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stevewlaw
stevewlaw, Attorney
Category: Business Law
Satisfied Customers: 207
Experience:  25+ years and millions of dollars in settlements in catastrophic personal injury, wrongful death, and commercial litigation.
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I have a 30 year old National Non Profit 501 c 3 and need an

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I have a 30 year old National Non Profit 501 c 3 and need an answer regarding what authority the FTC has over the non profit regarding a fishing expedition they are doing. We have always been maticulous regarding following state and federal laws but they have recently been invited by a state to investigate us. They have sent us 94 interrogatories that are over burdomesome.

stevewlaw :

Good morning. As you know most federal agencies have broad authority. The Federal Trade Commission basically has jurisdiction over any business involved in commerce. Even as a non-profit, you are engaged in some kind of commerce, thus the FTC's jurisdiction. Federal Trade Commission Act (15 U.S.C. §§ 41-58, as amended)
Under this Act, the Commission is empowered, among other things, to (a) prevent unfair methods of competition, and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; (c) prescribe trade regulation rules defining with specificity acts or practices that are unfair or deceptive, and establishing requirements designed to prevent such acts or practices; (d) conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce; and (e) make reports and legislative recommendations to Congress

stevewlaw :

I would suggest you find out what the complaint(s) were about your business, to get to the bottom of the scope of their investigation. Then I would speak with the investigator or attorney with the FTC who sent you the interrogatories to see if you can limit their scope.

stevewlaw :

If you have been meticulous in your business and your record-keeping then you should have nothing to fear. As for the interrogatories that you find irrelevant to their investigation, then I would respond by stating as much. You must know the subject matter of their complaints regarding your business in order to make a conclusion as to the relevancy of the individual interrogatories. I know the federal agency investigators can sometimes be a little overbearing, dictatorial, or down right obnoxious. But lest you not forget that they wield a very sharp sword.

stevewlaw :

As for the IRS jurisdiction over 501c3's, you are correct inasmuch as they wield the power to make the determination as to whether or not you may operate as a not for profit entity. but it sounds like you have no problems there.

stevewlaw :

I would just try to speak informally with the FTC investigator to get to the bottom of what they want to know, and specifically what you need to provide to them to assist them in concluding that your business operations are above-board so they can conclude their investigation.

stevewlaw :

Finally, so that it looks like you are being cooperative (once again) I would remind the investigator/attorney for the FTC that they are limited by Rule 3.35 to 25 interrogatories, including subparts. As them which 25 they would like for you to answer. if they do not identify the specific interrogatories within the limits that they want you to answer, I would merely answer the first 25 and object to the remaining interrogatories pursuant to Rule 3.35 of the FTC Rules. I wish you the best of luck. Please provide me with positive feedback if you are satisfied with my answer. Thank you.

Customer:

Thank you so much. I have attorneys that are working on this but they have not addressed my concerns. I have used them for over 25 years and i just need other opinions . Initially there were a few states that started this fishing expedition two years ago. we have been through similar problems with state regulators over the years, 23 civil law suits and numerous CID and it has done nothing except cause us tremendous amounts of the charity monies that are raised to pay legal fees. we have never gone to court . Always there has been settlement statements. similar to "I have never beat my wife and I promise I will not beat her again" I retired from a large national charity that was involved in research and I wanted to do something for the family. I researched 30 years ago and found we were the first national group to do so. The FTC CIDs said the scope of the investigation was Telemarketing however 90% does not ask about telemarketing. They primarily ask about Gifts In Kind in the U.S. and International. They recognized we had an attorney and sent the CIDs to him however in the beginning they ask members of the charity to contact them direct. Very confusing. Previously we had sent over 40 discs of materials. It took 5 of my staff over two weeks to accomplish this. Everything was dormant for over a year and we heard the states were trying to get a federal agency involved and then 4 months later we get the FTC CIDs. We have been audited 2 times by the IRS with a "NO CHANGE LETTER" and still this harrasment goes on. I can't understand why there are no rights for non profits. I started this program with myself and two of my children. Over the years we tested other groups and they broke off. They are involved in compassionate care missions also and when we assist a patient many times we refer them to assist in their manner. When the regulators attack me, they tie them in also. It is a never ending battle. February first was my 42nd anniversary in the non profit cancer field.

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