U.S. Navy Veterans Association still in smokescreen

The check for $2,500 arrived in the mail last May, unsolicited but much appreciated.

"We don't get many of those," said Joey Wallace, executive director of the NewWell Fund, a nonprofit in Richmond that provides low-interest loans to Virginians with disabilities.

Wallace is less enthusiastic about the gift these days. He decided last week to freeze the funds, considering all the questions swirling around the source of the check, the U.S. Navy Veterans Association.

Last year, the association's director, Bobby Thompson, gave Virginia politicians $67,500. The U.S. Navy Vets then pushed to get a law passed allowing it to solicit funds without registering with state regulators. Most of the state officials, including Gov. Bob McDonnell, gave away their campaign contributions last week after learning the group was under a cloud of suspicion about its makeup and fundraising activities.

At least three states have begun formal inquiries into the U.S. Navy Vets, following reports in March by the St. Petersburg Times that questioned, among other things, the very existence of more than 80 people listed as the group's executive officers and state directors.

On its Web site, the U.S. Navy Vets calls those assertions "a pack of lies and poppycock."

But in at least one case, the association's veracity has become such an issue that the money it gave to a charitable cause will not be spent anytime soon.

"You can trust me, the money is on hold right now," Wallace said of the $2,500 that still sits in a NewWell Fund account.

"It appears that this is an organization that is in question," he said. "Where these funds came from is in question. I don't want to have my organization associated with anything that might be questionable."

'Never heard of them'

Before being pleasantly surprised last year by the U.S. Navy Vets, Wallace had never heard of the organization.

A brief letter that accompanied the check was signed by Allan Rosellini, who identified himself as the commander of the association's Virginia chapter. "The chapter currently has 998 members throughout the Commonwealth, representing every county" in the state, Rosellini wrote.

Nationally, the U.S. Navy Vets has about 66,000 members, according to its Web site. (Repeated efforts by The Roanoke Times to reach the association have been unsuccessful).

Yet for its size and a reported history that goes back to 1927, the U.S. Navy Vets does not appear to be well known among other veterans organizations.

"I've never heard of them," said Dan Boyer, chairman of the Joint Leadership Council of Veteran Service Organizations, which has 24 member groups and is associated with the state Department of Veterans Services.

"They are not on our radar screen," said W.R. "Bear" Holland, commander of the Navy Seabee Veterans of America Inc.

"I'm a Navy veteran myself, 20 years, and I've never heard of them," said Kim DeShano, adjutant quartermaster at the state headquarters of the Veterans of Foreign Wars.

In fact, representatives from 10 veterans organizations -- at the local, state and national level -- contacted last week said they had no dealings with the U.S. Navy Vets. Nine of the 10 had never heard of the group.

The one exception was Ike Puzon, director of legislation and government relations for the Association of the U.S. Navy, a veterans organization. Puzon said he was aware of the group by name only but never ran into one of its representatives during the myriad of meetings he said are attended by veterans service organizations in Washington D.C., where the U.S. Navy Vets are headquartered.

"I've never had a need to reach them," Puzon said. "I just assumed that if they were legitimate, I would meet or see them somewhere."

Few details available

Although the group may not be very visible in some military circles, its presence has been felt in the form of financial donations.

In reports submitted to the Internal Revenue Service, which are required by law for a military organization with a 501 (c) 19 tax-exempt status, the U.S. Navy Vets said it spent about $2.6 million in 2008 on food, shelter, care packages, direct cash and other assistance to members of the military and their families.

But only 10 specific recipients -- who received a total of $26,695 -- were listed in the IRS tax form. The 77-page document includes a number of general descriptions, such as psychological counseling for 5,000-some veterans, without offering a detailed explanation.

One of the named recipients was the Navy Memorial Foundation in Washington, D.C. Foundation spokeswoman Taylor Kiland confirmed a $6,350 donation from the U.S. Navy Vets. Other recipients listed on tax records include Paralyzed Veterans of America, the U.S. Naval Academy and Catholic War Veterans of the United States.

According to the St. Petersburg Times, which spent six months investigating the U.S. Navy Vets for a series of stories that ran in March, the group's practices are being scrutinized by regulators in Florida, New Mexico and Missouri.

The newspaper reported that professional fundraising call centers, which have raised millions for the group, claim up to 60 percent of a donation as their fee.

Despite extensive, nationwide database searches, the newspaper could not find 84 of the 85 U.S. Navy Vets national and state directors. (A similar attempt by The Roanoke Times to locate Rosellini, head of the Virginia chapter, was also unsuccessful.)

Many of the addresses the organization listed were mail drops at United Parcel Service stores across the country, the Florida newspaper reported, and all of the phone numbers were voice-mail boxes with the same message.

Helen Mac Murray, an Ohio lawyer who is counsel to the U.S. Navy Vets, agreed to review e-mailed questions from The Roanoke Times, but so far has offered no comment.

On May 14, Mac Murray wrote that she could not comply with the newspaper's deadline, adding "I don't see how your questions are newsworthy." Contacted again on Friday, Mac Murray said she would relay the newspaper's questions to her client. No response had been received by 6 p.m. Saturday.

In papers filed with the IRS, the organization went into great detail about how it handles financial matters. Whenever cash is given to an individual, it said, a "vetted and trained" officer is present to make sure the money is spent appropriately.

"For example," the document stated, "if $10 is expended to buy a recipient lunch at McDonald's, the [officer] should be walking into McDonald's with the recipient, verifying that the recipient did buy the food items for himself or herself and then proceeded to consume them."

Political actions revealed

Whatever low profile the U.S. Navy Vets had in Virginia changed last week. On May 16, The Roanoke Times reported how the group lobbied for legislation it would benefit from less than a year after its director, Thompson, gave $67,500 to key Virginia politicians.

The donations included $5,000 to the campaign of McDonnell, $55,500 to Ken Cuccinelli's successful attempt to become attorney general and $7,000 divided among the campaign committees of four key Virginia lawmakers.

Shortly after the donations came a push by the U.S. Navy Vets to have Virginia's law changed to allow it to solicit funds without being registered with the Department of Agriculture and Consumer Services. The group had raised money in the state previously, but suspended those activities last year.

After getting a visit from a U.S. Navy Vets representative, Sen. Patsy Ticer, D-Alexandria, agreed to introduce a bill that would exempt veterans groups with 501 (c) 19 status from having to register. Ticer's bill sailed through the General Assembly without opposition. After learning in March of the St. Petersburg Times' reports, Ticer -- who received a $1,000 campaign contribution from Thompson last year --became concerned enough to ask McDonnell to veto the bill.

But officials said the request came too late in the legislative shuffle, and McDonnell signed the bill into law. It will take effect July 1.

Once he learned about the controversy surrounding the U.S. Navy Vets, the governor gave his $5,000 to a nonprofit military organization in Virginia Beach.

Most of the other office holders have followed suit, with the exception of Cuccinelli.

The attorney general -- who had only one other donor contribute more than Thompson's $55,500 -- has indicated that he will give the money away if Thompson is found to have misappropriated funds that should have gone to support veterans.

Meanwhile, some veterans groups worry the controversy may affect them, too.

"People have an immense amount of generosity when it comes to veterans, and they support us quite well," said James Clem, treasurer of the Roanoke chapter of the Disabled Veterans of America.

But when situations like this one come up, "it tends to hurt fundraising for everyone," Clem said. "Because people become leery about giving their money to organizations, because they don't know where the money is going."

News researcher Belinda Harris contributed to this report.

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