Arizona brothers charged in $50M PAC scam to rip off donors
By LARRY NEUMEISTER
May. 17, 2018
NEW YORK (AP) — Two Arizona brothers fooled donors nationwide into giving more than $50 million during the last decade to at least nine political action committees that posed as advocates for such causes as autism and law enforcement but were really bogus, authorities said Thursday.
"We refer to these organizations as scam-PACs. They were PACs in name only. In reality, they were scams," U.S. Attorney Geoffrey Berman said as he described the business entities allegedly created by William and Robert Tierney in Gilbert, Arizona.
The men are in custody. They awaited court appearances after authorities cited court documents showing they collected $23 million of the total between 2014 and 2017, mostly in small donations of less than $200. Defense lawyers did not immediately respond to requests for comment.
Berman said during a telephone conference call with reporters that bogus PACs are a "growing problem" and an outgrowth of "consumer fraud schemes hiding in the tall grass of our political system."
He said the Tierney brothers forwarded less than 1 percent of what they raised to causes for which they collected money after telemarketing centers solicited funds ostensibly for the anti-abortion movement, law enforcement, autism awareness and other causes.
The prosecutor said more than 8,000 PACs collected over $4 billion in funding during the 2016 election cycle, accounting for more than half of all political donations.
"Our investigation continues," he said. "It's an important area."
Berman said the Tierney brothers spent 85 cents on every dollar received on the apparatus used to collect money, including shell companies and telemarketing centers. Another 14 cents of every dollar went into their pockets, amounting to more than $3.5 million, he said.
Authorities said the men also used fake identities to raise money and avoided press coverage of the fundraising efforts even though the PACs claimed in their solicitation materials that they were raising money for national advocacy and awareness campaigns.
William F. Sweeney Jr., head of New York's FBI office, said the PAC scams "capitalized on the sympathy and activism of those who sought to support awareness of various causes near and dear to their hearts."
He said "virtually none of the money raised was used for its intended purpose, and the so-called political action committees served as nothing more than a front for an extensive personal fundraising campaign."
William Tierney, 46, and Robert Tierney, 40, were each charged with wire fraud conspiracy, mail fraud conspiracy, conspiracy to commit money laundering and conspiracy to engage in monetary transaction in property derived from specified unlawful activity.