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Multimillion-dollar nonprofit charity for Navy veterans steeped in secrecy

First of two parts

Suppertime on a Sunday evening, a phone rings in suburban Tampa. Some 1,200 miles away, in a call center in Michigan, a cheerful telemarketer starts his pitch for a donation to the U.S. Navy Veterans Association.

Our troops in Iraq and Afghanistan need your help, he says. Any donation, even $20, would help pay for care packages.

He says the Navy Vets group has a long history. "They have a main office right there in Tampa. They really are on the up and up.''

How much of the donation gets to the Navy veterans, the homeowner asks, and how much goes to the telemarketer?

"That's a good question, I'm glad you asked. Hold the line and I'll get a supervisor.''

The supervisor says 20 percent goes to the charity. When the home­owner presses for more details, the line goes dead.

Other questions about the nonprofit went unanswered as well. In a six-month investigation, the St. Petersburg Times could find only one officer in the entire organization, and the nonprofit declined to reveal where its millions of dollars of income went.

• • •

On its Web site and in tax papers filed with the IRS, the U.S. Navy Veterans Association represents itself as having a rich heritage of charitable giving that annually provides millions of dollars in assistance to veterans, their families and America's military troops at war. It says its all-volunteer staff and 85 officers run a national headquarters and state chapters across America.

Since 2002, when the group told the IRS that a handful of volunteers spent $6,703 for groceries and medical care for veterans, the association said it has grown to more than 66,000 members, with 41 state chapters and more than $22.4 million in annual income. It says its five-member executive board and 12 key officers work out of the national headquarters on M Street in Washington.

In the eight years since the IRS certified the group as a tax-exempt charity, there is little evidence that regulators ever questioned its governance, spending and stated accomplishments.

But try to find the group — its directors and its officers, its money and its records — they're all but invisible.

The Navy Veterans Web site quotes Jack L. Nimitz, the association's CEO since inception, saying he "does not like to pull rank … has a lack of admiration for those who do on the officers' boards of other veterans' organizations.'' In the posted photo he's posed in a navy blue blazer and tie, and his bio says he's a lifelong Texas resident, retired naval reservist and now private investment banker.

The Times searched for Nimitz for six months but could not find him or 83 other executives and state officers whose names appear on tax forms filed with the IRS. The newspaper searched directories and online public records databases, including property records, court records and voter registration records.

The Times also searched LexisNexis, an online full-text database of news and periodical articles and broadcast news transcripts. Nimitz, the head of a nonprofit that boasts 66,000 members and millions in annual revenue, was never profiled or quoted.

Through the association's general counsel, the Times asked to speak to Nimitz, if for no other reason than to demonstrate that he exists. He was never made available to talk, by phone or in person.

The association lists its national headquarters at 1718 M Street NW, Suite 275, which is rented mailbox number 275 at a UPS shipping store.

Most state chapter addresses listed on tax documents also are rented mailboxes, and the Times could not verify the few conventional street addresses listed. In New Mexico, for example, state chapter commander Howard Bonifacio's home is said to be at 388 Boutz Road in Las Cruces.

But the address does not exist in public records in Doña Ana County. If it did, Bonifacio's home would sit on a parking lot adjacent to a car dealership.

None of the three officers listed in Florida registration papers could be found. One had a nonexistent address on East Lake Pine Way next to a Tarpon Springs condo, the second was listed at an Orlando condo that has no owner by that name, and the third listed his address as the Hilton in downtown Miami.

In the end, the searches for people and documents all came back to one man, the association's director of development, Bobby Thompson, and one place, his $1,200-a-month rented duplex across from the Cuesta-Rey cigar factory in Ybor City.

Thompson lived in the left side. The right side he used as offices, for the Navy Veterans Association and for NAVPAC, a political action committee that he helped found over a decade ago and that claimed 16,000 members.

After the Times started asking questions, NAVPAC shut down and donated its remaining $16,595.35 to the Navy Veterans Association.

And Thompson, who had lived in the duplex for a decade, cleared out. His landlord said he left no forwarding address.

Secrecy rules

How do charities earn public trust? Openness, accountability, independent audits.

