Federal officials arrested two men on Thursday on charges of defrauding donors of tens of millions of dollars given to political nonprofit groups.
Prosecutors in the Southern District of New York said that the two men, Richard Zeitlin, who ran telemarketing call centers, and Robert Piaro, a treasurer of political nonprofit groups, had bilked small donors who had wanted to support causes such as aid for military veterans and breast cancer research.
Damian Williams, the U.S. attorney for the Southern District of New York, said in a statement that the two men “exploited these important causes and the good intentions of everyday citizens.”
The New York Times reported in June that prosecutors had subpoenaed recordings of fund-raising calls by Mr. Piaro’s groups, as well as several separate nonprofits that The Times had profiled in May.
Mr. Zeitlin, 53, of Las Vegas, is charged with fraud, obstruction of justice, and conspiracy. Mr. Piaro, 73, of Fredonia, Wis., is charged with wire fraud and mail fraud. Both face lengthy prison sentences if convicted.
The indictments do not say that Mr. Zeitlin and Mr. Piaro were working together on the same scheme, though Mr. Williams said they had lied to and stolen from donors who thought they were giving to groups aiding veterans, law enforcement and the fight against breast cancer. Politico reported in 2018 that Mr. Zeitlin’s company had raised money for Mr. Piaro’s groups.
The indictment of Mr. Zeitlin said he directed employees at his call centers to falsely suggest to donors that they were contributing to charities, not political groups.
For instance, the indictment said, Mr. Zeitlin directed callers to tell donors their support would help disabled veterans by “getting them the medical needs the V.A. doesn’t provide.” That money instead went toward a group that focused on political advocacy, prosecutors said.
A separate indictment for Mr. Piaro said he “made and authorized others to make fraudulent claims” about how donations to several political action committees, known as PACs, would be spent, raising about $28 million through false statements and misrepresentations, leading donors to believe the PACs would advance specific legislation, educate lawmakers, and conduct and fund research.
In reality, the indictment said, a majority of funds raised from the PACs — about $22 million — went to entities “controlled by a single individual” who provided “telemarketing and related services” for the nonprofit groups.
Mr. Piaro also paid himself about $526,000 from funds raised by the PACs he controlled, according to his indictment.
Of the four groups listed in Mr. Piaro’s indictment, one — Standing by Veterans PAC — has continued to operate but is largely inactive. Another, Americans for the Cure of Breast Cancer PAC, has shut down. And two more, the Association for Emergency Responders and Firefighters PAC and the U.S. Veterans Assistance Foundation PAC, are seeking the Federal Election Commission’s permission to close. Efforts to reach Mr. Piaro through his nonprofits were not immediately successful.
Mr. Zeitlin, who has been in the telemarketing business for decades, was the subject of a 2019 investigation by the nonprofit Center for Public Integrity that said his companies had been paid more than $133 million by nonprofits and PACs combined since 2006.
That investigation found that Mr. Zeitlin’s companies had kept more than 85 percent of the money they raised for these groups. Mr. Zeitlin has defended his work, including on a website bearing his name, saying that he had never been in trouble with the law and that fund-raising is an inherently costly business.
In 2018, Mr. Piaro, the PAC treasurer, told Politico that his fund-raising costs were so high because his groups were just getting off the ground. In 2019, the Center for Public Integrity reported that some groups run by Mr. Piaro had raised millions of dollars but spent nothing to help candidates. In 2020, Reuters reported that Mr. Piaro’s groups had paid more than 80 percent of their money to fund-raising vendors.