America, We Have a Problem

Publicly available tax returns show that veterans charities with poor records collect billions annually.

Nonprofit organizations report three main categories of expenses to the IRS every year: “programs” (actually accomplishing things), “management and general” costs, and “fundraising” expenses. Everything other than program expenses is called “overhead.”

Some veterans groups spend 90% or more of their multimillion-dollar budgets on overhead.

Read that again. This is actually happening.

Emotional fundraising works, and of course you feel good when you do something — anything — to help. Waste, fraud and abuse are their fault, not yours. Our job is to help steer charitable dollars away from these black holes.

How? Unlike other rating agencies, we produce and advertise charity ratings for veterans organizations. It’s an idea whose time has come, and we’re on it.

Examples of Waste and Abuse

Operating under a slew of pseudo-names such as American Disabled Veterans Foundation, Military Families of America, Veterans Emergency Blood Bank, and Veterans Fighting Breast Cancer, Help The Vets was a gold star rated Charity that raised millions to send care packages to deployed military service members.” They were also supposed to allegedly assist veterans with grants, medical care, suicide prevention, and therapeutic family retreats. But as the Federal Trade Commission revealed in 2022, none of this was true – except that Help The Vets did raise millions. 

Of the $20 million Help The Vets raised, the FTC claimed 95% of donor contributions went towards the fake charity’s founder, Neil Paulson, to cover for-profit fundraisers and other overhead expenses. The FTC’s court filing put it bluntly: Any benefit to veterans was merely incidental.”

Over $776,000 was raised for breast cancer treatment and chemotherapy grants, yet not a single grant was distributed. The medical care provided was just vouchers for chiropractic treatment only redeemable at a single location in Florida, with fewer than five vouchers being redeemed. Therapeutic retreats turned out to be vouchers for timeshares in Mexico, and one of the only two vouchers redeemed was used by the former board president. Paulson had the audacity to advertise his own personal cell phone as a “24/7 veteran suicide prevention hotline.”

How did Help The Vets get away with it for so long? By providing fraudulent information to GuideStar, a charity rating group, Help The Vets was able to easily deceive its way into being depicted as an A tier charity. It was only after law enforcement cracked down that GuideStar realized something was amiss and removed their Seal of Transparency.” 

The Federal Trade Commission, in conjunction with multiple states, reached a settlement in federal court with Help The Vets and Neil Paulson Sr., imposing a $20.4 million judgment. Paulson was banned for life from running, operating and or managing any charitable fund and was forced to destroy any donor lists that Help The Vets utilized. The organization was also ordered to forfeit its remaining assets (less than $75,000) and Paulson paid $1.75 million to be redistributed to legitimate charities under court approval.

Operation Troop Aid was a highly publicized veterans charity that was created to send care packages to military personnel deployed overseas.” With its catchy name and feel-good mission statement, Operation Troop Aid received glowing coverage from media organizations like NBC Nightly News or Fox, was promoted by Miss Tennessee, and even partnered with Crown Royal.

It was a good run for the charity, until it all came tumbling down in 2018, when the FTC and Virginia’s Attorney General cracked down. In response to legal action, Operation Troop Aid quickly admitted “it failed to ensure that donated money was used for its stated charitable purpose.” 

Operation Troop Aid’s founder was banned from subsequent involvement in nonprofits, and the charity voluntarily dissolved itself. Despite this, only a $10,000 civil fine was imposed. 

Healing American Heroes was a Texas-based charity that raised more than $2.5 million towards helpingwounded service members deployed in the Middle East.” But as is the case with so many of the stories in this report, the noble mission failed to live up to the charity’s actual track record.  

Healing American Heroes sent out millions of fundraising mailers – as many as nearly 5 million – and aggressively preyed on the goodwill of patriotic Americans. Even the AARP was forced to warn about the fraudulent charity. 

Michigan’s Attorney General accused Healing American Heroes of diverting millions of dollars.” Legal action by the state of Michigan eventually led to the charity being forced to pay penalties and dissolve itself.

In 2020, the veterans charity Fallen Hero Bracelets was ordered to pay back “nearly a million dollars” after Washington State accused the organization of being a scam.” By that point, Fallen Hero Bracelets was dissolved, but not before it made more than a million dollars in sales. The charity claimed the bracelets, hats and t-shirts it sold went towards providing causes like scholarships for the children of veterans who died in Iraq and Afghanistan, but in reality, it pocketed all the money. 

Even worse, the charity aggressively pursued customers who complained after the products they ordered never arrived. Not only was Fallen Hero Bracelets fraudulently claiming its proceeds went towards helping veterans, but then it compounded the fraud by often not delivering the product altogether! Imagine being sent to collections by a faux-veterans charity that scammed you twice: once during advertising, and then later during the actual delivery of the product.

