Friday, November 19, 2010

A Case For Investigative Reporting: Reporter Found That One Watchdog Was Not Watching

Jeff Testerman of the St. Petersburg Times called our attention to the latest wrinkle on the U.S. Navy Veterans Association fiasco. After IRS agents spent hours poring over records and gave the charity a "clean bill of health." That left the Navy Veterans free to continue a nationwide telemarketing campaign which, according to tax returns, brought the group another $27.6 million in 2009 — donations the public was led to believe would help veterans and America's fighting troops overseas. What the IRS did not know — and its tax audit did not uncover — was that Thompson had stolen his identity from a civilian in Washington state, was impersonating a Navy commander and using his elaborately constructed but phony Navy Veterans charity to swindle the gift-giving public.
The IRS, which by policy does not comment on "any examination of any entity,'' declined to comment for this report, and the agency refused to address how it gave a thumbs-up to a charity that used fictional offices and falsified tax returns to collect donations from the public. IRS agents, who missed the chance to stop Thompson's fraud in its tracks in 2008, opened a criminal investigation this summer.
Thompson was assisted by a trio of well-credentialed lawyers who were paid nearly $400,000 by the Navy Veterans from 2007 until Thompson disappeared last summer. All three attorneys said they believed the Navy Veterans Association was a legitimate charity and that Thompson was the Navy commander and veterans advocate he held himself out to be. One, Darryll K. Jones, tax counsel for the Navy Veterans and a professor at Florida A&M University College of Law and an expert on nonprofits, had no idea that the total income reported to the IRS by the Navy Veterans exceeded $99 million.
Along with the IRS, the three attorneys never realized that the Navy Veterans used a phony CPA to seek accreditation from the Better Business Bureau, a fictional legal expert to claim the group was exempt from making tax papers public and political cronies to pose as Navy Veterans members at political gatherings. The Times found out! It was the newspaper investigation that exposed the Navy Veterans as a phantom group that Thompson used to funnel donations from the public into dozens of political campaigns.

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