Charity telemarketing: Free speech or fraud?

? The telemarketer’s pitch sounded good — contribute money for Vietnam veterans down on their luck — but only pennies of each donated dollar went to help those in need.

The solicitation may have been misleading, but several Supreme Court justices seemed hesitant Monday to call it a crime.

The court heard arguments and is expected to rule by summer on whether charity fund drives that shade — or ignore — the truth about how donations are spent amount to fraud or free speech.

“We ask this court not to hold that half-truths are constitutionally protected,” Illinois Assistant Atty. Gen. Richard Huszagh told the justices. His state wants to go after a professional fund-raising firm for allegedly defrauding donors to a charity the fund-raisers called VietNow.

Telemarketing Associates Inc. took in more than $8 million on behalf of the veterans’ charity, and pocketed 85 percent of the money. Would-be donors allegedly were told their money would go for food baskets, job training and other services for needy veterans, with no mention of fund-raising costs.

Better-known charities have taken pains to distance themselves from VietNow and its practices but still side with the charity and its fund-raiser in the Supreme Court case.

Charities say potential donors would slam down the receiver if told upfront that a telemarketer would keep the overwhelming share of any contribution. The fees and overhead costs that telemarketers charge simply are a cost of doing business, and there is an intangible value in spreading a charity’s message through fund drives, charities contend.

“High fund-raising costs alone, and the failure to disclose those costs, are not fraud,” lawyer Errol Copilevitz argued for the fund-raising firm.

Charitable solicitation is protected under the First Amendment, and the Supreme Court has three times struck down state or local laws regulating how much charity fund-raisers were paid or what donors must be told.

Illinois argued that free speech claims and the high court’s previous cases do not apply when the telemarketer charges so much and stretches the truth. The state used its ordinary antifraud law to sue the fund-raiser but lost three rounds in state courts.