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Senator to IRS: Investigate the U.S. Navy Veterans Association

TAMPA — In a letter asking for an IRS inquiry, U.S. Sen. Jim Webb on Friday questioned the legitimacy and claims of service by the U.S. Navy Veterans Association, a charity founded in Tampa that has been shut down in three states.

Webb, a Virginia Democrat and former secretary of the Navy under President Ronald Reagan, told IRS Commissioner Douglas Shulman that he decided to seek an IRS investigation of the Navy Veterans after reading "alarming reports" that the charity's officers cannot be found and that its multimillion-dollar expenditures cannot be accounted for.

Webb attached to his letter a recent St. Petersburg Times story that dissected the tax return the Navy Veterans Virginia chapter filed for 2009. The return states that volunteers gave $5 million worth of free services to 2.2 million Virginia residents last year.

That would mean almost one in every three people in Virginia got services or that the group served more than 6,000 Virginians every day of the year.

"There is little evidence of services being provided on such a vast scale,'' Webb wrote to the IRS.

He said, "Investigators have been unable to locate individuals who purportedly serve on USNVA's various boards of directors because addresses and other legally required information have not been accurately documented in the organization's tax filings.

"Despite these alarming reports, tax records indicate that the USNVA has solicited millions of dollars from Virginians and residents of other states for its programs,'' Webb wrote. "I know you share my concern that we should minimize the opportunity for unscrupulous organizations to mislead or exploit our nation's veterans."

Also on Friday, the attorney general of Ohio ordered the group to stop all fundraising there after state investigators were unable to find any of its Ohio state chapter officers. Ohio officials said they found the addresses for all three officers to be UPS mailboxes and the phone numbers on registration papers to be "cell phones that connect to the same voice mailbox for the U.S. Navy Veterans."

"If the Association does not immediately cease and desist any and all solicitation in Ohio, we will seek any and all appropriate relief, including injunctive relief,'' said the letter from Attorney General Richard Cordray to the Navy Veterans.

Asked to comment, Navy Veterans general counsel Helen Mac Murray did not address the news but said by e-mail: "My client welcomes your comment on the skinny gray-haired white man in navy blue Impala" who today "followed around a terrified USNVA volunteer who is eight months pregnant with a high-risk pregnancy."

(The Times has not followed anybody, and Mac Murray declined to elaborate.)

In a posting on its Web site this week, the Navy Veterans explained why no one has been able to locate its key officers.

The board of directors has "chosen to go to great lengths to protect their privacy,'' the posting reads, "because some members of the public have verbally threatened board members" and because "members of terrorist organizations have personally attacked the Association."

The board of the Navy Veterans "decided a long time ago that they would release their phone numbers and addresses only when required by law,'' the posting says.

The group bills itself as "nationally recognized U.S. Department of Veterans Affairs Veterans Service Organization," with 41 state chapters, more than 66,000 members and $22.4 million a year in income that it says it uses for gifts to military personnel, veterans and their families.

But the Times found little evidence of the nationwide charity. Its officers, directors and auditors were nowhere to be found, its offices a network of rented mailboxes, its records kept secret.

Of 85 officers listed on tax papers, the Times could find just one, founder Bobby Thompson, who lived in a $600-a-month Ybor City duplex. He said he is a retired Navy lieutenant commander and "trust fund baby" who poured more than $180,000 of his own money into political campaigns.

Last year Thompson gave $67,500 to Virginia politicians, and the Navy Veterans hired three lobbyists to seek passage of a bill exempting veterans groups from having to file registration papers and financial reports with the state.

The bill sailed through the Virginia General Assembly 140-0. Someone e-mailed the Times articles to Virginia lawmakers, and the bill's sponsor, state Sen. Patsy Ticer, asked Gov. Bob McDonnell to veto her own bill. He had already signed it.

On May 10, the Navy Veterans sent Virginia regulators a letter saying its Virginia chapter intended to begin fundraising again and would use the newly established exemption. It included a tax return for the Virginia chapter for 2009.

It was signed by "Allan Rosellini, CEO" of the Virginia chapter, a Navy Veterans volunteer with no home listing, phone number or property records in Virginia.

The tax papers said the Navy Veterans chapter, though raising funds for only the first six months in 2009, brought in $2.6 million during the year.

The tax return says the Virginia chapter gave more than $1.63 million of "direct assistance" to veterans and military families but disclosed just three specific grants of $2,500 each.

Where the rest of the $2.6 million went is a mystery; the Navy Veterans says it cannot identify any recipient because of privacy issues.

The tax return says the group has 1,000 members in Virginia, with offices and home offices located throughout the commonwealth, so "there is understandably no central depository for all these documents."

Last week, Sen. Webb asked the U.S. Department of Veterans Affairs to review the listing of the Navy Veterans Association on the VA's website and to review its procedures for screening service groups before placing them on the department's site.

The VA, which says its listing does not imply any endorsement of a service group, immediately removed the Navy Veterans Association from its website and said it had begun a review of the charity and of its own procedures to screen veterans organizations.

Jeff Testerman can be reached at testerman@sptimes.com or (813) 226-3422. John Martin can be reached at jmartin@sptimes.com or (813) 226-3372.

Multiple investigations

On March 21, the St. Petersburg Times published stories that examined the legitimacy of the U.S. Navy Veterans Association and questioned why a search for the 85 officers on Navy Veterans federal tax returns turned up only one: Bobby Thompson. At least six states have since taken action.

. April 1: New Mexico orders the Navy Veterans to cease and desist operations there, after determining officers' names and addresses listed on tax returns are "fictional." Its attorney general continues to investigate.

. April 7: Florida consumer service officials confirm they have opened an investigation. Later, Attorney General Bill McCollum opens a separate investigation.

. Mid April: Missouri opens an investigation.

. May 17: Hawaii determines Navy Veterans is not legally registered and orders the group to stop fundraising there.

. May 18: Sen. Jim Webb, a Virginia Democrat and former secretary of the Navy, asks the Department of Veterans Affairs to review how it screens veterans service organizations listed on the VA website. The VA removes the group from its website listing of veterans service organizations and begins its own review.

. Thursday: The Roanoke Times reports that Virginia's consumer affairs agency is investigating the Navy Veterans.

. Friday: Webb asks the Internal Revenue Service to investigate the charity. Also Friday, Ohio Attorney General Richard Cordray orders the Navy Veterans to stop fundraising there after determining that the group's registration documents "contained false and misleading information."

Senator to IRS: Investigate the U.S. Navy Veterans Association 05/28/10 [Last modified: Saturday, May 29, 2010 4:13pm]
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