Government officials and some veterans’ groups are warning donors to be mindful of the legitimacy of charities which may pose as helping veterans or target veterans for donations or for VA benefits.
The Federal Trade Commission, along with the National Association of State Charities Officials, promoted International Charity Fraud Awareness Week toward the end of October, warning donors of illegitimate charities that pose as well-known organizations.
In one such case in 2016, a group called Southern Maryland Veterans Association was issued a cease-and-desist order from Maryland Attorney General Brian E. Frosh (D) and Maryland Secretary of State John C. Wobensmith.
The association was accused of soliciting in front of grocery stores and distributing false registration documents that claimed that the organization was registered with the secretary of state, which it was not, according to a release from Frosh. Solicitation materials also included misrepresentations about a homeless shelter for veterans in Calvert County that did not exist.
After an investigation, the group was shut down and its principal, Dan Brashear, was indicted on criminal charges of embezzlement and several other charges relating to the group’s practices. Brashear entered a probation before judgement disposition to a violation of the Charitable Solicitations Act charge in February 2018.
In that case, Wobensmith issued a decision that upheld that the organization violated several sections of the solicitations act, including misleading potential donors, using false and misleading advertising, and failing to register with the secretary of state before soliciting.
Shortly after the criminal charges against Brashear concluded, the Federal Trade Commission entered litigation against several groups as part of its “Operation Donate with Honor” campaign. One such group was Help the Vets Inc., a Florida company founded by Neil Paulson Sr. of Orlando. In that case, Frosh joined five other state attorneys general along with the FTC, and Help the Vets Inc. was ordered to pay out $20,405,287, suspended to $72,122.36, the remaining assets of the company, and a total of $1.75 million to “legitimate veterans charities.”
The FTC’s complaint said the group took $20 million between 2014 and 2017 from donors “based on misleading promises to assist veterans with grants, medical care, a suicide prevention program, therapeutic family retreats, and similar programs.” However, the FTC said, “donations almost entirely benefited the private interests of Paulson and the professional fundraisers he authorized to perform the deceptive solicitations.”
The Maryland Secretary of State’s office noted online that scammers can use “sound-alike names,” which are similar to names of legitimate charities, and that donors should always research charities online before giving.
“They try to cash in because veterans give, and they give to other veterans,” Harry Metzler, the service officer for the St. Mary’s County Disabled American Veterans chapter, said.
Metzler and the chapter’s commander, Raymond Nahrgang, said they routinely receive calls from false charities that claim to be involved with the DAV, or have similar names. “These people try to imitate what we do,” Metzler said.
The DAV, an organization chartered by Congress following the first World War, provides assistance to veterans by helping them with benefit claims, providing rides to medical appointments and connecting veterans to employment.
Metzler said that most of what the DAV collects goes to veterans, and only a small fraction pays the organization’s staff.
“If in a charity, say only 40 percent goes to veterans and 60 percent goes in their pocket, that’s nasty,” Metzler said. The Maryland DAV spends 9.82% of its income on management and fundraising expenses, according to the Maryland Secretary of State Charitable Organization Division’s database.
“I don’t care where you go, what you do, these guys will prey on you.” Metzler said. “They need to be caught, and they need to be prosecuted.”
Veterans are tempting targets for fraud
Also in October, the U.S. Government Accountability Office delivered a report to Congress’ veterans affairs committee addressing financial exploitation schemes which targeted veterans.
The report says that VA officials and veteran service organizations, such as Disabled American Veterans and Veterans of Foreign Wars, identified suspicious practices such as veterans being charged inappropriate fees for assistance with benefits, being charged by financial planners for unnecessary services and companies issuing illegal, high-interest loans that they called “pension sales.”
In one Virginia case last year, the report notes, Future Income Payments LLC was ordered by Hampton County Circuit Judge Bonnie L. Jones to forgive over $20 million in debt to its borrowers and issue over $30 million as a civil penalty. Virginia Attorney General Mark R. Herring (D) said that company was “preying” on veterans by offering pension holders a quick lump sum of cash in return for their future pension and charging them with extremely high interest rates.
Scams can also target veterans by overcharging them for home care, or for services that they do not receive, according to the report.
The report said that VA forms “do not warn them about exploitation or scams” such as being charged fees for filing claims, and that the VA “does not always verify direct deposit information on applications, which could lead to payments being stolen.”
In response to the report, the VA wrote that additional warnings would be placed on forms, but that a completion date could not be determined at that time. The VA also wrote that the Veterans Benefits Administration would review direct deposit verification.
Checking up on veterans’ health care
As a major fraud case moves along in St. Mary’s County, the Department of Veterans Affairs Office of the Inspector General and the Department of Justice announced the establishment of the VA Health Care Fraud Task Force in October.
The task force will start out focusing on investigating and prosecuting health care fraud in the VA’s Community Care program, a program which allows eligible veterans to receive care from a private provider rather than a VA facility, according to a release from the Justice department. In that program, private medical professionals can submit a claim for reimbursement to VA.
Michael D. Nacincik, a spokesperson for the VA’s Office of Inspector General, said that health care fraud can take multiple forms. He said that fraud cases can involve “bribes or kickbacks” paid to VA medical professionals as well as false claims submitted to the VA by private medical professionals, medical suppliers and by veterans or other patients.
Nacincik said that a special prosecutor has not been selected, but that there will initially be one special prosecutor designated for VA health care fraud, but that the number of positions “may expand as the task force develops.”
In St. Mary’s County, three residents were indicted by a federal grand jury in September for allegedly defrauding $820,000 from the VA and the Social Security Administration.
They were indicted by a federal grand jury in September on charges that allege one was the center of a conspiracy to submit fraudulent medical records to the VA.
The three entered pleas of not guilty in October. The case is being prosecuted by Michael Davio, a special assistant U.S. attorney who focuses on Social Security fraud.
Nacincik said that the office could not confirm or deny the OIG’s involvement in the active investigation.