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Sens. Accuse Sweepstakes Operators

July 20, 1999

WASHINGTON (AP) _ Members of a Senate panel accused some small sweepstakes companies Tuesday of making millions of dollars by misleading Americans hoping to win cash, cars and other prizes.

One company’s operator cited his Fifth Amendment right against self-incrimination and declined twice to answer questions sharply delivered by Sen. Susan Collins, R-Maine, during the hearing of the Senate Governmental Affairs’ permanent subcommittee on investigations.

Anthony Kasday, president of Neopolitan Consultants Inc. of Las Vegas, would not explain why an artists’ rendering of a seal on a sweepstakes promotion, followed by the words ``J. Remington Astor, Prize Registrar, My appt. exp. Aug. 29, 2000″ appears to closely resemble the seal of a notary public stamp on another page.

No one named ``J. Remington Astor″ actually exists, he said. He also declined to explain why he was not troubled by the possibility that the artists’ seal would mislead people to believe it conferred legal status on the promotion.

``It’s more apparent than ever that something must be done,″ said Collins, who has introduced legislation that would toughen laws regulating sweepstakes. The Senate Governmental Affairs committee approved the bill in May, and it awaits a vote by the full Senate.

``It is shameful to me what you’re doing,″ Sen. Carl Levin, D-Mich., told the president of another company, ``and I believe it should be stopped.″

But David Dobin, president of Lone Star Promotions Inc. of Merrick, N.Y., said he takes care to stay within the law.

``I don’t know how anyone can complain that Lone Star unfairly enticed them to purchase something they didn’t want. We clearly explain what it is we are selling,″ Dobin said.

Under Collins’ bill, sweepstakes that use deception to lure people into buying magazine subscriptions or other products by mail could be fined up to $2 million. It is designed to curb sweepstakes that may be in compliance with the letter of law but dupe people into the incorrect belief that they can improve their chances of winning by purchasing the company’s products.

Sweepstakes offers also would be required to state accurately the value of prizes offered, the odds of winning and the name of the sponsor.

Collins said most people are familiar with the giant sweepstakes promotions offered by Publishers Clearing House and American Family Publishers. But little is known about smaller companies, which sent out an estimated 100 million sweepstakes offers last year and rang up more than $40 million in sales.

An investigation by the Senate panel turned up evidence that some of their sales pitches are even more deceptive than mailings sent out by bigger sweepstakes sponsors and sometimes cross the line into illegality.

Investigators also found that many products offered for sale are of questionable value.

Collins said some mailings easily can be misunderstood to mean that a recipient had won a prize of several thousand dollars when winning actually would produce a prize worth only a few cents _ or none at all.

Dobin, who has pleaded guilty to a conspiracy to commit mail fraud charge related to another company, said he made serious mistakes when he entered the direct-marketing business in 1992, but ``since 1994, I have operated my business with close attention to all legal requirements.″

Lone Star sends out millions of sweepstakes offers a year and offers cash prizes of $12,000, $10,000 and $5,000. The company picks one winner for each 3 million mailings sent under each category, Dobin said.

All mailings state a customer need not purchase the company’s coupon books to enter the contest, he said, and about 5 percent of respondents buy coupon books.

The mailings are sent out under the names of 40 different companies, but each one states that the sweepstakes is being run by Lone Star, he said.

A subcommittee investigator said a person receiving several sweepstakes solicitations under the different names may not know that all are related to only one sweepstakes. They could be enticed into buying more than one product in the false hope they are increasing their chances to win, investigator Glynna Christian Parde said.

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