Police Protective Fund raises millions of dollars each year in the name of fallen officers.
On Tuesday, four men in charge of the charity's telemarketing operations were arrested on charges of hiring felons to raise that money.
All four are managers who oversee the charity's phone rooms in South Florida and the Tampa Bay area.
Charity regulators with the state Department of Agriculture and Consumer Services descended on the boiler room operations Tuesday afternoon and began running criminal background checks on each employee.
During the raid, they determined that several felons had been hired and were soliciting donations, agency spokeswoman Erin Gillespie said.
Florida law bans charities and professional solicitors from knowingly employing telemarketers who have been convicted of fraud and other financial felonies.
James Campanelli, 22, said he worked at the Port Richey phone room for about nine months until leaving in July 2011. He told a reporter that employees talked openly about their criminal pasts.
"It wasn't a hush-hush thing, but I thought it was weird they were getting people's credit card numbers," Campanelli said. "It seemed like the people who did real well were the guys that did time. They learned how to be smooth."
The state raid was prompted by an investigation by the Tampa Bay Times and The Center for Investigative Reporting, which in June named Police Protective Fund as one of the worst charities in the nation based on its high fundraising expenses.
The Times and CIR also revealed that state officials issued a warning but took no further action in 2010 when they first learned the charity had been hiring felons to solicit donations.
Police Protective Fund runs telemarketing centers in Port Richey, New Port Richey, Clearwater and Davie. One is in a shot-out strip center behind an Arby's on U.S. 19; another shares office space with a pain clinic.
Times reporters were turned away at several of the call centers Tuesday afternoon while state officials were inside screening employee records.
David Dierks, co-founder of the Austin, Texas-based charity, declined to comment on the arrests. He described Florida regulators' visit on Tuesday as a "routine follow up" and said his charity was cooperating with the state.
Today, Police Protective Fund relies almost exclusively on telemarketing by its own employees to raise donations. Charity officials said they employ about 120 telemarketers and reach about 1 million people across the country each year.
But for many years the charity relied on professional solicitors. From 2001 to 2010, they raised about $35 million. Nearly $15 million of that went to cover the solicitors' fees, IRS records show.
That put Police Protective at No. 20 on the Times/CIR list of America's worst charities, which was based on the total paid to solicitors over a decade.
Though its employees ask for money to promote officer safety and help the families of slain officers, tax filings show it has spent $260,000 on direct cash aid over the past decade.
Nonprofits run by Dierks and co-founder Phil LeConte, including Police Protective Fund, have been sued by regulators in at least six states, including Illinois, Ohio and Massachusetts. States accused charity employees of falsifying documents and overstating charitable deeds. Telemarketers went as far as pretending they were police officers to raise money, according to complaints filed by California and Illinois.