Nonprofit U.S. Navy Veterans Association is in hot water

The Hawaii Attorney General's Office is investigating whether a nonprofit veterans group, the United States Navy Veterans Association, which raised $5.9 million nationally last year, made up the names of chapter officials and deceived the public. The AG's office is trying to contact the three people listed as Hawaii chapter commander, lieutenant commander and chief financial officer of the nonprofit that's being investigated in at least five states, Hawaii included, for its fundraising activities.

The St. Petersburg (Fla.) Times spent six months looking for the 85 directors, auditors and state chapter officials listed on IRS forms by the nonprofit and it could find just one: former director and Chief Financial Officer Bobby Thompson. According to the IRS Form 990 filed by the organization, it had revenues of $5.9 million in 2009, and expenses of just slightly less than that amount.

U.S. Sen. Jim Webb, D-Va., wrote to the IRS on May 28, saying the nonprofit was under investigation in multiple states "for its legitimacy, fundraising activities and expenditures on behalf of veterans," and asked for "prompt attention to this matter."

The 501(c)(19) tax-exempt "war membership" organization reported on its website that it gave $10,000 each to the USS Arizona Memorial and National Memorial Cemetery of the Pacific at Punchbowl. Those contributions were confirmed. It also said it gave $2,500 to a veterans home in Hilo, and provided more than 5,000 "care kits" to Hawaii troops in the Middle East since 2002.

"In these simple acts of charity and patriotism, just over the period June 1, 2008 (to) July 15, 2009, this organization spent in Hawaii and for the people of Hawaii over 3 1/2 times the net contributions it raised in Hawaii," the charity said on its website, http://www.navyvets.org.

After the AG’s office issued a cease-and-desist order for solicitation in Hawaii Navy Veterans said it had closed a contribution mailbox on Bishop Street at the end of 2009. However, the AG's office said solicitation was continuing through the Navy Veterans' website. According to reports, Navy Veterans also used rented mailboxes in other states as collection points.

Deputy Attorney General Hugh Jones said he requested contact information for the Hawaii chapter's officers in letters sent on May 20, June 2 and June 16 to an Ohio attorney representing Navy Veterans, but hasn't received cooperation.

"Whether these people (the Hawaii Navy Veterans officials) really exist or not, I can't tell you at the moment. I wish I could," Jones said. "I've asked them (Navy Veterans) for their contact information and they've refused to provide it, which certainly causes me to be suspicious."

In October, Navy Veterans requested to withdraw its Hawaii nonprofit registration and was told it couldn't solicit contributions without that registration, Jones said. The organization now says the Hawaii AG's office no longer has jurisdiction because the nonprofit claims it no longer solicits funds here. "We beg to differ with them," Jones said. "They said they had a Hawaii chapter on the registration form that was filed with our office, and if that chapter was really fictional, that is, I think, a deceptive trade practice," he said.

People may have been deceived into giving through the Hawaii chapter, Jones said. "If it doesn't exist … that's a problem as far as I'm concerned," he said.

The Hawaii chapter's phone number, 440-4650, has a recorded message saying, in part, that "America is still the hope of mankind, a light that shines for freedom in the darkness, and that that darkness will not overcome us."

According to Navy Veterans’ website, the state chapter and national association raised about $122,000 in Hawaii in the year ending May 31, 2009. The organization said it spent about $103,225 in Hawaii.

According to media reports, New Mexico and Ohio also have ordered Navy Veterans to cease fundraising, and Florida and Virginia are investigating the nonprofit. The U.S. Department of Veterans Affairs removed Navy Veterans from a listing of veterans’ services.

In May 2009, Hawaii and other states announced a settlement with telemarketer Community Support Inc., based in Milwaukee, which solicited contributions for numerous charities, Navy Veterans among them, according to the Attorney General's Office. Under the settlement, which also included at least 35 other states, Community Support agreed to cease "illegal and objectionable" tactics, such as misrepresenting how much of the funds would go to charities and harassing call recipients, according to the AG’s office.

The U.S. Navy Vets has defended itself on its Web site. One post called the St. Petersburg (Fla.) Times report, which spurred all the scrutiny, "a pack of lies and poppycock."