Texas officials sue veterans' group

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Associated Press

Posted on March 22, 2014 at 10:32 AM

AUSTIN, Texas (AP) — A veterans' organization banned from South Carolina and fined in Tennessee has been named in a lawsuit brought by authorities in Texas, where it has been operating in several cities for years.

The Texas Attorney General's Office announced Friday that the Florida-based Veterans Support Organization is a defendant in a lawsuit filed this week alleging the group falsely claimed a majority of donations to the group would benefit Texas veterans.

Authorities contend VSO raised more than $2.5 million in Texas from 2010 to 2012. They say most of that was raised through a work program that amounted to nothing more than "structured panhandling" in which indigent veterans were paid to stand outside stores in Austin, Dallas, Houston and elsewhere soliciting donations.

Despite raising millions, VSO made grants of less than $57,000 to Texas veterans, which amounts to 2.24 percent of donations received in the state, according to court records.

Texas officials say most of the money went out of state to Florida, where VSO has its headquarters, and Rhode Island, where it's incorporated. Four VSO principals also are named in the lawsuit, including President Richard VanHouten, and all four live in Florida.

A call to VSO's headquarters rang unanswered Friday.

The Attorney General's Office does not indicate in court records how the money raised in Texas was spent elsewhere. Spokesman Jerry Strickland said authorities would go through the organization's records and other documents to track down the money.

"When well-meaning Texans open their hearts and their wallets, they should be confident that the hard-earned money they're donating will go to the cause they choose to support," Strickland said.

VanHouten — an Army veteran who lives in a $548,500 South Florida home, according to county records — has received $259,965 in salary, the Austin American-Statesman reported in February.

A phone message left at a Florida listing for VanHouten was not returned.

VSO says it helps veterans transition to life after the military by providing jobs.

"We are the one employer willing to overlook long (gaps in employment)," Arthur Metcalf, general manager of the group's Houston branch, told the American-Statesman.

He said his employees earn $7.25 an hour and are eligible for incentives if they raise more than $250 in a day.

But Texas authorities say VSO engaged in "false, deceptive and misleading acts" and is seeking a court order prohibiting the group from operating in Texas. They also want to seize its assets and funds in order to distribute them to low-income veterans.

South Carolina fined the group $5,000 last year and banned it for 15 years for violating its solicitation laws. Tennessee fined it $50,000 — and later settled for $20,000 — in 2010 for failing to properly register and making false claims to provide services in the state.

Connecticut's congressional delegation, meanwhile, has requested a federal investigation of the group and the Department of Veterans Affairs has suspended it from an advisory board.

Prosecutors in Texas also say VSO claimed to operate a housing program benefiting veterans. But the program amounted to subletting rooms at two residences, one in Austin and the other in Dallas, and only a portion were earmarked for vets, according to court records. Veterans were evicted from their room if they couldn't afford the $125-a-week rent, records indicate.

The American Institute of Philanthropy's CharityWatch gave the group an F rating, according to the American-Statesman's February report.

"VSO's 'program' does not help unemployed veterans obtain useful skills, such as computer programming, carpentry or nursing, to help them obtain gainful employment," the group said in a newsletter. "But the 'program' does help VSO raise money for itself by turning veterans into street solicitors."

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