Court papers: AMVETS in Ohio diverted millions
By STEVE BENNISH | Dayton Daily News, Ohio | Published: March 28, 2013
DAYTON, Ohio — For at least six years, AMVETS in Ohio operated largely sham career training centers for military veterans throughout the state to divert millions in proceeds from instant bingo operations that by law should have gone to charity, according to court papers filed by Ohio Attorney General Mike DeWine.
The probe, detailed in a 32-page filing with the Frankin County Court of Common Pleas, is considered settled under an agreement between the organization, its affiliates, and DeWine with the removal of top administrative staff of AMVETS, tighter fiscal controls and the appointment of new members to a board overseeing the career counseling centers.
Settling the investigation will not lead to forfeiture of funds because, DeWine concluded, it would push the organization into insolvency. As of yet, no criminal charges have been filed.
Ohio AMVETS Career Center, classified for tax purposes as a 501(c)(3) public charity, funded approximately 59 AMVETS posts around the state.
“AMVETS posts used the money for non-charitable purposes, with the knowledge of Ohio AMVETS Career Center board members and some AMVETS Department of Ohio officials,” the investigation concluded.
Beyond that, DeWine said, the investigation eventually expanded into the operations of AMVETS Department of Ohio and AMVETS Department of Ohio Service Foundation, where it was uncovered that millions of Ohio AMVETS Career Center and AMVETS Department of Ohio Service Foundation assets, dedicated for specific charitable purposes, were transferred to subsidize the AMVETS Department of Ohio, including payroll and travel reimbursements.
An AMVETS website lists 14 career training centers in the Dayton region, including locations in Dayton, Enon, Fairborn, Huber Heights, Hamilton, Kettering, Medway, Sidney, Springfield, Troy, Vandalia and Xenia.
DeWine’s filing didn’t single out specific centers, but a state spokeswoman said all 59 centers were found to have issues.
At an AMVETS location in Vandalia, 1123 S. Brown School Road, career center coach Marlene Dapore said her program was functional during the period covered by the state investigation. She said she had a dozen veterans every month use services there.
The center closed two months ago, but may open shortly as the state organization begins reopening centers. “They would come in there or work from home,” she said. Veterans worked on resumes or learned software programs like Excel, she said.
At AMVETS Post 25 on Kenton Street in Springfield, the woman who answered the door of the canteen Wednesday said they weren’t at liberty to discuss the career center. The Kenton Street post operates its career center in a separate building with set hours, but a sign in the window announced it would be closed Wednesday.
A breakdown by state investigators said that from Jan. 1, 2006 until May 31, 2012, AMVETS posts with satellite career centers made $50.28 million in net profit from the sale of instant bingo tickets. Ohio charity gaming law allows the posts to keep $37.7 million, or 75 percent, and use the money to pay any post purpose.
It was the other 25 percent that drifted outside the law. The laundering began with the 2003 Ohio law that cracked down on illegal storefront bingo parlors and also tightened up the rules for bingo operations at veterans’ organizations.
AMVETS created the career centers in an effort to retain all of the bingo proceeds On paper, the centers operated as a charity within AMVETS.
Inspections by state investigators found that the AMVETS career centers were largely idle or inoperable computer stations in AMVET locations, and the money to fund them was on paper only. The cash for the most part went to the post’s general operations, DeWine said. Some was used to make payroll or to purchase canteen supplies, including alcohol.
AMVETS re-routed $12.5 million to the career centers — the 25 percent portion — but the career centers then relayed $10.68 million to the same posts, or 85 percent.
Other findings of the probe indicated about $3 million in funds collected by AMVETS Service Foundation for scholarships for veterans or for those in ROTC were diverted for payroll to AMVETS Department of Ohio.
DeWine said the agreement will protect future charitable assets raised by AMVETS Department of Ohio, Ohio AMVETS Career Center and AMVETS Department of Ohio Service Foundation.
“Veterans need and deserve the assistance these AMVETS organizations provide, and going forward we will make sure they get it,” DeWine said.
AMVETS has revamped accounting and reporting practices, created written financial policies, and will avoid verbal contracts in the future, the attorney general said. Departures from AMVETS includes Executive Director George Ondick, Finance Officer George Box, Assistant Director Sam Pierce, Finance Officer Ray Hess and others.
Sandy Vorhies, AMVETS Department of Ohio State Commander, said in a written statement: “We are angry that veterans did not receive needed services. We have worked with the Attorney General to resolve these issues, and we have terminated several individuals who have contributed to these problems. AMVETS is dedicated to changing these practices and we are thankful for the Attorney General’s support,” Vorhies said.
Stewart Hickey, Executive Director of AMVETS National Headquarters, said he appreciates the reforms DeWine helped initiate.
DeWine said a new board of Ohio AMVETS Career Center will include officials who have shown interest in veteran support issues.
The new members include Columbus City Councilman Hearcel Craig, a veteran who is chairman of the Veterans’ Affairs Committee; Curtis McPherson, executive director of the Warren County Veterans Service Commission; Matt Slater, director of Veterans Services for Family and Community Services, a Ravenna-based nonprofit that serves the needs of veterans in northeast Ohio; and Terry Sayers, chapter commander of the Disabled American Veterans of Trumbull County.
Staff Writer Andrew McGinn contributed to this report.
AMVETS career centers
The veterans’ organization represented to the public that the centers, which included a computer, were for veterans to take online courses, including training in the use of word processing software or preperation for a high school equivalency exam. The attorney general found that although the majority of the centers were not functional, over a six year period 2,165 individuals registered for online courses.