Texas AG cracks down on Veterans Support Organization for deceptive marketing

ID-100128578Texas Attorney General Greg Abbott announced today that Veterans Support Organization (VSO) and four of its principals (Richard Vanhouten, Michelle Vanhouten, Steven Casella and Robert Cruz) were charged with unlawfully soliciting charitable contributions and misrepresenting to Texas donors that the the money it raised would benefit local veterans in need.

The state filed court documents alleging that the defendants claimed to offer help to needy local veterans through VSO’s work, housing, and grant programs. The state’s investigation found VSO’s “work program” was just a type of structured panhandling used to collect funds for VSO. (PDF of state’s lawsuit against VSO can be read here.)

The State charged that the defendants actually hired both veterans and non-veterans to stand in front of storefronts for up to 12 hours a day to raise at least $225 a day in donations for VSO.

Defendants allegedly misrepresented to store management that the solicitors were veterans who were there mainly to raise awareness about veterans’ programs and provide resource information to customers–not to solicit donations.

The defendants conducted solicited money in numerous counties statewide, including Bell, Bexar, Dallas, Harris, Hays, Nueces and Travis. The AG’s Office reports that VSO’s own records show few of the donations raised in Texas were actually used in Texas, although the defendants told donors that their contributions would help “local” veterans “in the area.”

The defendants reportedly raised more than $2.5 million in Texas from 2010 to 2012, with more than 70 percent of the funds going to Florida or Rhode Island.  

According to the state’s lawsuit, defendants often profited from their “housing program” for veterans that consisted of VSO renting two residences–one in Austin and one in Dallas–and subletting rooms to employee solicitors, only some of whom were veterans.

Individuals had to pay $125 a week for rent, participate in VSO’s “work program” or be subject to eviction. Employee solicitors who were unable to pay the rent were evicted.

The state seeks a temporary and permanent injunction as well as civil penalties against VSO. The State also asks the court to secure the defendants’ assets and funds, so they can be distributed to help needy veterans as donors intended.