Phony Vets Charity Collected $2M in Va.

RICHMOND -- A fraudulent charity organization that is under investigation in multiple states collected at least $2 million from Virginia residents who thought they were donating funds to help military veterans, according to findings by the state's consumer affairs agency.

The now defunct U.S. Navy Veterans Association raised the money over a five-year period that ended last year, when Virginia and other states launched investigations of the suspect organization, according to information gathered during a probe by the state's Office of Consumer Affairs.

"Based on what we've seen and what we believe, it appears to be a fraudulent group," said Secretary of Agriculture and Forestry Todd Haymore, who oversees the agency that conducted the investigation.

The case was turned over Monday to the office of Attorney General Ken Cuccinelli, who last year forfeited more than $55,000 in campaign contributions that he received in 2009 from the self-described director of U.S. Navy Vets. The man, who used the name Bobby Thompson, has eluded authorities since last year. Ohio authorities have charged him with identity fraud.

Cuccinelli decided to donate the funds to veterans organizations in July after Thompson disappeared and lawyers representing the U.S. Navy Veterans Association said they could not find him.

"I know that besides his being roped into these shenanigans, the whole point of people using veterans to scam other people out of money and then the money not going to veterans groups -- he is extremely angry about that," Cuccinelli spokesman Brian Gottstein said. "And I know he wants to see justice done on this."

The anti-trust and consumer litigation section in the attorney general's office will handle the matter, Gottstein said. The office likely would refer the case to a local commonwealth's attorney if criminal prosecution is warranted, he said.

Haymore provided few additional details about the consumer affairs agency's findings Monday, citing concerns about jeopardizing the investigation. He said Virginia's office worked with six other states that are investigating the suspect charity, citing Ohio, Michigan, Florida, New Mexico, Hawaii and Missouri.

The state agency launched its investigation in May after news reports raised questions about the charity's fundraising practices and its use of funds. Haymore said that one employee in the Office of Consumer Affairs was dedicated solely to the investigation from July until last week, and another spent about 25 percent of his time on the case.

Investigators examined all of the organization's activities in Virginia, including its efforts last year to gain an exemption from filing annual registration statements to comply with the state's charitable solicitation law.

The General Assembly approved the exemption last year and Gov. Bob McDonnell signed it into law before becoming aware that the Florida-based organization was under scrutiny in other states. The House of Delegates will act today on legislation to repeal the exemption. The Senate already has passed the bill.

Investigators found no evidence of wrongdoing by any state elected officials, Haymore said. Thompson contributed $67,500 to Virginia politicians in 2009. Nearly all of the recipients donated the funds to charities after questions surfaced about the legitimacy of U.S. Navy Vets.

Haymore said state investigators had "no cooperation or communication with principals involved with the U.S. Navy Veterans Association."

"There just wasn't any cooperation, I think is the best way to say it," said Haymore, who declined to identify the individuals investigators were pursuing. "They were nowhere to be found or, probably in some cases, not even who they appear to be -- at least in black and white on paper."

The address for the U.S. Navy Vets Virginia chapter is a drop box at a UPS store just outside Richmond.

When the St. Petersburg Times of Florida conducted an exhaustive investigation of the U.S. Navy Vets last year, Thompson was the only listed state or national director reporters could find. He moved out of his rented Tampa duplex shortly after reporters questioned him.

Ohio authorities have issued a nationwide arrest warrant for Thompson, accusing him of using a stolen identity to execute an elaborate fundraising scam that generated tens of millions of dollars.

While the search for Thompson continues, Ohio authorities are pressing forward with the prosecution of Blanca Contreras, charged with participating in the scam as the acting treasurer of U.S. Navy Vets.

Unable to post a $2 million bond, Contreras is being held in the Cuyahoga County Jail in Cleveland on charges of theft, money laundering and operating a corrupt enterprise.

Her trial is scheduled to start June 22.

When Contreras and Thompson were indicted on identical charges in October, officials said the duo took more than $1 million in contributions meant for members of the armed forces. Later court documents said the amount was closer to $100 million.

At a hearing last week in Cuyahoga County's Court of Common Pleas, Judge Kathleen Ann Sutula agreed to postpone Contreras' trial from March 21 until June because a new assistant attorney general has been assigned to the case.

Contreras, 38, of Tampa is being represented by the public defender's office.