Senator Patty Murray (Washington) chairs the Senate Veterans Affairs Committee. Her office notes this action by Murray, Senator Richard Blumenthal (Connecticut) and Senator Bill Nelson (Florida).
FOR IMMEDIATE RELEASE
Wednesday, May 30, 2012
CONTACT: Murray Press Office
(202) 224-2834
VETERANS: Murray,
Blumenthal, Nelson Call on Departments of Justice, Treasury to
Investigate Charitable Organizations Exploiting Veterans for Own
Financial Gain
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.
###
--
Eli Zupnick
Press Secretary
U.S. Senator Patty Murray
202-224-2834
eli_zupnick@murray.senate.gov