
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, April 23, 1990                   TAG: 9004230397
SECTION: VIRGINIA                    PAGE: A-4   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

CHARITY FRAUD APPEAL REJECTED BY HIGH COURT

The Supreme Court today rejected an appeal by Virginia officials seeking more power to prevent fraud by businesses that solicit charitable donations.

The court, without comment, let stand a ruling that lets federal judges block some anti-fraud measures for violating free-speech rights.

The dispute stems from an investigation by Virginia consumer protection officials into the conduct of Telco Communications, which raises funds for police organizations and firefighter unions.

The state Office of Consumer Affairs said it received complaints that Telco was misleading potential donors. For example, the state said, one solicitor allegedly lied and claimed he was a volunteer.

State officials met with Telco officials in 1988 without reaching any resolution. About two weeks later, the company sued in federal court to block the state from taking any action.

The state said the federal judge should not interfere, particularly since the state's investigation was incomplete. But the judge ruled against the consumer protection office.

The 4th U.S. Circuit Court of Appeals last September upheld much of the judge's ruling.

The appeals court said federal judges may bar state enforcement in such cases "where state proceedings were in a preliminary stage and where the state had imposed a prior restraint upon protected speech." Otherwise, the appeals court said, it "would leave a party's constitutional rights in limbo while an agency contemplates enforcement but does not undertake it."

The appeals court said there no longer is a live controversy over one of the state's anti-fraud laws that required professional solicitors to tell potential donors how much of their contributions will go to the charities.

A Supreme Court ruling in 1988 prohibits such laws, the appeals court said.

The appeals court also struck down a Virginia regulation that solicitors must submit to the state, in advance, a written script of what it tells potential donors. That kind of review by the state amounts to an unconstitutional prior restraint on speech, the appeals court said.

by CNB