By Karl Bremer © Copyright 2010
Out of more than $1.14 million the U.S. Navy Veterans Association Minnesota Chapter claims to have spent on charitable programs and services in Minnesota since 2004, only $26,300 can be positively accounted for: two $10,000 donations to a St. Paul Veterans Center in 2007 and one $6,300 donation to Twin Cities Public Television in 2008.
The rest of the money from the organization that went to benefit individuals was allegedly spent to provide such generic things as “direct cash assistance,” food, clothing, publications, “care packages” for service members, and “psychological counseling and comfort” for survivors of veterans. But there is little evidence or documentation of those services in records filed with the state or IRS. Furthermore, the officers for the Minnesota Chapter of the USNVA cannot be found, nor can any address for the group other than UPS drop boxes be located.
The Minnesota Chapter mysteriously dissolved May 4, 2010, citing unspecified pending legal liabilities that could drive the group into insolvency. However, the group’s St. Paul phone number still answers with a message identifying it as the “Minneapolis-St. Paul office of the United States Navy Veterans Association.”
The USNVA has been shut down or is under investigation for allegedly fraudulent fundraising and/or reporting activities in several states, including Ohio, Virginia, Florida, Hawaii, New Mexico, Missouri and Oregon. The Minnesota Attorney General’s Office has refused to confirm or deny whether an investigation into the group is underway here.
HIGH-RENT UPS BOXES
The Minnesota Chapter of the USNVA collected more than $1.56 million over six years in Minnesota. Even though the group provided the state with nothing more than UPS drop boxes as “street addresses” from 2004-2009, it reported $28,740 in “occupancy” and “rent/utilities and maintenance” expenses on state and federal forms during that same period.
A large UPS mail box at the 1043 Grand Ave. location in St. Paul, which the USNVA listed as its address, costs only $264 per year, plus a one-time setup fee of $15.
The USNVA Minnesota Chapter appears to have violated state laws regulating charitable organizations on several occasions, and yet the group operated virtually unimpeded by the Attorney General’s Office with little more than some gentle warning letters about registration discrepancies that were resolved without disciplinary action or investigations.
The group ran largely under the radar in Minnesota until a Dump Bachmann investigation discovered that the group’s founder and national commander, Bobby Thompson, had donated $10,000 to Rep. Michele Bachmann at an April 7 Minneapolis fundraiser featuring former halftime Gov. Sarah Palin.
Thompson disappeared soon after the St. Petersburg (FL) Times began its lengthy investigation into him and his organization. He’s been missing ever since and is wanted in several states for questioning about the USNVA’s activities and finances. The Bachmann fundraiser is the last known location Thompson has been reported to have been at.
Besides Bachmann, Thompson has donated tens of thousands of dollars to Norm Coleman. the Republican Party of Minnesota, Marty Seifert’s governor’s campaign, and other state GOP causes.
WERE DONATIONS A RUSE?
The two $10,000 donations to the St. Paul Vets Center and the $6,300 donation to Twin Cities Public television are among the few charitable expenditures by the group that have been confirmed in the 41 states in which it operates chapters. But if the group’s behavior in other states is any indication, the money may have been given in part to keep state officials from looking further into the group’s finances. That’s the pattern investigative reporters at the Times noted in their year-long investigation into the activities of the organization, which they estimate could have taken in over $99 million through its national and state chapters since it was established in 2002.
On March 23, 2007, Cyndi Nelson, registration administrator for the Minnesota Attorney General, wrote to Thompson at the group’s Tampa, FL, address on file with the state at the time—also a UPS drop box—and to Jack Nimitz, an officer with the group who lists a Washington, DC, UPS box as his address.
“It has been brought to the attention of this Office that you may be soliciting or receiving contributions from the public in the State of Minnesota,” Nelson wrote, and informed the group that they were not properly registered to do so.
It’s not clear why the Attorney General’s Office only then had become aware of the group’s fundraising in Minnesota. Its initial registration filed with the Attorney General’s Office in February 2005 showed fundraising expenses of $1,826 for 2004 and noted that it intended to use the services of a professional fundraiser—Community Support of Montville, NJ. Also, by that time, the USNVA Minnesota Chapter had filed its 2005 IRS Form 990 with the state that showed $326,316 in revenues. Its 2005 annual report filed with the AG’s Office listed $38,890 in fundraising expenses.
