NASHVILLE, Tenn. – A veterans charity already under scrutiny for how it raised hundreds of thousands of dollars in Tennessee handed out only a fraction of the money in the form of gift cards and threatened to fire workers if they didn't meet fundraising quotas, former employees say.
The Stuart, Fla.-based Veterans Support Organization has been criticized by other groups for how it uses donations raised outside retail stores and supermarkets. It had been fined by Tennessee for making false claims about the benefits it offered, and Connecticut lawmakers called for a federal investigation before the group's Tennessee branch closed last month.
However, former employees interviewed by The Associated Press shed new details on how the charity operated. For instance, it claimed to help veterans and non-veterans by providing them jobs, but disciplined people who didn't meet fundraising quotas. It also claimed to provide housing and help for poor or homeless veterans, though the former workers say that amounted to little more than a rented home in Tennessee where the workers were charged $400 a month for bunk beds and plastic dressers.
It's not the first such charity to be scrutinized as thousands of veterans leave the military after serving in the wars in Iraq and Afghanistan. In Ohio, for instance, a man has been charged with running a $100 million scam through a bogus charity collecting donations for Navy veterans. Other charities around the country have been scrutinized for spending large portions of the donations they receive on operating expenses.
VSO reported raising nearly $8.5 million nationwide during the last fiscal year, but leaders emptied its office in Madison and laid off about 20 workers the day before Thanksgiving. Charity officials declined to answer questions about the workers' claims, but provided a short statement.
The Tennessee chapter was raising tens of thousands of dollars a month at its peak, former chapter manager Kurt Jones told the AP, who was among those laid off. However, he said, its only donations were about $400 worth of Walmart gift cards given every other month to Veterans Affairs facilities in Tennessee and Kentucky.
Jones estimated the chapter raised almost $1.5 million in his two years as manager, but very little benefited veterans in those states.
"I can promise you that I have probably given away $25,000 out of the money that was raised in that office," he said.
Justin Wells, director of operations, said in a statement the charity decided to close both its chapters in Tennessee and New York to focus on launching new markets that would allow them to hire more veterans.
"Our national organization currently employs over 150 veterans and invests 70 percent of donations into a work and housing program that helps veterans get off the street and into the workforce, but the economic challenges of our Tennessee chapter were affecting our ability to operate elsewhere," he said in a statement. He did not describe the economic challenges.
The charity receives no government grants. Its only fundraising comes from employees who solicit donations outside of malls and retail stores, which it claims as a work program for veterans and nonveterans.
Chapters and their employees were required to meet monthly fundraising goals, and employees who didn't could lose their jobs, Jones said. If solicitors didn't start bringing in $1,000 after a month on the job, Jones said he was tasked with giving them written disciplinary warnings that could lead to dismissals.
"The only thing they cared about was their quota," said DeMarcus McKenzie, 38, one of the workers in Tennessee. "They don't care if it is cold or raining, they don't care."
According to the 2011 earnings report to the IRS, the charity took in contributions of nearly $8.5 million but distributed less than $300,000 in grants and contributions. More than $1.8 million went to salaries and compensation, including an annual salary of $286,000 for president and founder Richard Van Houten. Jones also said chapter managers could earn large bonuses if fundraising goals were met.
The charity also claims that it has housing programs in six chapters, including Tennessee, that aim to provide "sober, subsidized, transitional living for indigent veterans and to offer supportive services to help veterans recover from addiction and/or life's misfortunes quickly so they can return to a successful, independent lifestyle."
The charity's former workers said all the program amounted to in Tennessee was a rented house. They claim they were not provided with food, clothing or social services.
The charity's executives would not answer questions about the housing program.
Jones said the charity claimed the house it rented in Madison was part of the program as it charged the workers $400 a month to live there. McKenzie, who was living in the home, said all the charity provided them in the home was bunk beds — but no sheets — and plastic dressers for their clothes.
Some employees said the charity's work program did keep them off the street, but they were caught by surprise when it ended suddenly.
Kerry Rankins, a 52-year-old Army veteran, said he's been involved with the charity for more than two years. He lost his job at a florist in 2009 and was hired by Jones to raise money.
"I started making my finances, kinda got myself back on level with my finances," he said. "It really helped me out."
But Rankins said he was surprised when he arrived at the VSO office Nov. 21 to find a moving truck removing everything from the office.
Gary Thomas, a 57-year-old Vietnam veteran, said he was introduced to the VSO when he went to the Madison office seeking money when he was between jobs and living in a camper. He said Jones gave him $100 and a job as a solicitor.
Thomas said the amount of money they raised compared to what they were giving out didn't add up to claims the charity makes about how it uses donations.
"What they are doing is scamming a lot of people, taking money out of the state, not doing what they said they will do and faking it with phony figures," Thomas said.