Here's what we know about the Navy Veterans Association:

• When the IRS certified the group as tax-exempt, the association became subject to federal tax laws that require public disclosure of tax documents.

The association denied the Times' request for the records, maintaining it is exempt from disclosure because its staff is all-volunteer. A former top IRS official says there is no such exemption.

The group reported $4.58 million in income from its Florida chapter in 2008 and $17.82 million from its other chapters. It said it donated about 1 percent to needy beneficiaries and said the other 99 percent went for administrative costs, educational materials and "direct assistance'' to veterans and their families.

By e-mail, the association said it had "tens of thousands'' of expense records that document everything. The group would not discuss details, disclose where the records are stored or let the Times review a single receipt.

• To gain premium placement on GuideStar, a Web site that gathers and publishes information about nonprofits, the Navy Veterans Association submitted an audit that the Better Business Bureau had rejected because it did not meet "generally accepted accounting principles.''

The Navy Veterans posted the GuideStar exchange seal on its Web site and said GuideStar had "accredited'' the association and given it a "prestigious honor.''

None of that was true.

A spokeswoman said GuideStar does not accredit any organization and did not endorse the Navy Veterans. It had the group take down the GuideStar exchange seal from its site but allowed the nonprofit to keep the GuideStar logo there as a link.

The audit the Navy Veterans submitted to GuideStar was signed by Cee Smith, whose letterhead says he's a CPA with an office at the World Trade Center, Two Canal Street, New Orleans.

But the building managers there say Cee Smith is not in their records, which go back three years. The state of Louisiana has not issued a CPA license to a Cee Smith, nor is he a member of the Society of Louisiana CPAs.

Why was there no record of Smith at Two Canal Street? Via e-mail, the association said Smith was "probably orally subleasing briefly" in the office building. And, "We wouldn't give his address to you if we did have it."

Smith is described on his letterhead as a disabled veteran. The Navy Veterans said he had rejoined U.S. armed forces on active duty, and his whereabouts were unknown.

Nor could the Times find the Navy Veterans' internal auditor, Deborah Johns. The Institute of Internal Auditors lists one person in the United States by that name — spelled Debora Johns — the head auditor for public schools in Richmond, Va. She said she has done no work for the Navy Veterans and has "never heard of that Deborah Johns.''

The Navy Veterans wouldn't supply contact information for Johns and said it would release a copy of her audit when "pigs fly.''

The association said the Times has it all wrong. Its members exist, 66,000 strong, as do the state officers and the executive board. It's just that none of them wanted to participate in the newspaper's "character assassination" and "McCarthy-like witch hunts."

After a single interview with Thompson, he directed that all questions be e-mailed to the association's general counsel, Helen Mac Murray, in New Albany, Ohio. Responses were e-mailed back through Mac Murray or via Federal Express and signed by association officers the Times could not locate.

Their people are all out there, the group said via e-mail, their nonprofit is beyond reproach. "We are a great charity.''

At the ATM

Late afternoon, Feb. 21, 2008, customers at the ATM outside a downtown Wachovia bank called Tampa police to report a ponytailed man with a stack of debit or credit cards making transaction after transaction.

The police report said the waiting customers "became suspicious of the subject's behavior and called police."

The man identified himself as Bobby Thompson, a director with the U.S. Navy Veterans Association, and he said "his job required him to have multiple credit cards and he was trying to make several transactions in a row.''

He told police he had no next of kin and refused to provide a friend's name in case of emergency. He said he had several homes, the primary one in Tampa. He gave a business address on West Waters Avenue that is a mailbox at a UPS store.

Officers checked the cards, all were in Thompson's name. They found no reason to detain him.

The rules

The IRS certification of the Navy Veterans as tax-exempt meant those who donated to the charity could take a tax deduction. It also subjected the group to tax laws that require disclosure of documents.

Within 30 days of a written request, a nonprofit must provide copies of its original application for tax exemption and its last three annual tax returns, called 990s.

The Navy Veterans Association said it's exempt because it uses only unpaid volunteers.

But Marc Owens, who headed the IRS's Exempt Organizations Division for 10 years, said, "There is no exception from the disclosure requirement for organizations that operate with volunteer labor." (Now a lawyer in private practice, Owens' clients include the Poynter Institute, which owns the Times.)

