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mailings extensively with most of its other clients. Before they
formed W&H, both Watson and Hughey had experience with the use of
sweepstakes contests on behalf of either their employers or their
clients.
As part of its initial program of prospect mailings for
petitioner, W&H tested various packages. A “check” package
performed best and became petitioner’s “control” package--a
package that is mailed until a later package can net more money.
In November 1984 a sweepstakes (sweeps) package was tested and
also performed well. As Watson put it in an October 15, 1985,
memorandum to several of petitioner’s directors and its executive
director, “At this point UCC had two control packages, the check
package which could be mailed to the traditional donor market;
and a sweepstakes offer which could be mailed to markets that
respond to sweepstakes.”
A January 1985 major prospect mailing was planned using the
check package. However, although the package had been approved
by petitioner, petitioner’s board of directors then urged that
the check package be replaced by a different package. That
different package then lost $110,000.14
14 The record reflects that petitioner’s directors
directed the check package not be used, because they believed
certain representations contained in the package were inaccurate.
Recipients of the package were informed that if they made a
contribution, petitioner then essentially would receive a
matching donation from another party. In actuality, at the time
the solicitation was made, petitioner had not yet secured a
(continued...)
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