Tuesday, September 6, 2011

An Extraordinary Charity Fraud Gets Lost By Regulators

by Gary Snyder

The media accounts, principally by the St. Petersburg times, of the final months of the U.S. Navy Veterans Association were marked by frantic attempts to fend off reporters and investigators who suspected the charity was a fraud. Though it had reported raising nearly $100 million to assist veterans, the non­profit's directors were nonexistent, its headquarters nothing more than mail drops. Run out of a dilapidated duplex in Ybor City but soliciting donations nationwide, the group sent much of its money to politicians, not needy veterans. the group's leader, a scruffy 60-something who called himself Commander Bobby Thompson, vanished from view. The last two board members resigned. The group's tricked-out pickup was sold. Private investigators and a PR person were hired. The Navy Veterans' long-time lawyer had severed her relationship with the group and gone to the authorities with serious accusations of wrongdoing. But Florida and federal officials took nearly a month to act on that tip. By the time authorities seized documents from the Clair-Mel home of one of Thompson's associates, some records already had been shredded.
As the the St. Petersburg Times' expose of the Navy Veterans in March 2010 unfolded, Thompson mounted a multipronged offensive intended to rally support and lash back at the Times and its nonprofit owner, the Poynter Institute, according to public records and documents filed in court cases in Florida and Ohio.
• "Brian Reagan," the purported head of the Navy Veterans who proved to be fictitious, filed complaints against Poynter in at least three states, including Florida, saying it was soliciting contributions without being properly registered. No states acted on the complaint.
• The group hired Christopher Szechenyi, a freelance journalist, paying him $24,000 between April and June 2010, according to records. Szechenyi, an adjunct professor of journalism at Emerson College in Boston, drafted letters to the editor on behalf of a Polk County man who received $1,700 from the Navy Veterans for a barbecue at the James A. Haley VA Medical Center in 2009. Although the letters were submitted, there is no evidence they were published in either the Times or the Tampa Tribune. Szechenyi, who previously worked for the Church of Scientology on an unpublished investigation into the St. Petersburg Times, did not return a call and e-mail seeking comment.
• Using another fake name and an accomplice's mailing address, Thompson created a new organization, U.S. Navy Veterans Support Group Inc. According the Navy Veterans website, the "private, for-profit" corporation would take responsibility for the group's online publications. The inaugural column was a lengthy attack on the St. Petersburg Times.
When Florida officials demanded that Thompson's new entity either reply to subpoenas or face fines of $1,000 a day, the group was dissolved.
• In the second week of June, Thompson met in New York City with one of the Navy Veterans' professional fundraisers. His mission, according to Ohio investigators, was to persuade the company to continue soliciting in the face of negative publicity. Despite a strong financial incentive — fundraisers kept 85 to 90 percent of all donations to the nonprofit — Thompson's pleas were rejected.
For more than six months, Helen Mac Murray, the Navy Veterans' general counsel, had been fielding queries from the Times, including one seemingly easy request: Prove that dozens of directors and officers exist. Of 85 officers listed for the group, the Times was only able to find one: Thompson. Mac Murray, who once headed consumer protection for the Ohio Attorney General's Office, said Thompson assured her all officers and members were real. Though she represented the group for four years, Mac Murray later said she only met a few volunteers and never met or spoke to any officials but Thompson.
A few weeks before the Times' first story, Mac Murray hired a private investigator in Ohio, according to an invoice in court files in a case involving the Navy Veterans in Hernando County. The subject: Bobby Charles Thompson. The investigator revealed what he had learned when he tracked a Social Security number that "was supplied as possibly belonging to Bobby Thompson." It belonged instead to a Louisiana man who never appeared to have lived in Florida, the investigator found. Mac Murray recently denied that Thompson had claimed the Social Security number as his own.
Florida's criminal investigation into the Navy Veterans is ongoing, but its civil action has been closed. With Thompson a fugitive, state officials say, there is no one to sue.
Ohio officials, who estimate their state's residents were bilked for more than $2 million by the Navy Veterans, have been the most aggressive in their prosecution of the case. Last month, a Thompson associate, Contreras was sentenced to five years in an Ohio prison after pleading guilty to aggravated theft and money laundering. In a separate civil action, Ohio investigators continue to hunt for clues that could lead to Thompson, who was last seen at an ATM in New York City on June 16, 2010.
This summer, an Ohio judge granted a motion to give authorities access to three e-mail accounts whose owners are believed to have a relationship with Thompson. Investigators said they "may have information pertaining to his whereabouts."

Gary Snyder is the author of the recently published Silence: The Impending Threat to the Charitable Sector and Nonprofits: On the Brink. Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, , Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more • Nonprofits: On the Brink (iUniverse, 2006)
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