The head of the Better Business Bureau's Wise Giving Alliance, Bennett Weiner, has monitored hundreds of charities. How many keep their financial records secret and their directors under wraps?

"I haven't heard of such a thing,'' Weiner said. "If that's the case, it's most extraordinary."

"Most organizations will allow their directors to speak. Over the years, we have seen many organizations in controversies or troubles, but even in those circumstances, these organizations will deal in an open fashion to try to show good faith about issues raised. The fact is, silence does not instill greater trust."

Face to face, once

In the August heat, cell phone to his ear, he paces the sidewalk outside the faded maroon doors of his duplex.

"That's right, the U.S. Navy Veterans Association,'' he says into the phone. "Send it to my attention, Commander Bobby Thompson."

A no trespassing sign warns, "Security Provided by Smith and Wesson." A barbed-wire fence runs behind the cigar factory across the street.

By phone the day before, Thompson told a reporter that the association never makes political contributions and did not contribute the $500 reported by Kevin White, who is running to keep his Hillsborough County Commission seat. Thompson said the donation was a check from his personal account.

Now the reporter asks if Thompson has a copy of the canceled check. For 10 minutes he lectures the reporter. He says he doesn't have the canceled check, his bank doesn't do that for him. "Get it from Kevin White. He should have a copy."

A background check on Thompson included the possibility that he was from the Choctaw tribe in Mississippi. Is that him?

"I am one-sixteenth Choctaw. But the Bobby Thompson you're talking about is a relative of mine. That's not me."

Thompson says his credit information has been corrupted so that any check on his ID leads to four separate people.

Getting nose to nose with the reporter he answers a question that had not been asked: "I'm not involved in casino gaming, and I have never spoken to Kevin White about casino gaming."

Thompson wants one point made absolutely crystal clear: "Our group (the Navy Veterans) has never made a contribution to any candidate for office, ever.''

What about Thompson's Navy background? He stifles a laugh. "Lt. Commander, Navy Reserves, retired," he says, and disappears into his duplex.

Questions through Ohio

The next day, Thompson called the reporter, unsolicited, said he had spoken with White and realized he had misspoken. He said he used cash to buy a $500 money order he sent White with his business card attached. White's campaign mistakenly reported it as from the Navy Vets.

After the story was published, Thompson accused the reporter of racism, misrepresenting facts and casting the article with a fraudulent slant.

"In my official capacity with the U.S. Navy Veterans Association, over the past 10 years, I have given hundreds of interviews with media reporters,'' wrote Thompson. "I have never come across the likes of this approach by this reporter, a palpable slant or misreporting and omitting facts with the strong and clear smell of somebody out to 'get' somebody else."

A search of thousands of newspapers and periodicals in the LexisNexis database showed no mention of Thompson in connection with the Navy Vets.

Thompson declared that nobody in the entire association would speak to the Times — ever because of its history of using "questionably acquired information to cast wrongful and perhaps defamatory aspersions on others.''

He directed that any questions be sent to Mac Murray, the general counsel. She wrote that the Navy Veterans had "no legal or moral obligation to respond at all to reporters'' and said she had advised her client not to answer anything.

But she continued to forward e-mails, and often included language making clear the responses were not her words, nor were they Thompson's, they were the statements of the association as a group.

The Times never asked if the Navy Veterans was just a one-man operation. But through Mac Murray, the association kept issuing statements denying it was.

One said, "It would be difficult for any reasonable person to believe that an organization with this gross documented income over time, with the documented program activity achievements this organization has carried out over time'' could be "managed, legally or in fact, by one person."

Another referred to the group's extensive Web site and said it would be "impossible to maintain that the varied, detailed, analytical and rich journalistic content of these Association's primary purpose materials were all put together by one person, or even a small group of people, as opposed to key Association staff and officers numbering at least in the thousands."

Telephone solicitors

DeShawn Marie Chesley, a 40-year-old mother of two, began getting calls last summer asking her to donate to the Navy Veterans Association. A brochure mailed to her home in Phoenix said, "Our troops don't wait to do their part. Please do not wait any longer to do yours.''

