FROM:  
Stephen P. Gibbons, Assistant District Attorney   CONTACT PERSON: 
Martha J. Donohoe, Deputy District Attorney
Consumer Protection Unit
(408) 792-2571   For release on May 25, 2005    DEFENDANTS SENTENCED IN $3.5 MILLION CHARITY FRAUD SCHEME   This afternoon, May 25, 2005, Santa Clara County Superior Court Judge Paul Bernal sentenced former Sheriff’s Lieutenant Armand J. Tiano, 66, commercial fundraiser Matthew B. Kellner, 49, and attorney George Kellner, 51, to state prison.  Armand Tiano was sentenced to 17 years, 8 months, Matthew B. Kellner to 11 years, 4 months, and George Kellner to 6 years, 4 months.  The three men were convicted of various felony offenses by a jury on December 10, 2004, following a year-long trial.  The Kellners, who are brothers, operated Family Entertainment Group, a commercial fundraising business.  The defendants were convicted for crimes related to their operation of a phony law enforcement organization called the “Santa Clara County Police and Sheriffs’ Athletic League,” and the “Deputy Sheriffs’ Athletic League,” which fraudulently raised over $3.5 million dollars from Bay Area donors. Tiano and Matthew Kellner were convicted of conspiracy, grand theft, insurance fraud, embezzlement, perjury and tax fraud.  Tiano was also convicted of money laundering.  George Kellner was convicted of tax fraud and perjury. Seven of their co-defendants pleaded guilty before trial, and two co-defendants pleaded guilty after jurors deadlocked on some charges.  Charges as to co-defendant Lovie Nicoletti, 77, mother of George and Matthew Kellner were dismissed today.   The sentencing concludes a multi-year investigation and prosecution by the Santa Clara County District Attorney’s Office, the Franchise Tax Board, the Attorney General’s Office, Registry of Charitable Trust, and the Employment Development Department.  Thirty donors testified during trial that they believed, when contacted by the defendants’ telemarketers, they had been contacted by a law enforcement agency representative.  They further believed their contributions would be used to help underprivileged children and families, as well as the family of a slain Millbrae police officer.  Many victim donors said that they believed that the callers were with a law enforcement agency because Armand Tiano was associated with the organizations and identified as a Lieutenant with the Sheriff’s Office.  In reality, contributors’ donations were primarily used to pay the defendants and their commercial fundraising staff.  Over $1.4 million of donor contributions were paid out of the defendant’s organization through untraceable cash payments.  Defendants and their staff did not report their income or pay taxes to taxing authorities such as the Franchise Tax Board and the Employment Development Department.  Of the over $3.5 Million raised, less than $50,000 was used for charitable purposes.  It is estimated that over 50,000 Bay Area residents were victimized over a seven-year period between 1993 and 2000.   In addition to the charity fraud, Tiano and co-defendant Matthew B. Kellner were sentenced for insurance fraud-related crimes.  Tiano and Matt Kellner colluded to defraud an insurer by falsely claiming that Tiano lost wages following an auto accident.  Tiano was also separately convicted of Worker’s Compensation Insurance Fraud for falsely claiming that he had a disabling back injury from a work-related construction site accident when he was caught at the same time continuing to drive race cars in amateur racing events and participating in weightlifting competitions.   

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