Medical professionals are highly respected and well-trusted individuals by the general public. Dr. Allan Spiegel undoubtedly used his title to his advantage when running the Healing Heroes Network just a few doors down from his medical practice in Palm Harbor, Florida. An 11-state investigation found that Allan, along with his wife Stacey and son Neal, redirected money away from rehabilitating veterans in order to fund high-paying salaries, telemarketing junk mail, and even t-shirts from a relative’s clothing business.

In 2016, the Healing Heroes Network pulled in $2.7 million of revenue. It was claimed to be used to help wounded veterans of the wars in Iraq and Afghanistan to receive medical treatment not available from the Veterans Administration. Incredibly, Healing Heroes Network spent less than a half of one percent on direct services to veterans (a grand total of $13,387). Despite this lack of spending, Allan’s wife was able to pull in a salary of $110,000 as treasurer of the group.

The family formed another fraudulent veterans charity similarly named Hero Giveaways that also came under scrutiny. Both groups dissolved following a multistate investigation and settlement. The Spiegels were banned from running a nonprofit for five years, and $95,000 worth of donations was ordered to be recovered and redirected to accredited organizations with similar missions.

At first glance, The Disabled Veterans National Foundation (DVNF), had an admirable mission of “providing critically needed support to disabled and at-risk veterans who leave the military wounded—physically or psychologically.” Many Americans also seemed to believe the DVNF was providing critical support to disabled veterans. The group raised over $115 million in donations just six years after its founding. But less than 15% of donations were spent on program expenses. Manufactured veteran testimonials were used in mail and phone solicitations.

In their solicitations, the group falsely stated that for every dollar donated to DVNF, the organization would be able to supply nearly $10 worth of goods and services to disabled veterans around the country. In actuality, DVNF spent 90 cents of every dollar it raised on direct mail costs, amounting to over $104 million paid to fundraisers. This gross financial mismanagement resulted in a debt of $13.8 million to direct-to-mail services companies like Quadriga Art—a fundraising consultant that agreed to pay $25 million to settle an investigation by the New York Attorney General.

Additionally, the group claims that they donate “badly needed goods” to smaller veterans charities and other organizations. In reality, the few tangible goods sent are often unnecessary and rendered useless. For example, the small veteran’s charity St. Benedict’s received 11,520 bags of coconut M&M’s, 2,600 bags of cough drops, 2,200 bottles of hand sanitizer and 700 pairs of Navy dress shoes, which the group could not use and were given away during a yard sale.

In another example, the group sent chef coats, pillowcases and cans of acrylic paint to a small veterans charity in Arizona, reporting the fair market value of the donation to be $834,000, significantly greater than the actual amount of $234,000.

As part of the $25 million settlement with the New York Attorney General’s Office, DVNF had to cut all ties with its fundraisers, replaced and reorganized its entire board, and ended all solicitations with falsified materials of veteran stories.

Sincere donors thought their money was going to help disabled veterans. Instead, it was used to pay off solicitors, enabling a wasteful cycle.

Testifying before the House Committee on Oversight and Investigations, the former founder of Help Heal Veterans, Roger Chapin, explained that diverting funds away from veterans assistance to pay $80,000 golf club dues was a necessary cost: “I think it was entirely appropriate,” he said. “The board plays golf when they come to meetings out there.”

Even if these funds were diverted away from Chapin’s lavish golf outings, most would agree that the services the organization provides would be better spent on more critical needs. HHV claims it provides “free therapeutic arts and crafts kits” to hospitalized veterans, but an investigation from CNN noted that the kits merely included instructions for making paper airplanes. HHV’s “therapeutic kits” could have easily included more subsistence, but the group was too busy spending around 55 cents of every dollar donated on “awareness programs,” costing nearly $240 million.

Over a 10-year period, HHV wasted $160 million spamming American households with nearly 440 million letters with action steps such as “Volunteer at VA hospitals or become pen pals with a veteran.” Taking advantage of an accounting loophole, HHV was thus able to decrease its reported fundraising costs from 65 percent to less than 30 percent of total costs.

While bed-ridden war veterans were given instructions on how to build paper airplanes, key officers and board members enjoyed six-figure salaries and spent the charity’s funds on a Virginia condominium.

The California attorney general accused the charity of improper use of funds and brought legal action against it. The resulting settlement was a $2,500,000 fine against the charity and the resignation of key officers.

Help Hospitalized Veterans is still in operation, rebranding itself under the name Help Heal Veterans.

Allied Veterans of the World, a Florida-based charity, claimed to raise millions of dollars for veterans through bingo games and internet café sweepstakes, promising that anywhere from 70 to 100 percent of its profits went towards charitable activities. In reality, the charity – which made hundreds of millions off its gambling operations – was a complete fraud that spent less than 2 percent of its money towards actually helping veterans

Instead, the vast profits went towards extravagant purchases like Maseratis, Porsches and Ferraris, or expensive waterfront housing.” The alleged mastermind of the operation was accused of pocketing $6 million. Another software company that was in on the scheme was paid more than $65 million.   

