The letter was designed to tug at the heartstrings — and open the wallets — of anyone who admires veterans.
“For thousands of disabled veterans who served in Iraq and Afghanistan, giving an arm and a leg isn’t simply a figure of speech — it’s a harsh reality … Your $10 gift will mean so much to a disabled veteran,” said the letter from Neil G. Paulson Sr., head of a group called Help the Vets, Inc.
There was just one problem: Federal and state agencies say 95 percent of the $20 million that Americans donated to Paulson’s various charities, operating under names including Veterans Emergency Blood Bank and Vets Fighting Breast Cancer, went to fundraising, administrative expenses, and Paulson’s salary and benefits. At the same time, Paulson falsely claimed a “gold” rating from GuideStar, a group that evaluates charities.
Paulson has been charged with violating state and federal laws, one of more than 100 actions announced today as part of a sweeping crackdown on fraudulent veterans charities by the Federal Trade Commission (FTC) and law enforcement officials and charity regulators from all 50 states and the District of Columbia.
The massive joint federal-state effort, focusing on multiple cases of sham charities that bilked consumers out of millions of dollars in donations, also includes a new nationwide initiative to educate consumers about how to donate wisely.
“Americans are grateful for the sacrifices made by those who serve in the U.S. armed forces,” FTC Chairman Joe Simons says in a statement. “Sadly, some con artists prey on that gratitude, using lies and deception to line their own pockets. In the process, they harm not only well-meaning donors, but also the legitimate charities that actually do great work on behalf of veterans and servicemembers.”
Another target of the crackdown, Travis Deloy Peterson, was charged by the FTC with inventing names of fake veterans charities to persuade people to donate cars, boats and real estate, which he then sold for his own benefit.
Among the names he used were: Vehicles for Veterans, Saving Our Soldiers, Veterans of America, Act of Valor, and Medal of Honor.
Peterson allegedly made millions of robocalls asking people for donations he falsely claimed were tax deductible. None of the groups was a real charity with tax-exempt status.
In addition to the FTC cases, the states announced a long list of separate actions against a wide range of charities that fraudulently claimed to help veterans.
The illegal behavior alleged by the states includes fundraisers who stole money solicited for a veterans charity, officials at charities who used donations for themselves, and charities that used deceptive prize promotions in their solicitations or falsely claimed that donations would be tax deductible.
“Scam artists are on the prowl, ready to take advantage of donors who want to help veterans,” says Maryland Secretary of State John Wobensmith.
Older Americans can be especially appealing targets to phony veterans charities, says Lois Greisman, associate director of the division of marketing practices at the FTC. “We know older adults are very generous, and some of the scammers have lists and are targeting older consumers,” she said.
“The harm here is enormous,” Greisman says. “Think of the legitimate charities deprived of money they could put to good use.”
The new public education initiative unveiled by the FTC and the states, called “Operation Donate With Honor,” is designed to help consumers distinguish between legitimate and fraudulent charities. It includes a video and other materials on how to research charities, what questions to ask, and how to be aware of tricks scammers use.
One of the tips offered to consumers is to remember, when they are asked for donations, to simply hold off on giving until they have time to think and do some research.
“If they’re pressuring you to make an immediate gift, that’s a red flag,” says Art Taylor, president and CEO of the BBB Wise Giving Alliance. “It’s not critical you give at that moment.”
Those involved in the public education effort are hoping that publicity about sham charities will not discourage people from donating to worthy charities that help members of the military.
“Educate yourself and continue to give,” Wobensmith says. “Just make sure you’re giving to reputable charities.”
“The vast majority of charitable organizations do good and important work,” says Nebraska Attorney General Doug Peterson, who urged Americans to look up charities’ records so they can “donate with confidence in support of our military and veterans.”
Veterans charities to watch out for
You can’t always trust a name, so it’s important to do some research before you donate. The following groups have all been sued for lying to donors:
- American Disabled Veterans Foundation
- Foundation for American Veterans, Inc.
- Healing American Heroes, Inc.
- Healing Heroes Network
- Help the Vets, Inc.
- Military Families of America
- National Vietnam Veterans Foundation
- Veterans Fighting Breast Cancer
- VietNow National Headquarters, Inc.
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