A Vietnam veterans charity that last year paid professional fundraisers 88 percent of the nearly $2 million it spent will be dissolved as part of an agreement with charity officials across 24 states.
Rockford, Ill.-based VietNow claimed in telemarketing solicitations that it was funding veterans’ services, medical facilities, and treatment, but only about 4 percent of what was spent last year went to program services, according to its Form 990, continuing a pattern of little spending on program over a number of years. The organization was founded in 1990.
The settlement is joined by 24 states and requires the appointment of a receiver to dissolve VietNow. The settlement also obtains injunctive relief against directors and officers and requires their cooperation in investigations of VietNow’s professional fundraisers. The 24 states that signed on to the settlement are: Michigan, Illinois, California, Ohio, New York, Connecticut, Hawaii, Iowa, Kansas, Kentucky, Maine, Maryland, Minnesota, Missouri, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, South Carolina, Tennessee, Virginia, and Wisconsin.
The charity also is permanently enjoined from soliciting contributions from the public. Defendants are required to cooperate with the receiver, and with all interested states in any present or future investigation of any professional fundraisers for VietNow during the period in question (since 2011).
Controlling officers or directors of VietNow are permanently enjoined from serving as charitable fiduciaries or acting as professional fundraisers: Joseph Lewis of Cordova, Tenn.; Steven Rucki of Algonquin, Ill.; Rich Sanders of Dixon, Ill., and Terry Buscher of Oak Park, Ill.
Upon dissolution, VietNow’s remaining funds will be paid to two other veterans’ charities, Fisher House Foundation and Operation Homefront. VietNow also will pay $30,000 as part of the settlement amount to reimburse for investigative costs; $20,000 to the Michigan Attorney General’s Office and $10,000 to the California Attorney General’s Office. The $32,000 held in the Life Membership Restricted Fund will be divided among 617 Life Members and distributed to the respective local chapter of each Life Member.
According to the organization’s Form 990 for Fiscal Year 2016, filed this past May, VietNow National Headquarters had net assets of almost $500,000 and total revenue of $1.89 million. Some $1.856 million was raised through fundraising events, namely telemarketing campaigns. Of the $1.868 million in expenses, $1.649 million, or about 88 percent went to professional fundraising fees. About $74,705 was listed as program expenses that year, less than 4 percent of total expenses.
VietNow is based in Rockford, Ill., but solicits donations in many states. The Michigan Department of Attorney General first issued a Notice of Intended Action against VietNow in February, alleging the organization violated the state’s Charitable Organizations and Solicitations Act by using false and misleading telemarketing solicitation scripts, diverting charitable funds donated for a specific purpose, and submitted false and inaccurate financial statements. Michigan’s Notice of Intended Action alleged 16,422 violations with civil penalties of up to $10,000 per violation.
In April, the California Attorney General’s Office issued a cease and desist order, requiring VietNow immediately cease and desist from all operations in California, including solicitation for charitable purposes. VietNow was assessed penalties of $67,000 for violations of the California statute. Some 27 states expressed interest in the organization’s solicitation activities.
Ten companies raised a $1.676 million through phone solicitation, retaining $1.423 million, or 85 percent, and $251,420 going to the organization in the most recent fiscal year. The 10 companies were:
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