Attorney General's News Release

January 29, 2007

Ticket holders for Gateway to a Cure raffles can apply for refunds from $3.5 million court order obtained by Nixon

Clayton, Mo. — Consumers who bought tickets for as much as $1,000 apiece in one of five recent high-profile raffles sponsored by Gateway to a Cure may apply for restitution if they have not already received refunds from the St. Louis-based charity, under a court order obtained today by Missouri Attorney General Jay Nixon.

The order from the St. Louis County Circuit Court requires Gateway to a Cure to provide $2,080,075 in restitution for ticket holders for the Grand Giveaway-Kansas City, the Grand Giveaway-St. Louis, the 7th Annual Great American Dream Home Giveaway, the Dream Home National Raffle, and the Scholarship Raffle. Tickets for those raffles ranged from $25 for the Dream Home National Raffle to $1,000 for the Grand Giveaway raffles.

Gateway to a Cure solicited ticket sales in Missouri and other states in high-profile raffles for advertised prizes such as luxury homes, automobiles and college scholarships. Nixon sued Gateway to a Cure and two individual defendants last year alleging, among other things, that the defendants violated Missouri consumer protection laws when they:

• Deceived consumers that the raffles would result in sizable donations to spinal cord injury research;
• Misrepresented the prizes to be awarded, including specific homes and vehicles;
• Misrepresented that raffle drawings were imminent, when ticket sales were still far below the break-even point;
• Misrepresented that the ticket purchase was tax deductible, when it was not;
• Gave away raffle tickets to settle debts or sold some tickets at less than the advertised price, violating the good faith of all consumers who purchased tickets; and
• Misrepresented that Gateway was organized for charitable purposes, when the defendants used the tax-exempt status of Gateway to purchase vehicles for private individuals so they would not have to pay local and state tax on the vehicles.

Judge Steven H. Goldman found those allegations to be true and entered his order today after finding that Gateway to a Cure had failed to comply with court orders requiring it to provide information during discovery. The default judgment permanently prohibits Gateway from advertising, sponsoring or holding any raffle; requires Gateway to remove raffle solicitations from its Web site; and restrains Gateway from holding any raffle drawings or disbursing any of the prizes for any of its raffles.

Gateway will be required to pay $2,080,075 to the state of Missouri to distribute as restitution for consumers who purchased raffle tickets and who have not yet received a refund. To be awarded restitution, consumers must file a complaint with the Attorney General's Office on or before May 1, 2007. Consumers can file complaints online at ago.mo.gov or can call the Consumer Protection Hotline at 1-800-392-8222.

Consumers requesting refunds must provide with their complaint copies of proof of payment made to Gateway to a Cure for one or more raffle tickets. Proof of payment may include the tickets themselves, canceled checks, credit card receipts or statements, or other indication that payment was made. Consumers who have received refunds from Gateway to a Cure are not eligible for restitution.

In addition to the restitution, the court ordered Gateway to a Cure to pay civil penalties of $1,399,600 to the state of Missouri, and $208,000 to the state for the Merchandising Practices Revolving Fund, which is used for consumer protection education and enforcement.

Nixon said his office's lawsuits against defendants Carl Louis Sengheiser and Mary M. Bolling are still pending.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to the Press Secretary.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818