heroin and writing graffiti on breaks. One caller featured prominently in the series was convicted of murder; he curses the people he calls, and is, in the words of one of the bosses, “a bit of a psychopath.”

“You can do whatever you want as long as you’re making the sales,” Lipman-Stern said. “A lot of these guys are just fucking crazy. You can’t make them up. There are all these characters on the sales floor, but they go all the way up.”

He pointed to the Houston Metro Fraternal Order of Police Lodge 98, whose president at one time had his own telemarketing company. “And we learned that they were literally cooking meth in the office,” Lipman-Stern said.

But when he and Pespas grew wise to the scam, they made it their life mission to take down these networks, starting from the inside, and documented that difficult and at times dangerous effort for more than a decade.

The project eventually took them to Washington, D.C., where they met with officials at agencies like the Federal Trade Commission and the Federal Election Commission, as well as members of Congress. But they quickly found willpower to tackle the fraudsters was lacking in the halls of power.

In one poignant moment, they ask David Vladeck, former director of the Bureau of Consumer Protection at the Federal Trade Commission, why only the minor players seemed to pay the price, and why no investigators had taken down the larger organizations behind the scams.

“And even David Vladeck told us that they were scared, too—‘No one wants to be on the wrong side of the Fraternal Order of the Police,’” Lipman-Stern recalled.

A Pro-Trump ‘Scam PAC’ Got a Huge Taxpayer Bailout

The documentary traces how the fundraising scams evolved over time, responding to different crackdowns by finding the next loopholes, with new schemes, often run by the same network of people.

“It’s been going on essentially since the invention of the telephone,” Lipman-Stern said. “You can see articles from The New York Times in, like, the early 1900s about people calling to raise money for fake charities and the police.”

The latest iteration, since around 2017 or so, is the PAC era, as scammers opened up fake political groups outside the jurisdiction of the Internal Revenue Service, and where the fundraising operations themselves are largely beyond the regulatory scope of the FEC.

“It became really apparent that that was the new loophole. They have to disclose less information, they can keep more of the money, and they don’t have to tell donors what the percentages are,” Lipman-Stern explained.

PACs also offer another protection: Political speech enjoys almost blanket protection under federal law. When the FTC took down a notorious call center in 2020, the $56 million settlement made that plain, ordering that the defendants “are permanently restrained and enjoined” from any type of charity fundraising, “Provided that this prohibition shall not apply to fundraising for political purposes.”

The scammers also incorporated new technologies, and grew cagier about their work.

The Daily Beast spoke with a former Zeitlin call center employee who worked on the IT team, developing soundboard and artificial intelligence applications for more efficient call flows—scripts and codes that The Daily Beast previously revealed still lived on a secret webpage.

“It was always strongly expressed to us that the soundboard application was a trade secret, and that publicizing its use would have repercussions for the company (in the form of regulation or competition) and us as individuals,” said the former employee, who left the company in 2017.

The majority of the soundboard callers operated overseas, out of a call center in Ecuador, the person said, explaining that “one of the design intents behind making the soundboard application was to allow for the hiring of cheaper labor outside of the U.S., as it allowed foreign callers to sound like U.S.-based agents.”

This former employee claimed to have been kept in the dark about Zeitlin’s operations—citing in part Zeitlin’s own erratic temper—and only discovered the truth after The Daily Beast’s report.

“In the IT division we were aware to an extent that a chunk of change was being taken by us as a company before any money was passed through, but they often likened it to the Red Cross in how much of their donations go to the stated cause,” the person said. “I was absolutely unaware as to the scale of the operation.”

With all these barriers to enforcement—regulatory loopholes, technological developments, sclerotic institutions, and flat-out intimidation—it’s worth noting that a permanent solution would actually appear to be a relatively simple stroke of the legislative pen. Even more confoundingly, the issue has bipartisan support.

A Trump-Impersonating ‘Scam PAC’ Gets Busted by the FBI

In 2020, Rep. Katie Porter (D-CA) teamed up with Rep. Dan Crenshaw (R-TX) to do just that. They introduced the “Stop Scam PACs Act,” which provides a quick fix by striking one word.

“Federal law prohibits ‘fraudulently’ misrepresenting a person as speaking or acting on behalf of a candidate or political party. However, the meaning of the word ‘fraudulently’ in this context is unclear, which has created a real roadblock for the FEC,” Porter previously told The Daily Beast.

But that bill, for whatever reason, still hasn’t gotten traction. Lipman-Stern holds out hope that his documentary, along with the recent indictments, will inspire lawmakers to finally make a change.

“Originally my goal was to put it out there so people can watch it and learn about this wild American story, essentially being educated through this documentary, and get the money to worthwhile charities and causes, where it’s supposed to go,” he said. “I did my job and we’ll see where it falls. Pat Pespas wants to get in front of Congress and have a hearing about it—this game of Whac-A-Mole, it just can’t keep going on forever, you know?”

But he caught himself.

“Right now, I’m seeing that the International Union of Police Associations and the PACs are still calling,” he said, referencing data on a robocall website. “They’re doing it right now, literally as we’re speaking.”

Read more at The Daily Beast.

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