Wednesday, January 18, 2012

Unwinding of an Unusual Nonprofit Fraud

by Gary Snyder

Virginia Attorney General Ken Cuccinelli said that the state has reached a settlement with a telemarketing company that solicited funds from Virginia residents for a fraudulent veterans charity that is under investigation in multiple states. The settlement requires Michigan-based Associated Community Services Inc. to pay more than $65,000 in refunded contributions, civil penalties and other costs for alleged violations of Virginia law. 

The company was soliciting funds for the now defunct U.S. Navy Veterans Association, a fraudulent organization that purported to raise money to aid disabled veterans and send care packages to troops serving overseas. A state investigation last year concluded that the association collected at least $2 million from Virginia residents over a five-year period that ended in 2010. (sounds like a good deal: stole $2 million and pay only $65,000). 

The settlement requires the telemarketing firm to pay a total of $16,780 among 812 Virginians who contributed to the charity. Associated Community Services already has returned uncashed checks and cash contributions totaling more than $32,500 to an estimated 1,500 Virginians who donated to the group. The settlement also requires the telemarketing firm to pay $9,052.50 to 485 Virginians for contributions made to a separate organization called American Homeless Veterans because the firm had not filed a solicitation notice with the state. Associated Community Services also must pay $25,000 in civil penalties for the alleged violations of the state's charitable solicitation law and $15,000 for reimbursement of the state's expenses and attorney's fees. (link)

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, ,, Responsive Philanthropy Magazine, New York Times...and many more • Nonprofits: On the Brink (iUniverse, 2006)
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