Veterans charity again under fire, charged with deceiving donors
By JEREMY SCHWARTZ | Austin (Texas) American-Statesman | Published: March 21, 2014
AUSTIN, Texas — The Texas attorney general’s 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 weren’t going where they were supposed to be going,” former Austin chapter manager, Robin Woods, said. “What they were doing wasn’t 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 group’s 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 didn’t 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 general’s 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.
Texas authorities also took issue with the group’s housing program, which was touted as transitional sober housing for homeless veterans. The Statesman revealed that the program rented shared rooms to its solicitors for $125 a week at a five-bedroom house in far South Austin. According to the lawsuit, VSO leased the house for $1,495 a month, but stood to get $5,000 a month if the house was full. The group deducted rent from its employees’ paychecks and filed eviction notices against solicitors who lost their jobs or were unable to pay rent.
“In contrast to its statement that it was seeking to help ‘homeless veterans,’ in practice VSO was interested in individuals, veterans or not, who could afford to pay for a room,” the lawsuit claims. “In fact for some individuals, VSO noted ‘inability to pay’ as a reason for their departure. An inability to pay would seem to be the rationale for having a housing program to assist veterans, but VSO instead saw it as a reason to displace them.”
In addition to misleading the public, the VSO failed to file reports on its fundraising activity as required by state laws on veterans soliciting organizations, according to the lawsuit. The state wants the return of “all monies fraudulently solicited in Texas,” which prosecutors say should be used to “further the stated mission to help needy veterans, and their families in Texas.”
Texas joins a growing list of states that have taken aim at the organization. State officials in South Carolina targeted the group for violating that state’s solicitation laws in September, banning it from the state for 15 years and fining it $5,000.
In Tennessee, officials slapped the VSO with $50,000 in civil penalties in 2010 (the group later settled for $20,000) after investigators found that the group failed to properly register and that it claimed to provide services and goods — including housing, addiction recovery programs and bus passes — that it wasn’t offering in the state.
Georgia and North Carolina officials are also looking into the group, according to press reports in those states, and Connecticut’s congressional delegation demanded in 2012 a federal investigation into the group.
According to the organization’s website, the VSO is “expanding across the United States” and targeting “communities with growing populations of veterans.”