Texas Attorney General Ken Paxton today announced a settlement resolving the State’s enforcement action against the Veterans Support Organization (VSO) and four of its principals. Under the agreed final judgment and permanent injunction, the defendants must cease engaging in unlawful solicitation of charitable contributions in Texas, and must dissolve VSO as a charitable organization in our state.
“Donors have one thing in mind when they donate to charities: helping people in need,” said Attorney General Ken Paxton. “It is particularly outrageous that VSO cheated veterans in need of help and those good citizens who wanted to help them. Bad actors like these not only take advantage of people’s good intentions, they damage the good reputations of other charities that are operating in good faith. This judgment will permanently ban the defendants from operating in Texas, so they no longer can misrepresent to Texas donors that their donations help local veterans with work and housing.”
Today’s resolution stems from a legal action filed in Travis County in March 2014 against Florida-based VSO and its directors, Richard Vanhouten, Stephen Casella, Robert Cruz and Michelle Vanhouten. The State’s investigation found that VSO had raised more than $2.5 million in Texas from 2010 to 2012. More than 70 percent of the funds raised in Texas were diverted to Florida, where VSO is headquartered, and to Rhode Island where it was incorporated – contrary to the defendants’ statements to Texas donors that the charitable donations would benefit local veterans in need. The investigation also found that VSO’s so-called “work program” for veterans was merely structured panhandling, whereby anyone, veteran or non-veteran, could sign on to solicit funds for VSO. Their advertised “housing program” to get homeless veterans off the streets was simply a room rental to VSO’s workers (veterans and non-veterans) who had to pay rent to VSO or face eviction.
Under the final judgment and permanent injunction, defendants have to withdraw VSO’s registrations and filings in Texas, and the individual defendants are permanently banned from engaging in the following activities in Texas:
Owning, operating, or managing charities, or any other entity that engages in charitable solicitations;Serving as a fundraiser, spokesperson, or consultant for any charitable entity;Assuming any position of financial authority in any veteran related charitable entity.
Furthermore, if any defendant maintains a website that may be accessed by persons in Texas to solicit funds for VSO, the website must clearly and conspicuously state “Donations from Texas residents are not accepted.”
The State’s final judgment and permanent injunction orders the defendants to pay $250,000 in civil penalties should they violate the terms of the settlement, and orders VSO to pay $275,000 for a Texas court to distribute to support needy veterans in the local area, provide housing assistance for homeless veterans, and support volunteer services at local VA hospitals.
To view the settlement, please visit: https://www.texasattorneygeneral.gov/files/epress/20151118_VSO_Filestamped_AFJPI.pdf