WASHINGTON — The callers said they were seeking donations for VietNow, a charity that provided for Vietnam War veterans who were hungry, homeless, disabled or unemployed.
That much was true. What the donors were not told was that only 3% of the money collected paid to support these veterans.
On Monday, the Supreme Court took a hard look at this practice to decide whether such fund-raising pitches can be prosecuted as frauds.
In the past, telephone soliciting has been deemed to be free speech and protected from laws that would force fund-raisers to tell donors what share of the contributions goes to true charitable work.
Under its contract with VietNow, a professional fund-raising firm known as Telemarketing Associates kept 85% of the donations it solicited. And VietNow spent 80% of the rest on its operations and overhead.
During Monday's argument, Illinois prosecutors and the Bush administration urged the court to drop the 1st Amendment barrier and to allow a broader crackdown on deceptive fund-raising schemes.
"Charitable solicitors are not free to commit fraud just because they are charitable solicitors," said Illinois prosecutor Richard Huszagh. The fund-raisers did not tell "explicit lies, but they engaged in misrepresentations. And half-truths are not constitutionally protected."
The Illinois attorney general brought a fraud charge against Telemarketing Associates, but it was thrown out on free-speech grounds by the Illinois courts.
"Nothing in the 1st Amendment says that fraud in charitable solicitations need go unpunished," Deputy Solicitor General Paul Clement argued.
But the state's case ran into surprisingly sharp questioning from the justices.
Because no one could say just when high fund-raising costs became too high, fund-raisers would not know when they were violating the law, several justices said.
"I'm not comfortable leaving this to a jury," Justice Antonin Scalia said.
If 85% is too high, what about 65% or 50%, asked Justice David H. Souter. "My concern is there is no way to predict in advance" what is considered a fraud, he said. "It would be a dice throw."
However, other justices wondered how the public can be protected. Probably 95% of those who donated money would not have done so if they thought nearly all of it went to the fund-raisers, Justice Anthony M. Kennedy said.
"Isn't that saying this is a misrepresentation?" he asked.