Chesley wrote a letter of support to Nimitz, the Navy Veterans CEO, saying she had friends and family in the military and was grateful "they have someone like you and your group in their corner." But Chesley, whose husband does landscape work, couldn't afford to make a pledge.

The telephone solicitors kept calling.

"There was a period I felt really pressured,'' Chesley said. "They kept hounding me for the money. For a while, it seems like four of them were calling every day."

She tried to reach Nimitz at the Navy Veterans phone number in Washington but couldn't get past voice mail.

"I try to watch out for scams,'' Chesley said. "I couldn't find this Nimitz anywhere."

Complaints like Chesley's are what attracted state regulators last spring to investigate the two telemarketing companies used by the Navy Veterans and other nonprofits, including the National Children's Leukemia Foundation and a host of organizations representing firefighters and law enforcement.

Associated Community Services, of Southfield, Mich., handles most of the fundraising for the Navy Veterans. In May 2009, the attorney general of Connecticut filed a lawsuit that alleged the company "knowingly broke the law," called consumers on the "do not call" list and used repeated, harassing calls to collect pledges. The attorneys general of Missouri and South Carolina made similar allegations.

The company settled the charges last summer; it paid fines and promised to comply with state requirements.

Some 35 states alleged that the second company, Community Support Inc. of Milwaukee, used solicitors who masqueraded as veterans, misrepresented the percentage of donations that would go to charities and told residents they were responsible for pledges they had never made.

The company agreed in May 2009 to cease using deceptive fundraising practices and to reimburse the states $200,000 for investigative costs.

Chesley doesn't know which company called her. Neither company returned calls from the Times to discuss the state accusations.

The Navy Veterans would not discuss the companies, except to say their activities are protected free speech and money they raise helps finance services for veterans.

Charity Navigator, an independent charity evaluator, says its favored charities pay fund­raisers about 12 or 13 percent. And Leslie Lenkowsky, a professor of public affairs and philanthropic studies at Indiana University, said "many people think 25 percent is a reasonable amount."

The Navy Veterans pays a premium for the fundraising dollars it gets. According to contracts filed in Florida and Arizona, for every pledge, the company keeps 60 percent.

After "administration and overhead'' is included, the figure goes even higher, to 80 percent. That's what two officials at Associated Community Services, Kyle Phillips and Brian Downs, told a Times reporter after their company called him at home, apparently at random.

Where is everybody?

The 2008 tax return for the association's national chapter says the group used about 1 percent of its $4.2 million in income for cash grants to paralyzed veterans, public broadcasting stations and other nonprofits.

The other 99 percent paid for administrative expenses, educational materials and "direct assistance" to veterans. The group said it can account for all the money, but it won't share any of the documentation.

The association, for example, told the IRS it spent $467,215 for accounting in a two-year period but declined to tell the Times what the money was for and who got it.

In Texas, state law requires that those who get assistance from a nonprofit to sign receipts and that audits be made public. Because of such requirements, the Navy Veterans says the group won't do business in Texas and calls the rules "discriminatory.''

"My experience with other veterans charities is that they are usually eager to feature individuals who have received support and to show where the funds are going,'' Weiner said. "It's a way of demonstrating to the public their generosity.''

Citing attorney-client privilege, Mac Murray declined to say if she had spoken to any Navy Veterans director other than Thompson. Samuel F. Wright, a retired Navy captain who lives in Virginia and is the association's special counsel, gave the same answer and hung up on a reporter.

Day after day for weeks, a reporter dialed the association's main number in Washington and asked to speak to any of the 11 officers other than Thompson. Each time the operator said the officer sought — Nimitz, secretary Brian Reagan or anyone else — was not in but a message could be left on voice mail. Each time, the operator said the person shared voice mail with Commander Bobby Thompson, and "the message you will hear is Thompson's."

In an e-mail through Mac Murray, the group explained the newspaper's futility in finding people:

"In each and every case, your investigation is flawed. You haven't the tools or the ability to come up with the right organization, contacts or information; people don't want to talk to you because of your disreputable tactics and stories and biases: many of the people you do talk to don't have the resources to give you accurate information: and regardless of whether you are working off accurate or inaccurate inputs, your conclusions are always accusatory against your target, as opposed to being the result of objective analysis."

