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State attorney general sues wounded-veterans charity

California's attorney general on Thursday filed a civil lawsuit against a Riverside County-based charity that raises money allegedly to support programs for military veterans and active-duty personnel, particularly for those hospitalized with war wounds.

Instead of supporting those programs, the Help Hospitalized Veterans has used donations for lavish salaries and pensions, self-dealing business relationships and loans, and perks such as $80,000 in golf memberships and use of a condominium, Atty. Gen. Kamala D. Harris said in a lawsuit filed in Riverside County Superior Court.

The suit requests the recovery of $4.3 million that was allegedly diverted illegally, as well as removal of several officers and board members of the charity based in the Riverside County community of Winchester.

“We must protect veterans, active-duty military and donors from scam artists who see them as little more than prey for their financial frauds,” Harris said.

Help Hospitalized Veterans, established in 1968 to provide “gift packs” for service personnel in Vietnam, has long been criticized for the relatively small percentage of its funds that are used directly for support programs.

In 2011, the tax-exempt group reported revenue of $45 million, including $30 million in cash donations. But the watchdog group CharityWatch says only 35% went to programs for military personnel, compared with the 65% that many similar groups report.

Filings to the IRS and the attorney general’s office used “accounting tricks” to inflate the amount of money supposedly spent on military personnel, including arts and crafts kits for hospitalized veterans,  according to the lawsuit.

The charity’s longtime president Roger Chapin, who reportedly received $2.3 million during seven years and retired in 2009 with a $2-million pension, was not available for comment. Chapin and his wife, Elizabeth, residents of San Diego County, are among the defendants.

When similar allegations have been made in the past -- including at a fiery congressional hearing in 2008 -– Chapin has blasted his critics and accused them of being ignorant about the high cost of fundraising.

“If I could do better, I would,” Chapin said at the hearing when grilled by Rep. Henry Waxman (D-Los Angeles) and others. “I’ve tried television, I’ve tried radio, I’ve tried foundations, and the only things that works is direct mail.”

If charities were forced to reveal how their donations are spent, “we’d all be out of business,” Chapin said. “Nobody would donate; it would dry up.”

Waxman was unmoved: “It’s unethical. It’s wrong. It’s really a fraud against Americans who agree to give you their hard-earned dollars.”

In the civil lawsuit, the attorney general’s office is seeking general and punitive damages, restitution and civil penalties.

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--Tony Perry in San Diego

 

 
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L.A. Now is the Los Angeles Times’ breaking news section for Southern California. It is produced by more than 80 reporters and editors in The Times’ Metro section, reporting from the paper’s downtown Los Angeles headquarters as well as bureaus in Costa Mesa, Long Beach, San Diego, San Francisco, Sacramento, Riverside, Ventura and West Los Angeles.
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