Ken Paxton

Friday, March 21, 2014

Purported Veterans’ Charity Charged with Violating Texas Law, Deceiving Texas Donors

AUSTIN – Texas Attorney General Greg Abbott charged Veterans Support Organization (VSO) and four of its principals with unlawfully soliciting charitable contributions and misrepresenting to Texas donors that the donations would benefit local veterans in need.

Court documents filed by the State Wednesday explained that the defendants claimed to offer assistance to local needy veterans through VSO’s work, housing, and grant programs. However, the State’s investigation found that VSO’s so-called “work program” was merely structured panhandling that the defendants used to solicit funds for VSO. While publicly claiming to hire veterans, the State charged that the defendants actually hired both veterans and non-veterans to stand in front of various storefronts for up to 12 hours a day to raise at least $225 a day in donations for VSO. In seeking permission to place its solicitors in front of a store, the defendants misrepresented to store management that the solicitors were veterans whose main purpose is to raise awareness about veterans’ programs and provide resource information to store customers – not to solicit donations from them.

State's lawsuit
against the Veterans Support Organization

The defendants conducted their unlawful solicitations in numerous counties statewide, including Bell, Bexar, Dallas, Harris, Hays, Nueces and Travis. According to VSO’s own records, few of the donations VSO raised in Texas actually were used in Texas – despite the defendants’ misrepresentations to donors that charitable contributions would help “local” veterans “in the area.” The State’s investigation revealed that the defendants raised more than $2.5 million in Texas from 2010 to 2012. More than 70 percent of the funds raised in Texas were diverted to Florida or Rhode Island – contrary to the defendants’ statements to Texas donors that the charitable donations would benefit “local” veterans in need.

The State’s enforcement action also explained that the defendants often made a profit on their so-called “housing program” for veterans. The housing program consisted of VSO renting two residences – one in Austin and one in Dallas – and subletting rooms in the houses to their employee solicitors, only some of whom were veterans. In addition to paying $125 a week for rent, each individual had to participate in VSO’s “work program” or be subject to eviction. The defendants also evicted employee solicitors who were unable to pay the rent. In contrast to its claim that it was seeking to help “homeless veterans,” VSO actually only housed individuals – veterans or not – who could afford to pay for a room.

The State is seeking a temporary and permanent injunction as well as civil penalties against the defendants. The State is also asking the court to secure the defendants’ assets and funds and distribute them to help needy veterans and their families in Texas – as intended by the donors.