Texas Sues 'Veterans’ Group' for Alleged Deceptive Practices
by Bob Price on March 24, 2014 at 2:03 PM
In defending the honor of veterans, Texas Attorney General (AG) Greg Abbott this week filed a lawsuit against The Veterans Support Organization and four individuals for allegedly violating the Texas Deceptive Trade Practices Act (TDTPA) by falsely representing the method of solicitation of donations and how the funds were actually used.
In a copy of court documents obtained by Breitbart Texas, the AG’s Office filed suit against The Veterans Support Organization (VSO), a Rhode Island 501(c)(3) organization and four officers, CEO Richard Vanhouten, Administrative Director Michelle Vanhouten, Director Steven Casella and Director Robert Cruz. The suit against the organizational officers was filed against them both in their position with the organization and as individuals. All four of the individuals were listed as Florida residents. The organization was shown to have operating locations in Austin and Houston.
In a statement sent to Breitbart Texas today, the AG’s office said “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’.”
An investigation by the state revealed the defendants raised more than $2.5 million in Texas between 2010 and 2012. “More than 70 percent of the funds raised in Texas,” according to the AG’s Office, “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 filed documents allege several violations of Texas law pertaining to how organizations claiming to be “Veterans Organizations” can operate. The lawsuit claims the defendants represented to the general public that its charitable purpose was to support homeless veterans and provide them housing and a work program. The suit further claims out of the $2.5 million raised over a two year period, only $56,993.69 (2.24 percent of funds raised) was spent in the form of grants to Texas veterans. The lawsuit also claims while the defendants did pay their Texas “work program participants, they only paid them to raise the actual $2.5 million.
The lawsuit states, “The records for 2010 and 2011 show that Defendants ‘helped’ jobless individuals (both veterans and non-veterans) by hiring them to solicit on behalf of VSO; VSO paid the solicitors $417,180.00 in 2010 and 2011, which is 16.7% of the total Texas donations.” This left over 70 percent of the funds to be sent back to Florida and Rhode Island. This contradicts the published purposes of the organization that funds were raised to support local veterans.
The lawsuit attached below this article, provides much more detail about the methods of solicitation and expenditures of funds. It claims the actions of the defendants violates the TDTPA, the Texas Business Organizations Code and the Texas Occupations Code. It further claims fraud, negligence and a violation of constructive trust. The lawsuit seeks damages from the Defendants in the form of all monies fraudulently solicited in Texas, together with all proceeds, profits, income and interest received. The recovered funds would then be used in Texas for their stated mission of helping needy veterans and their families. The lawsuit seeks the collection of a $25,000 bond that was issued by the Great American Insurance Company to VSO.
The Texas AG’s Office is seeking civil penalties against the Defendants of up to $20,000 per violation of the Texas Business and Commerce Code and $10,000 per violation of the Texas Occupations Code and that the defendant’s charter to conduct business in Texas be revoked.
“We owe veterans in our country a debt of gratitude, and when well-meaning Texans open their hearts and their wallets, they should be confident that the hard-earned money they’re donating will go to the cause they choose to support,” Jerry Strickland with the Texas Attorney General’s Office told Breitbart Texas.