The Vantage Group and its subsidiaries Vantage Financial Services Inc. and Vantage Direct Marketing Services Inc. have agreed to pay $4.5 million to settle civil postal fraud charges.
The government’s complaint, which named Henry R. Lewis (then Vantage’s CEO) and Harry S. Melikian (then Vantage’s CFO), alleged that while conducting fundraising programs for nonprofits, the company improperly mailed 78 million pieces of mail at the reduced nonprofit rate, knowing they were not entitled to use the rate for their cooperative mailings.
“Vantage believes now, as it always has, that we were in compliance with all U.S. Postal Service regulations,” said Melikian, now Vantage Group’s executive vice president, in a prepared statement. “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.”
“Our single priority is to serve our clients in the best possible way,” Melikian added. “This settlement enables us to focus solely on that core objective.”
Vantage Financial Services is a Boston-based direct marketing company specializing in providing database and fundraising management services to non-profit organizations in the United States and Canada. The complaint, filed in 1998, noted that in 1990 the Postal Inspection Service investigated Vantage for sending illegal cooperative mailings.
At that time, a U.S. Postal Inspector informed Vantage, Lewis and Melikian that mailings sent pursuant to Vantage’s standard contract were ineligible for the reduced non-profit rate because Vantage had a financial stake in the mailings. As a result of the 1990 investigation, Vantage and one of its non-profit clients paid a postage deficiency to the government.
In response to that investigation, the complaint said Vantage revised its standard contract to make clear that, in the future, Vantage would not have a financial stake in the programs it conducted on behalf of non-profit clients. Based on the revised contracts, the Postal Service permitted Vantage to mail at the non-profit rate on behalf of its nonprofit clients.
The complaint alleges, however, that Vantage then entered into secret “side letters” with many of its non-profit clients, agreeing to take a financial state in the mailings.
Approximately 22% or $990,000 of the settlement will be paid to Lawrence Saklad, a former Vantage salesman, who brought this misconduct to the attention of the government by filing suit under the provisions of the False Claims Act.
The investigation was conducted by the Boston Division of the U.S. Postal Inspection Service, with the cooperation of the Office of Inspector General for the U.S. Postal Service. The case was litigated by Assistant U.S. Attorney Peter K. Levitt.
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