Good works

Clarence "Butch" Durrance, a 59-year-old Army veteran, says he found the perfect sponsor for the Fourth of July barbecue he put on for the injured war veterans at the James A. Haley VA Medical Center in Tampa.

The Navy Veterans Association had solicited Durrance, who sent a check for $200. The Navy Veterans ended up giving him $1,700 for the barbecue.

"Your gracious help shows you pay more than lip service to the cause of supporting our veterans,'' Durrance wrote in a thank-you note posted on the Navy Veterans Web site.

Lon Henke, a Navy veteran of the Vietnam War, suffered a stroke during a trip to South Florida in 2008. His family found the Navy Veterans charity on the Internet. The nonprofit paid for an air ambulance transport to take Henke home.

"Lon Henke's family and friends are forever in debt to you and the U.S. Navy Veterans Association,'' Henke's wife, Sherry, wrote to Thompson. "You brought Lon back from Miami to Illinois at a time when it seemed impossible to do, adding a ray of sunshine to the bleakest days in our lives."

In 2008, the Navy Veterans wrote checks that totaled $26,965 to, among others, a paralyzed-veterans group in Washington, the U.S. Naval Academy, the USO and WEDU-Ch. 3 in Tampa.

On the Department of Veterans Affairs' Web site, the Navy Veterans Association is listed among organizations that offer veterans services. Spokeswoman Josephine Schuda said the VA's Web listing is for reference purposes and "does not constitute an endorsement" of the organization.

Modest digs, big money

Thompson does not have a Florida driver's license. His state ID card puts his age at 63 and lists a rural address in Macclenny, in Baker County, west of Jacksonville.

He lived in Ybor City for a decade, in the duplex at 1626 E 17th Ave. His landlords say he paid his rent on time, usually in cash.

From these modest surroundings, in eight years since founding the Navy Veterans Association, Thompson has written at least $180,000 in personal checks to dozens of political candidates nationwide.

The Navy Veterans Web site described him as a lifelong Tampa resident. Despite his avid participation in politics, Thompson did not register to vote in Hillsborough County until 1998, when he would have been in his 50s.

In a letter to the Times, the Navy Veterans told of Thompson meeting and being photographed with politicians, from Hillsborough Commissioners Brian Blair, Kevin White and Jim Norman, to Govs. Mitt Romney and Bobby Jindal, to President George W. Bush.

Thompson's business card pictures him with Hillsborough County Sheriff David Gee, after Gee accepted two $250 donations from the Navy Veterans Association for Florida Sheriffs Youth Ranches. The type next to the photo reads, "Good Friends Are Hard To Find."

Asked about the business card, Gee said: "I don't know the guy."

Tom O'Daniel, whose South Daytona business collects donated cars the Navy Veterans can liquidate for cash, said he enjoys working with Thompson because he's "a stickler for detail."

O'Daniel, who said he attended a Daytona 500 stock car race with Thompson, described him as "politically very conservative and passionate about veterans affairs."

The Navy Veterans Association is also passionate. It says it won't take money from the United Way because it supports Arab and Muslim groups. The association says groups in the Middle East have tried to sabotage its Web site more than 200 times and ought to pay a stiff price, which the association included in a statement appended to its 2008 tax return:

"If we had a policy in place as a matter of foreign policy, similar to, or analogous to, or directly related to, the same policies for American malfeasors in this regard, we would land the 82nd Airborne Division on top of any person, be he or she 13 years of age or older in whatever foreign country he or she lives, who sent a virus or any form of malware into any computer hard drive in the United States of America, with instructions from the president of the United States to kill that person, and to kill any other person in that country that got in the way of killing that person, including the armed forces of such a country.

"Then our armed forces could leave with a note put behind on such a person's desk. 'Do not mess with the United States of America or its computer hard drive system; we are gone now, but do it again and we will be back.' ''

Thompson told the Times he was a lieutenant commander in the Navy reserves. Others say he told them he was on active duty around the world. Thompson won't say where or when he served.

