From the Chattanooga Times Free Press (Tennessee) 

December 28, 2003 Sunday 

HEADLINE: Lawmakers wary on rule change affecting professional
fund-raisers 

By Dick Cook 
Staff Writer 

Some lawmakers and nonprofit advocates want to tighten a new postal
regulation on direct-mail fund-raisers that allows private solicitation
firms to make more money than the charity groups that hire them. 

"I'm sick and tired of consumers being ripped off and taken advantage
of," said U.S. Senate Majority Leader Bill Frist, R-Tenn. "If this needs
bringing a light and shining it on the issue, I'd be happy to check into
that." 

The new regulation went into effect Nov. 13 and eased restrictions on
direct-mail fund-raisers such as the Vantage Group Inc. of Boston, which
the Tennessee Sheriffs' Association claims took over its business and
drove it into bankruptcy in 2001. The rule change allows for-profit
companies such as Vantage to go into business with a nonprofit and use
the nonprofit's lower postal rate for direct-mail solicitations. Such
business relationships existed but were illegal under previous rules in
place since the 1970s, officials said. 

Even prior to the rule change, records show more than 70 percent of the
$17 million raised in Tennessee by professional fund-raisers was
retained by the fund-raiser firms. Only $4.9 million, or about 29
percent, went to the nonprofits. 

Peter Levitt, an assistant U.S. attorney in Boston, prosecuted a U.S.
District Court lawsuit against the Vantage Group that was settled in
October. According to the government, Vantage improperly sent 78 million
pieces of mail at its client's reduced nonprofit rate, knowing it was
not entitled to use the rate. The Vantage Group agreed to pay $4.5
million to settle the lawsuit, Mr. Levitt said. 

Calls made over several days last week seeking comment from Vantage
officials were not returned. But Harry Melikian, Vantage Group's
executive vice president, stated in an Oct. 28 story in a trade
publication that he believed the company did not violate any postal
rules. 

"Vantage believes now, as it always has, that we were in compliance with
all U.S. Postal Service regulations," Mr. Melikian said in the article
in the Direct Mail newsletter. "We note with pleasure that the
regulations at issue in this matter have recently been amended by the
U.S. Postal Service and now reflect the position taken by Vantage
throughout the proceedings (government's lawsuit)."