A St. Petersburg, FL, law firm initially responded to the state on March 27, 2010, claiming it had been retained by the USNVA.
“We look forward to working with you towards a fair resolution. In the meantime, please direct all future communications regarding this matter to my attention,” wrote Darryl E. Rouson of Rouson, Dudley & Jones.
But three weeks later on April 18, 2007, the Minneapolis law firm of Gray Plant Mooty (now Gray Plant Mooty and Bennett) responded on behalf of the USNVA Minnesota Chapter, which it described as “our client.” It acknowledged possible problems with the group’s fundraising activities and promised compliance with the law in future fundraising efforts.
“The Minnesota Chapter recognizes that the written solicitation materials it used may not have been clearly marked enough to differentiate the Minnesota Chapter from the national Navy Veterans Association,” wrote Jennifer Bishop of Gray Plant Mooty in a letter copied to Bobby Thompson. “It also recognizes that the professional fundraiser it used may not have, in communications with prospective donors, specifically indicated that the source of the solicitation was the Minnesota Chapter. Going forward, the Minnesota Chapter will revise its written solicitation materials and its directions to the professional fundraiser to ensure that such source is clearly apparent.”
Then out of the blue, on April 2, 2007, the USNVA national organization donated $10,000 (PDF) to the “VA Minneapolis-St. Paul Vets Center, 2480 University Ave., St. Paul, MN 55114.” The national organization’s website says its $10,000 donation was a matching grant to a $10,000 grant from the Minnesota Chapter, although the Minnesota Chapter’s federal tax filing for 2007 makes no mention of such a grant. The national group’s tax filing for that year only shows one $10,000 donation to the St. Paul Vets Center, yet the VA says it received a total of $20,000 from the organization.
Ralph Heussner, public affairs officer with the Veterans Administration Twin Cities office, confirmed the receipt of two $10,000 checks from the U.S. Navy Veterans Association in 2007—one from Tampa, FL, and the other from Washington, DC. The checks were designated to benefit veterans at the St. Paul Vets Center, now located in New Brighton, and were deposited in the Center’s account on May 1, 2007. There was nothing to indicate whether the checks were from the national group or the state chapter of the USNVA, says Heussner.
The AG’s Nelson approved the Minnesota Chapter’s annual registration June 29.
The $6,300 donation to Twin Cities Public Television was made less than a year later.
In Florida, where the Florida Attorney General’s Economic Crimes Division has now launched a navy veterans official investigation into the USNVA’s activities, soon after the St. Petersburg Times’ reporters started asking questions in 2009, the USNVA made two $20,000 donations to charitable organizations in Tampa that recently had been written up in the Times. Prior to the Times’ investigation, the group had made no traceable contributions in Florida in the previous seven years.
In Virginia, where the group is under investigation by the Department of Agriculture and Consumer Services, an organization that provides low-interest loans to Virginia residents with disabilities received an unsolicited $2,500 donation from the USNVA in May 2009. That was at the same time the state was challenging the USNVA’s registration to solicit contributions in Virginia. It also was about the time the group began to seek changes in the state law that would exempt it from certain reporting requirements.
Virginia politicians who received donations from the USNVA’s Thompson around the time the group began its lobbying effort to change the state’s charitable organization reporting laws have come under fire. Virginia Attorney General Ken Cuccinelli, a Republican who took $55,500 from Thompson in 2009, at first resisted calls for him to return the money or donate it elsewhere but now has frozen the money in his campaign account until the Virginia investigation into the USNVA is complete.
Virginia lawmakers are pressing for a broader criminal investigation of the USNVA to be conducted by the State Police. Virginia U.S. Sen. Jim Webb has asked the IRS to investigate the group as well.
The national USNVA organization also made donations (PDF) to three veterans-related organizations in Hawaii, two veterans-related groups in Virginia, and two other nonprofits in Ohio in 2009—three states where investigations into the group began in 2010.
