Recently a sweeping investigation by the Ohio Attorney General of AMVETS found 59 locations around the state, including 15 locally, were diverting money for career training for veterans from its intended purpose. Meanwhile, a man accused of bilking donors out of $100 million in 41 states by claiming the money was going to Navy veterans faces trial in Cleveland on fraud charges. Investigators say John Donald Cody who went by the alias Bobby Thompson had an office in Cincinnati and collected nearly $2 million in Ohio.
A 2007 arrest photo of John Donald Cody, alias Bobby C. Thompson, provided by the U.S. Marshals Service from the Multnomah County (Ore.) Sheriff's Department. Cody, accused of bilking donors out of $100 million in 41 states by claiming the money was going to Navy veterans, faces trial in Cleveland on fraud charges.
And just last week the Attorney Generals office announced it had shut down a Riverside-based charity whose director was accused of spending money on herself instead of helping incarcerated veterans charged with wartime crimes as it claimed. I think theres always been people who have tried to take advantage of the publics sympathy for veterans and our love of veterans, Attorney General Mike DeWine said. I think with two wars going on in Iraq and Afghanistan people were much more focused on veterans and it was an environment these con artists can flourish in.
Increased outreach and better tools have led to more effective enforcement of charity rules, according to Pete Thomas, chief of the attorney generals charitible law division. I frankly do think were doing a better job of what weve been doing all along, he said.
Charity head says motives were pure
The Texas attorney generals office has charged the Veterans Support Organization, a Florida-based charity that has come under fire in several states, with deceiving Texas donors by falsely telling them that their donations would help needy local veterans. In a lawsuit filed this week in Travis County District Court, state prosecutors seek to seize funds raised by the group in Texas and bar the group from operating in the state. For several years, the group operated chapters in Austin, Dallas and Houston, sending veterans and nonveterans alike to stand outside supermarkets and other stores to raise money. According to the lawsuit, the group raised $2.5 million in the state between 2010 and 2012.
In February, the Austin American-Statesman published an investigation into the group, revealing that it gave less than 1 percent of the $7.1 million it raised from the public in 2011 for grants to needy veterans. Members of the Austin and Dallas chapters quit as a group in December after managers said they became aware of how much money the group was sending out of state. The funds werent going where they were supposed to be going, former Austin chapter manager, Robin Woods, said. What they were doing wasnt right for Texas or for veterans.
According to the lawsuit, solicitors told members of the public their donations would help needy local veterans. In reality, between 2010 and 2012 the group made grants of less than $57,000 to Texas veterans, or 2.2 percent of what it raised in the state during those years. State investigators think that more than 70 percent of what the group raised in Texas was sent to Rhode Island and Florida, where the groups headquarters are. And although the group claimed it was helping at-risk veterans with a work program, state officials called it nothing more than structured panhandling which they use to solicit funds.
VSO employees faced strict quotas, according to the lawsuit, and could be fired if they didnt raise $250 a day on average. Further, once back at the VSO office, the solicitor was subjected to pat down to ensure that he did not take any donations and had to remain on the VSO premises while the donations were counted, the lawsuit says. The attorney generals office is also seeking tens of thousands of dollars in fines against VSO President Richard VanHouten and three associates, including his wife. VanHouten an Army veteran who lives in a $548,500 South Florida home, according to county records received $259,965 in salary in 2011, more than five times what the group disbursed to needy veterans that year. Neither VSO officials nor attorneys responded to requests for comment.
But none of the donations go to charity. Instead, they go to a for-profit recycling company using the Centers name illegally, apparently to supplement their business of selling second-hand clothes to overseas buyers. Dozens of the bins have appeared around Northern Virginia over the last year, and officials from MFSC say theyve never seen one cent from the collections. Its frustrating, because we get complaints all the time about these bins, but we have nothing to do with them, said Jerry Brittain, operations director for the charity. It hurts our organization. It gives us a bad name. And some guy is making a lot of money fraudulently off the military connection.
Veterans groups and charity watchdogs say that isnt a surprise. Any time a national issue sparks a wave of generosity, it also spurs a disheartening rise in donation scams. Holidays add even more opportunity. Its a sadly common problem, said Tracy Thorleifson, an attorney with the Federal Trade Commission. You see both more good and more bad groups pop up whenever there is a need. You should not assume any more that a bin set out is truly collecting for a non-profit group. Thorleifson could not comment on the specifics of MFSCs problems, but said that her agency in recent years has seen plenty of scams allegedly collecting for veterans and first responders.
In the Military Family Support Center scam, the bins are covered with the charitys name, a picture of an eagle with an American flag and the slogan Building better lives for military families. But the phone number on the bins -- for maintenance and charitable receipts -- belongs to the World Trade Company, based in Woodbridge. Calls to that line default to a voicemail whose messages are rarely returned, according to Brittain and area business owners who have complained about the unwanted bins.
Company president Alan Garada said the unauthorized use of the logo is simply a mix-up and that his firm is paying $3,000 a year to Freedom Support Services -- which he called an MFSC spin-off group -- to use the name on the bins. Brittain said he has never heard of the group and said no one outside his office would have the authority to allow use of the MFSC name and logo. Lynchburg attorney David Embrey -- who is listed as the agent for Freedom Support Services, a private corporation -- refused to answer any questions about the organization.