FTC cracks down on fake charities for veterans

The Federal Trade Commission announced two major actions against allegedly fraudulent charities for veterans Thursday...

Posted: Jul 19, 2018 7:50 PM
Updated: Jul 19, 2018 7:50 PM

The Federal Trade Commission announced two major actions against allegedly fraudulent charities for veterans Thursday.

One alleged scam, known as Help the Vets, took in $20 million in donations intended for wounded and disabled veterans between 2014 and 2017, the FTC said.

Another solicited cars, boats and timeshares for several made-up veterans' charities.

In both cases, most of the donations were never passed along to veterans, according to the FTC.

A total of 100 enforcement actions were announced Thursday with the cooperation of officials in all 50 states. Some of the groups falsely promised to help disabled veterans, to provide employment counseling, or mental health counseling. Other false claims by the organizations included promising to send care packages to service members, the FTC said.

One fundraising letter from Help the Vets stated: "But for thousands of disabled veterans who served in Iraq and Afghanistan, giving an arm and a leg isn't simply a figure of speech - it's a harsh reality ... Your $10 gift will mean so much to a disabled veteran."

But 95% of the money donated to the group was spent on fundraising, administrative expenses, or paid to the founder, Neil G. "Paul" Paulson Sr., according to the FTC complaint, which was filed with cooperation of six other states on Wednesday.

Help the Vets stopped operating in 2017, but a proposed settlement bans Paulson from managing another charity, the FTC said. It also requires him to pay $1.75 million - more than double what he was paid by Help the Vets - to a legitimate veterans charity.

The organization took in $11 million in cash donations between 2014 and 2016. Unaudited financial statements show another $9 million was received in 2017, the complaint said.

Paulson could not be immediately reached for comment. An attorney for Paulson wasn't listed in the FTC complaint.

In the second action, the FTC charged Travis Deloy Peterson with robocalling people and using fake charities to get them to donate things like cars that he would then sell for his own benefit. The calls would falsely say the donations would be tax deductible when charities were fictitious and did not have a tax-exempt status, the FTC said in a complaint filed on July 10.

Peterson has most recently been using the name Veterans of America in the robocalls, the complaint said.

Peterson could not be immediately reached for comment. His attorney was not listed in the FTC documents.

"Americans are grateful for the sacrifices made by those who serve in the US 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 service members."

The FTC suggests on its website that people research charities before making donations and recommends checking out reports and ratings from BBB Wise Giving Alliance, Charity Navigator, CharityWatch, or GuideStar.

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