In early 2018 a joint investigation was launched by the Virginia and New York Attorneys General into the activities of several Falls Church veterans’ organizations involving questionable fundraising activities and possible self-dealing.
Concerns were first publicly reported in December 2017 by the Center for Public Integrity, an investigative nonprofit, based in DC. Now, over two years later, as of March 5, 2020, CPI reports that the two- state investigation has concluded settlement agreements with the organizations and their leader. A press release from Virginia AG Mark Herring outlined the scope of the actions against the organizations, as well as elements of the settlement:
shut down three organizations that exploited goodwill towards those in the military and misused more than $13 million that was supposed to support homeless veterans. The named organizations are the Center for American Homeless Veterans, Inc., and Circle of Friends for American Veterans;
their founder, Brian Hampton, a retired Army officer, allegedly raised funds across the country using telemarketers ostensibly to provide education and assistance for homeless veterans, but a majority of which actually went toward paying telemarketers and the salaries of the founder and staff; and
The agreement permanently shutters the organizations, and permanently bars founder Brian Hampton from soliciting charitable contributions and holding a fiduciary position with any charitable organization, and requires the shuttered organization to distribute $100,000 to three Virginia charities that provide actual assistance to homeless veterans.
Another provision of the agreement requires Hampton to provide continuing cooperation with the AG’s office to pursue further inquiries into the activities of the telemarketing companies. According to CPI, a similar settlement arrangement was executed with the New York Attorney General. At least some of the $13 million raised by Hampton’s organizations will benefit the intended recipients.
One outstanding issue with respect to the regulation of fundraising by professional organizations remains: will the AG promote or propose legislation to limit the share of charitable funds that may reasonably be withheld, retained, or paid over to those organizations? The Commonwealth’s regulations appear to be quite liberal in this regard, e.g., there is no limit to the share that may go to the professional organization. As testimony, Hampton’s own words of justification for his choices of fundraisers is instructive, as he told CPI in 2017:
Hampton founded his organizations in 1993 and by 2015 was being compensated at over $340,000 per annum for his work while as much as 90% of the funds raised remained with the telemarketers. In effect, Hampton’s justification is, in fact, merely a rationale for his own income and benefit. That the named recipients of his organizations received nothing appeared not to be of concern.
Herring’s press release contains a long list of cautionary tips to consumers about responding to charitable appeals. Given that the actions of Hampton and his organizations reached $13 million in a dozen years and affected many thousands of contributors, the public and the legislature could benefit from some remedial actions. It is also remarkable that, given the scope of the operation and the amounts of money, there appears to be no criminal conduct involved.
The Virginia and New York resolutions echo neatly with the conclusion of charges against President Trump and Trump University. Curiously, no remedial measures were mentioned in the AG statement, even to the extent that the AG’s office was formulating some responses or recommendation to the General Assembly to address the next charitable fundraising scandal. Attaching criminal penalties for scammers would send a stronger message than mere financial ones. Duped contributors have always and already paid a price while the fraudsters escape prison. Thus, be it ever always, caveat emptor. Time for some caveat venditor, let the seller beware.
Jim McCarthy and Michael Fruitman