MINNESOTA CHAPTER EXPENSES RAISE QUESTIONS
The Minnesota Chapter of the USNVA was “organized” in 2003, according to its registration statement filed in February 2005 with then-Attorney General Mike Hatch’s office. The IRS granted the Minnesota Chapter tax-exempt status in a September 2004 letter.
“Based on your organization’s representation that at least 90 percent of its members are war veterans … donors can deduct contributions made to or for the use of your organization,” the IRS wrote.
For an organization that claimed to operate with an all-volunteer staff and only gave UPS mailboxes as its operating addresses, the USNVA Minnesota Chapter generated eye-popping operating expenses. Besides the $28,740 in “occupancy” and “rent/utilities and maintenance” expenses the group reported on state and federal forms from 2005-2009, the Minnesota Chapter claimed to have spent:
$177,809 on “management/general expenses”
$93,945 on travel and conferences
$74,703 on “accounting expenses”
$89,555 on “legal expenses”
$16,498 on telephone bills
The Minnesota Chapter claims to have spent $863,252 in “direct assistance” to “indigents, indigent families, U.S. Armed Forces service members or service member families” over that same period. Of that amount, the group claimed $315,086 paid for “in-kind service members’ care packages,” $152,910 for “shelter,” and $146,299 for “direct cash assistance.”
The Minnesota Chapter of the USNVA claimed to have:
provided money, food, medical and dental aid, shelter and in-kind gifts to 8,482 individuals.
provided “free counseling” to over 3,000 Minnesota residents.
provided free “psychological comfort and counseling to nearly 800 survivors of veterans.
provided “care packages” to over 1,600 armed forces members.
Yet no other state veterans organizations contacted claim to have heard of the USNVA, and the group isn’t even on the Veterans Administration’s official list of recognized veterans organizations. (Note; the USNVA was on the list of Dept. of Veterans Affairs service organizations for several years, but the VA took it off the list after the recent controversy surfaced).
Similar expense claims have been made in other states, but so far, the group has dodged requests to document them.
Other statements the group filed with its annual report and federal taxes should have raised questions. For example, the group claims on every federal tax filing:
“The organization did receive donated services and the use of materials, equipment and facilities at no charge, donated in all cases by Chapter Members, in the execution of all of its charitable program service activities, for which no tax deduction whatsoever was taken by any taxpayer. The value of these donations was: Priceless.”
WHERE IS ATTORNEY GENERAL LORI SWANSON?
The public silence of the Minnesota Attorney General’s Office on the allegedly fraudulent USNVA is curious. The organization’s Minnesota Chapter has already taken over $1.56 million out of the pockets of Minnesotans, for charitable expenses that leave much to the imagination. It’s been shut down and is under civil and criminal investigations in several states. It appears to have violated state reporting laws for charitable organizations multiple times. Its founder and national chairman, wanted in several states’ investigations, was last reported to be in Minneapolis on April 7 donating $10,000 to Michele Bachmann. And it continues to answer with a recorded message at a St. Paul telephone number.
Yet the AG’s Office has done nothing to warn Minnesota consumers about the group, even though they may still be operating in the state.
The response in other states has been markedly different.
In New Hampshire, for example, where an investigation into the USNVA was just opened last week, Attorney General Michael Delaney has publicly urged citizens to “exercise extreme caution before donating to this organization” and advised anyone receiving a solicitation from the group to contact the attorney general’s office immediately.
In Ohio, Attorney General Richard Cordray held a news conference about his investigation into the USNVA, which he described as a “sham veterans group tied to shady practices.”
Meanwhile, unlike the nearly $10,000 in “dirty money” that Bachmann took from convicted money launderer Frank Vennes Jr. in 2008, she is not returning the suspicious $10,000 donation she received from Bobby Thompson. Instead, Bachmann told the St. Paul Pioneer Press, the Republican congresswoman has merely “frozen” the funds in her campaign treasury.
“Congresswoman Bachmann believes people are innocent until proven guilty,” campaign spokester Gina Countryman said of Bachmann’s $10,000 donor on the lam.
Karl Bremer is a freelance writer in Stillwater, MN. He can be reached at saintcroix [at] aol.com.
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