News Releases

VETERANS: Murray, Blumenthal, Nelson Call on Departments of Justice, Treasury to Investigate Charitable Organizations Exploiting Veterans for Own Financial Gain

May 30 2012

Recent findings raise serious questions as to whether organizations are violating federal law and abusing their tax exempt status by misrepresenting work on behalf of veterans

(Washington, D.C.) – Today, U.S. Senator Patty Murray (D-WA), Chairman of the Senate Veterans’ Affairs Committee joined with Senators Richard Blumenthal (D-CT) and Bill Nelson (D-FL) in sending two letters regarding the Veterans Support Organization (VSO), addressing potential violations of federal law and abuse of tax exempt status by the 501(c)(3) organization. The first letter was sent to Attorney General Eric Holder and Secretary of the Treasury Timothy Geithner, requesting an audit and, where appropriate, an investigation of the VSO for potential violations of federal law. 

In a second letter, sent to Secretary of Veterans Affairs Eric Shinseki, Senator Murray, again joined by Senators Blumenthal and Nelson, expressed concern about the membership criteria used by the Department of Veterans Affairs’ Voluntary Service National Advisory Committee (NAC) to evaluate prospective member organizations and the NAC’s failure to require any standards of conduct for its members. The Senators point out the lack of internal controls for membership on the advisory committee and call for the removal of any organization that fails to conduct itself in a manner befitting the Department’s mission or that exploits its relationship with the Department for its own financial gain.

“Without a meaningful review process or standards of conduct, the Department risks legitimizing organizations engaged in questionable business practices by permitting their membership on the NAC,” the Senators write in the letter to Secretary Shinseki. “For example, the Veterans Support Organization (VSO) has repeatedly touted its membership on the NAC as a way to represent itself as a reputable organization.  But throughout the seventeen states in which it operates, VSO has drawn scrutiny from state authorities, veterans service organizations, local news organizations and veterans themselves.  VSO’s business practices have been characterized as dishonest, misleading and fraudulent, and in at least one instance, VSO has acknowledged breaking state law.” 

The full text of both letters follow:

May 30, 2012

The Honorable Eric H. Holder
Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530

The Honorable Timothy F. Geithner
Secretary of the Treasury
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW                                           

Dear General Holder and Secretary Geithner:

We write to request that the Departments of Justice and Treasury audit and investigate, as appropriate, the Veterans Support Organization (VSO), a registered 501(c)(3) tax exempt corporation, for potential violations of federal law.

Throughout the seventeen states in which it operates, including Connecticut and Florida, VSO has attracted scrutiny from state authorities, reputable veterans service organizations, local news organizations and individual veterans.  VSO’s business practices have been characterized as dishonest, misleading, and fraudulent and in at least one instance, VSO has acknowledged breaking state law.  Taken together, these actions and allegations raise serious questions as to whether VSO has repeatedly and intentionally misappropriated public donations and abused its tax exempt status in violation of federal law.

At the heart of VSO’s suspect practices is its use of paid solicitors, violation of state solicitation laws and financial irregularities.  VSO presents its paid solicitors to the public as veterans, providing them with camouflage-style uniforms and instructing them to keep thirty percent of their collected donations as commission.  Through its use of these paid solicitors, VSO has been found in violation of state charitable contribution laws and has faced civil penalties as a result.  VSO’s paid solicitors program is its single largest expenditure, with executive and employee compensation following close behind.  In 2009 alone, VSO paid its chief executive officer $255,000, or over four percent of its total revenue.  That same year, VSO’s spending on its paid solicitor program and executive and employee compensation was over eight times greater than its direct grant awards to other veterans service organizations, government entities, and individual veterans.  Clearly, VSO’s disproportionate spending on paid solicitors and its own executives, coupled with its admitted violation of state solicitation laws and general lack of transparency and accountability is cause for serious concern.  For your reference, we have enclosed a background paper that details VSO’s questionable conduct in greater detail.

As an increasing number of our servicemembers return home and transition to civilian life, it is especially critical that charity organizations act as good stewards of the American people’s goodwill and generosity towards our veterans.  On behalf of our nation’s veterans and those who serve them, we thank you for your attention to this matter and look forward to your timely response detailing the steps you have taken auditing or investigating, as appropriate, VSO.

-----------------------------------------------------------------

May 30, 2012

The Honorable Eric K. Shinseki
Secretary of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20420

Dear Secretary Shinseki:

We write to express our concern about the membership criteria used by the Department’s Voluntary Service National Advisory Committee (NAC) to evaluate prospective member organizations and the NAC’s failure to require any standards of conduct for its members.

It is critical that organizations permitted to affiliate themselves with, or invoke the name of, the Department of Veterans Affairs conduct themselves in a manner befitting the Department’s mission, its reputation and the integrity of its work.  Yet today, any organization that meets a minimum level of monetary and material support to VA facilities is eligible for membership on the NAC.  No other review is undertaken by the Department to evaluate a potential member organization, nor does the NAC have in place any standards of conduct to which its member organizations must adhere. 

This is both troubling and unacceptable.  Without a meaningful review process or standards of conduct, the Department risks legitimizing organizations engaged in questionable business practices by permitting their membership on the NAC.  For example, the Veterans Support Organization (VSO) has repeatedly touted its membership on the NAC as a way to represent itself as a reputable organization.  But throughout the seventeen states in which it operates, VSO has drawn scrutiny from state authorities, veterans service organizations, local news organizations and veterans themselves.  VSO’s business practices have been characterized as dishonest, misleading and fraudulent, and in at least one instance, VSO has acknowledged breaking state law. 

In response to VSO’s suspect practices, we have written to the Attorney General and to Secretary Geithner, requesting that their departments investigate whether VSO has misappropriated public donations or abused its tax exempt status in violation of federal law.  We expressed our concern that charity organizations must act as good stewards of the American people’s generosity towards our veterans.  Surely an organization, such as VSO, which has admitted breaking state law, should be ineligible to serve on the NAC or use the Department’s name in furtherance of its own financial interest. 

To protect the integrity of the NAC’s work, we ask that you review this situation and take such action as you consider appropriate.  It is our hope that you will rescind the membership of VSO and any other organization that fails to reflect the caliber and character of the Department’s mission and work, and institute safeguards to regulate the NAC’s membership accordingly.  We look forward to hearing from you regarding your review of this issue.  Thank you for all that you do on behalf of our nation’s veterans.