For many donors, Help the Vets sounded like a great cause: The group said contributions would benefit disabled veterans by helping pay for medical care, assist with suicide prevention, even fund family retreats.
As it turned out, however, Help the Vets was a “sham charity” that primarily benefited its founder and president, Neil G. “Paul” Paulson, who raised $11 million over three years by misleading soft-hearted contributors, according to a complaint filed Wednesday by federal and state authorities.
Fed up with charitable scams that exploit public sympathy for veterans, the Federal Trade Commission struck back Thursday by unveiling Operation Donate with Honor, a sweeping campaign aimed at exposing scammers who tug at donors’ heartstrings with false promises of helping military personnel.
The public-relations effort was organized with the National Association of State Charity Officials and coordinated with law enforcement and charitable regulators in every state as well as the District of Columbia, Puerto Rico, Guam and American Samoa.
“Americans are grateful for the sacrifices made by those who serve in the U.S. armed forces,” said FTC Chairman Joe Simons in a statement. “Sadly, some con artists prey on that gratitude, using lies and deception to line their own pockets. In the process, they harm not only well-meaning donors, but also the many legitimate charities that actually do great work on behalf of veterans and servicemembers.”
Separating real from fake charities has become a challenge as scam artists proliferate. In March, for example, four people were indicted in Indiana for allegedly raising and pocketing $125,000 for “Wounded Warrior” groups that had no connection to the well-known Wounded Warrior Project.
The FTC announced the consumer campaign along with legal actions against two organizations accused of soliciting donations under false pretenses: Help the Vets and Veterans for America.
Under a settlement agreement reached with the FTC and six states, Help the Vets will be banned from fundraising “for falsely promising donors their contributions would help wounded and disabled veterans.”
Based in Florida, Help the Vets operated under at least five different fictitious names, including the American Disabled Veterans Foundation, Military Families of America, and Veterans Emergency Blood Bank, and falsely touted a “gold” rating from GuideStar.
“The varied business names also allowed fundraisers to solicit the same donor on multiple occasions for what appeared to be different charities,” said the complaint filed in U.S. District Court in Orlando.
The promised “medical assistance” for “amputees and severely injured vets” turned out to be vouchers redeemable at one chiropractic clinic in Winter Garden, Florida.
Calls to the “24-7 suicide prevention hotline” went to Mr. Paulson’s cell phone. As for the “family retreats,” they consisted of timeshare vouchers for use chiefly in Mexico.
While thousands of vouchers were distributed from 2013-17, there was evidence that only two were redeemed. One of those was used by Help the Vets board president and veteran Sherwood Shoff.
What happened to the $11 million raised from 2014-16? While Help the Vets did donate some proceedings to the Red Cross and other legitimate charities, 95 percent of funds collected went to telemarketers, who took 85 to 90 percent of every dollar raised, as well as overhead expenses and Mr. Paulson.
“Help the Vets is not a legitimate charity,” said the complaint. “It is dedicated neither to the public good nor to helping veterans. Rather, it has existed to benefit Paulson and the for-profit fundraisers he hired.”
The settlement, which was filed the same day as the complaint and must still be approved by a judge, set up a $20 million judgment and banned Mr. Paulson and Help the Vets from seeking charitable contributions in Florida, California, Maryland, Minnesota, Ohio and Oregon.
Mr. Paulson, who ran unsuccessfully for Orlando mayor in 2015, agreed under the settlement to pay $1.75 million, more than double what he received at Help the Vets, while the organization must turn over its remaining revenue, $72,000.
“It is reprehensible that anyone would prey on the good intentions of people trying to help our heroes and I will not let the immoral actions of a few bad actors taint the good work of our legitimate charities,” said Florida Attorney General Pam Bondi in a statement.
Doug Kilby, attorney for Help the Vets, said he was unable to comment on the ongoing legal matter.
“Because there is a lawsuit pending, we (as counsel for Help the Vets) are not able to comment on the matter,” he said in an email.
In a separate complaint, the FTC charged Travis Peterson with soliciting donations on behalf of nine fake charities with names like Veterans of America, none of which was actually registered as a non-profit, even though they promised consumers that contributions were tax-deductible.
Mr. Peterson was accused of making millions of robocalls to convince contributors to donate items like cars and warcraft and then selling them for his own benefit.
“After Peterson receives the donated vehicles and watercraft, he typically sells them through online vehicle auction companies,” said the complaint filed in U.S. District Court in Utah. “In some instances, he sells donated vehicles for parts at a local junkyard.”
Operation Donate with Honor released a video and ads listing nine legitimate-sounding veterans organizations followed with a warning: “They have all been sued for lying to donors.”
“Don’t depend on the name. Do your research. Then donate,” says the ad.