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A Times Editorial

Tracking down a scam, and some answers

Now maybe there will be some answers about how the man known as Bobby Thompson managed to run a fake charity from Tampa known as the U.S. Navy Veterans Association, eluded prosecution for years and took millions from donors who thought they were helping needy veterans. U.S. marshals found Thompson coming home from a bar late Monday in Portland, Ore., and took him into custody without incident. While the nationwide manhunt has ended, there are more questions to be asked and federal and state reforms to be pursued before the final chapter of this scam is written.

Thompson drew the attention of federal and state regulators only after the Tampa Bay Times' Jeff Testerman and John Martin exposed his operation in a series of articles that began after the Times sought Thompson out in 2009 about a contribution to a local election campaign. The man who referred to himself as Lt. Cmdr. Bobby Thompson stole the name and title, and authorities said Tuesday they still do not know his real name.

What is known is that Thompson ran a front out of an Ybor City duplex that stole millions from unsuspecting contributors. While the Navy Veterans reported raising tens of millions of dollars and having thousands of members over an eight-year period ending in 2010, almost the entire operation was a fraud. Testerman and Martin found no evidence that members of the national board of directors or state officers listed on the association's website even existed. National and state offices were UPS mail drops, and little money went to veterans as Thompson contributed nearly $200,000 to political candidates in Florida and across the country. Yet Thompson and the Navy Veterans managed to operate in the open without a hint of concern from state or federal regulators.

The entire episode is a highlight reel for defrauding the well-intentioned without fear of being caught. The Internal Revenue Service approved the group's tax-exempt status in just 33 days. That's not surprising, as one study shows the IRS approves nearly 98 percent of applications for tax-exempt status in a review process that is cursory at best. As the Navy Veterans reported in tax returns more than $100 million in income over eight years, regulators still took no interest until the Times began writing about the organization. That's not surprising, either, since only a tiny fraction of the IRS's criminal cases involve tax-exempt groups.

While the criminal case plays out, Congress and the Florida Legislature still need to reform the way charities are regulated and policed. Congress could consider creating a public-private agency to regulate charities that could work with the states and avoid the IRS privacy rules that make it hard to connect the dots. Adam Putnam, who heads Florida's Department of Agriculture and Consumer Services, told the Times editorial board on Tuesday that he is interested in reviewing the state's oversight of nonprofits. That's good, because the scourge of fraudulent charities did not disappear with the Navy Veterans.

Law enforcement officials who tracked Thompson from Rhode Island to Oregon say that sometime after leaving Florida, the fugitive started a new nonprofit in Rhode Island: Plymouth Rock Society of Christian Pilgrims.

Tracking down a scam, and some answers 05/01/12 [Last modified: Tuesday, May 1, 2012 5:22pm]
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