The Times could find no military record showing active service. The newspaper was assisted by the POW Network, a nonprofit veterans rights group expert at verifying military records. Using Thompson's voter registration data, the POW Network's Mary Schantag wrote the Military Personnel Records Center in St. Louis.

Archivists there could find no record that Thompson was on active duty. The record section reported that it had also checked with the FBI, "but this agency was not able to furnish any data indicating the veteran served in the U.S. Armed Services."

Advised that the Times and the POW Network could find no trace of Thompson's military background, the Navy Veterans answered via e-mail through Mac Murray: "Mr. Thompson joined the Navy under age," and it's doubtful the newspaper could find his military records because "not only did you not have the numeric identifiers, you did not have the nominative ones either."

The association declined to help verify Thompson's military background but said it "is confident that Thompson did not lie about his service or rank to anyone.''

The Times asked about the "other homes'' Thompson told Tampa police he owned the day they questioned him at the ATM. The association wouldn't say where the homes are but wrote that "none of them are mansions.''

"Although we are aware Thompson did and does have outside sources of income," the group said, he lives humbly, "liking to resemble and feel comfortable with many of the homeless veterans he cared for: no yachts, no gambling, no vacations in the Bahamas, no diamond rings, no Rolexes."

Thompson asked four people to vouch for him. One each in California and England confirmed his membership in Britain's Royal Naval Association, a group that says it accepts anyone who pays the dues and is in accord with the group's principles.

The other two Thompson asked to speak up for him are officers of System4, a commercial cleaning business that cleaned Thompson's rented duplex for free. Franchise owner William Cook said he believes in veterans causes and has faith in Thompson.

"Commander Thompson is the real deal,'' Cook said. "If anything was found out about Bobby Thompson, a thousand people would stand up for him."

Questions, then cash

Because of the Times' "witch hunt,'' the Navy Veterans said, those in need have suffered. Responding to the newspaper cost the nonprofit "well over $150,000'' in legal fees and volunteer man-hours, diverting dollars that otherwise would have gone to needy groups. That included $20,000 that had been intended for the Tampa Bay Harvest "to feed homeless veterans locally this holiday season.''

The Tampa Bay Harvest tells a different story.

The volunteer group annually gathers and distributes some 1,500 tons of surplus food to the needy. Last year, having lost a major part of its funding, the group pleaded publicly for help. A Sept. 27 Times story was headlined, "Hard times for harvesters."

The next day, a Navy Veterans representative brought a $20,000 check to the home of Tampa Bay Harvest executive director Will Carey, an amount that represents about 40 percent of the Harvest's annual budget.

"Literally 24 hours after that article, they showed up at my door,'' Carey said. "They had read the news story. They said, 'We heard you were in trouble; here's a check.' "

Carey asked the check courier if he might make a presentation to the Navy Veterans board to seek future funding. Carey said the woman "steered" him away from meeting with the board, advising that new funding would be "up to Commander Thompson."

On Sept. 23, the Times published a feature about Sew Much Comfort, a nonprofit that delivers custom clothing to the disabled. The article highlighted Tampa volunteer Diana Anderson. The next day, Anderson said, her home office e-mailed her that the Navy Veterans was giving the group $20,000.

That made two $20,000 grants in five days. In the nearly seven years before the newspaper started asking questions, the Navy Veterans Association never made a grant higher than the $14,000 it gave Tampa's WEDU-Ch. 3 in 2008 and two $10,000 awards in 2007: to the Flight 93 National Memorial and to a veterans center in St. Paul, Minn.

In late December, through Mac Murray, the Navy Veterans wrote to Times management, demanding payment for a $36,099 legal bill it said was caused by the newspaper's inquiry. The group said it had produced an internal file of more than 10,000 pages — and found nothing amiss.

"Our investigations have all concluded, at this point, that the Association did nothing wrong,'' the e-mail said. "Our accomplishments are all actual and real, and we continue to be proud of all of them."


Tomorrow. Following the money: politics and Bobby Thompson.

Jeff Testerman can be reached at (813) 226-3422 or Researcher John Martin can be reached at (813) 226-3372 or

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