Law enforcement raided the faux-charity’s offices, arresting 50 people. Several people involved in the operation later pleaded guilty to crimes likemoney laundering.” Sadly, much of the illicit money that was seized was later returned to those charged,” and it is unclear if any of the funds ever made its way towards actually helping American veterans. 

Kansas’ Purple Heart Veterans Foundation may have had an inspiring name, but its track record was anything but. A report found that the Tonganoxie-based charity, which targeted local and small businesses in the area, only gave 11 cents of every dollar towards veterans. Instead, the vast majority of the $540,000 it raised alone went towards paying a fundraising business coincidentally operated by the brother of Andrew Gruber, the foundation’s director. 

Further examination of the supposed-charity by journalists found an unbelievable record of shadiness by Gruber, who previously pleaded guilty to stealing a car and was also accused of assaulting one of his employees. As for the brother, who ran the ‘fundraising business,’ he had a lengthy criminal history,” including convictions for “domestic battery.” 

The Purple Heart Veterans Foundation leveraged unsuspecting peoples’ goodwill and branding it had no right to use. The Military Order of the Purple Heart (i.e., an actual veterans charity) was forced to sue, claiming Gruber misleadingly abused the Purple Heart trademark

Once people began scrutinizing this sham operation, Gruber quickly promised he woulddissolve the foundation,” and its status was eventually revoked by the IRS.

The United States Navy Veteran Association was founded by Bobby Thomas, a retired Navy officer. Bobby Thomas was actually an alias – he never served in the Navy, and the entire charity was fraudulent from start to finish. The scheme was so bad, Thomas ended up on television among America’s Most Wanted.”   

By preying on unsuspecting, patriotic Americans, the United States Navy Veteran Association raised upwards of $100 million,” mostly in the form of small donations like $5 or $25 dollars. While the faux-charitymade a few contributions that benefited veterans,” most of the money went to self-enrichment or supporting Thomas’ personal causes – leaving veterans out in the cold. When Thomas’ fraud eventually came to light, he went on the run. 

Thomas was eventually arrested, but authorities expressed skepticism at the time that they would recover anything more than a fraction of what was stolen

Travis Peterson seemed like an upstanding  citizen: using various well-named organizations like Veterans of America or “Saving Our Soldiers,” he made millions of robocalls calling on people to donate cars, boats, real estate, timeshares…anything really, towards helping veterans. In reality, anything that was donated went towards enriching Peterson, not helping veterans. Those nice-sounding organizations? None of them were even registered charities. 

In 2018, the Federal Trade Commission filed charges against Peterson, accusing him of a massive scam operation. Peterson was eventually sentenced to more than three years in jail, and ordered to pay nearly $550,000 in restitution. 

Hundreds of unsuspecting people donated to the “American Oklahoma Veterans of Green Country,” only to find that they had not donated to the “Green Country Veterans Association,” but instead a cleverly named fraud. The mastermind behind the scheme, Jeff McDougal, was eventually charged in 2018 with 20 felonies, and accused by the Oklahoma Attorney General’s office of stealing tens of thousands of dollars.

VietNow National Headquarters, a prominent veterans charity based in Rockford, Illinois, raised more than $15 million over the years towards helping veterans deal withjoblessness and post-traumatic stress disorder.” Not only did the charity give only a small fraction of this money towards veterans, it somehow got away with the scam for more than a decade! 

It was only thanks to a 2015 investigative report by the Chicago Tribune that Illinois’ Attorney General took action. Many of the charity’s members were Vietnam veterans themselves, who volunteered their time to help fellow veterans.” Unfortunately, at the end of the day the only people who benefited were the charity’s fundraisers, who pocketed up to 80 percent of donations. 

Despite the overwhelming evidence of fraud, it took until late 2017 (two years after the original Tribune report) for the charity to finally dissolve. Records at the time showed only $500,000 worth of assets and donations remained; clearly authorities moved far too late to recoup even a fraction of the $15 million that had been raised.

Hearts 2 Heroes was a for-profit company that claimed to have a charitable mission: sending care packages overseas to U.S. troops. The company went door-to-door, making big claims about how people could support these care packages, including with different contribution levels and the ability to choose a specific military branch.  

Not only was the whole operation a sham, but it was fraudulent at a truly unprecedented level (even by virtue of the inglorious scam artists contained within this report). To list only a few points: staff claimed to be veterans, but were not. The company’s leadership skimmed donations, but then additionally, never bothered to send out care packages at all. Worst of all, the corporation was terminated back in 2016, but continued operating for years afterwards with no one the wiser. So much for accountability in the veteran’s charity space. 

Eventual action by state attorney generals in 2019 shut the fake company down, and the owners were barred from charitable activities. A judgment for nearly $300,000 was levied against Hearts 2 Heroes, but as with too many other veteran-related frauds, the penalty payment was shockingly low: only $10,000. A co-owner of the company later pleaded guilty to wire fraud