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Cuccinelli announces settlement with fund raiser for fraudulent U.S. Navy Veterans Association
- Associated Community Services, Inc. to pay more than $65,000 in refunds and penalties -
RICHMOND (January 17, 2012) - Attorney General Ken Cuccinelli announced today that his office has reached a settlement with a company that solicited funds from Virginians for the now defunct and fraudulent United States Navy Veterans Association.
Associated Community Services, Inc. (ACS), a Michigan company that solicits contributions on behalf of charitable organizations through telemarketing calls, reached a settlement for alleged violations of the Virginia Solicitation of Contributions (VSOC) law committed while raising funds for the United States Navy Veterans Association (USNVA) and other charitable organizations. The settlement requires ACS to pay more than $65,000 in refunded contributions, civil penalties, attorney's fees, and expenses.
In a complaint filed with the settlement, Cuccinelli's office alleged that ACS solicited Virginia residents after USNVA directed it to stop calling Virginians on its behalf. The solicitation calls also violated a prohibition against soliciting on behalf of a charitable organization that is not registered with the commissioner of the Virginia Department of Agriculture and Consumer Services (VDACS). The complaint further alleged that ACS solicited contributions on behalf of USNVA and other charitable organizations without filing with the commissioner the required written authorization of the charitable organizations or the required solicitation notices for some of its solicitation campaigns.
ACS settlement details
The settlement requires ACS to pay $16,780 to 812 Virginians, returning contributions made to USNVA in response to calls placed after August 24, 2009, when ACS was notified by USNVA to stop soliciting Virginians. ACS already has returned uncashed checks and cash contributions totaling more than $32,500 to approximately 1,500 Virginians who made donations to USNVA.
The settlement also requires ACS to pay $9,052.50 to 485 Virginians, returning contributions made to Circle of Friends for American Veterans (doing business as American Homeless Veterans) when ACS had not filed a solicitation notice with the VDACS commissioner.
In addition, ACS must pay $25,000 in civil penalties for the alleged violations of the VSOC law and $15,000 for reimbursement of the commonwealth's expenses and attorney's fees.
In addition to the monetary payments, the settlement includes a permanent injunction that prohibits ACS from violating the VSOC law in the future by, among other things,
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soliciting contributions on behalf of a charitable or civic organization after being directed by the organization to cease solicitations;
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soliciting contributions on behalf of an organization that is not registered or that has not been granted an appropriate exempt status under the VSOC law; and
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soliciting on behalf of an organization without having filed the required solicitation notice and the written authorization of two officers of the organization with the VDACS Commissioner.
The settlement, which is in the form of a consent decree, was submitted for approval to the City of Richmond Circuit Court. The settlement is not to be deemed an admission of wrongdoing or violation of the VSOC law by ACS. ACS cooperated with the attorney general's office throughout the investigation and further maintained that it was unaware of USNVA's fraudulent actions.
ACS's history of soliciting for USNVA in Virginia
ACS began soliciting contributions in Virginia on behalf of the U.S. Navy Veterans Association in 2005. In October 2004, VDACS' Office of Consumer Affairs (OCA) found USNVA to be exempt from the registration requirements of the VSOC law. However, in February 2009, OCA notified USNVA that it was incorrectly recognized as exempt from the registration requirements.
In an August 2009 letter, OCA directed USNVA to file a registration statement with OCA as required by the VSOC law. USNVA directed ACS to suspend its solicitation of Virginia residents in a letter received by ACS on August 24, 2009. On August 27, 2009, USNVA responded to OCA that it had suspended all solicitations in Virginia and would not be filing the requested registration statement.
While ACS initially ceased calling Virginians, the commonwealth's complaint alleges that it made at least 7,500 solicitation calls to Virginians to request contributions on behalf of USNVA from February 4, 2010, through March 9, 2010. ACS has maintained that these calls were made in error because a calling list was inadvertently loaded into ACS's dialing system. The settlement requires the return of all contributions made by Virginians who were solicited by ACS on behalf of USNVA after August 24, 2009.
The settlement announced today resolves the commonwealth's civil claims against ACS for alleged violations of the VSOC law identified through investigations conducted by OCA and the attorney general's office.
USNVA and "Bobby Thompson"
The attorney general's office has civil enforcement authority under the VSOC statute. Regarding criminal prosecution of USNVA and Bobby Thompson - which does not fall under the office's jurisdiction - the office previously referred the matter to authorities with appropriate criminal jurisdiction. The office therefore cannot comment as to which authorities it was referred, as there is an ongoing investigation.
The attorney general did not play a role in the civil case against ACS, but instead assigned his chief deputy attorney general, Charles "Chuck" James, to oversee it. The case was handled by Senior Assistant Attorney General Richard Schweiker and Senior Assistant Attorney General/ Antitrust and Consumer Litigation Section Chief David Irvin.
USNVA claimed that it assisted disabled and needy war veterans and that it sent care packages to U.S. troops stationed overseas, among other charitable work. However, on March 21, 2010, the St. Petersburg Times began publishing a series of articles regarding USNVA that questioned its legitimacy. By the end of June 2010, USNVA ceased operations and its founding director, Bobby Thompson, disappeared amid allegations that USNVA was a fraud.
"The U.S. Navy Veterans Association defrauded people in the name of veterans, and this fraud diverted needed money from veterans' charities," said Cuccinelli. "This office will continue to work with our law enforcement partners at the state, local, and federal levels to find 'Bobby Thompson' and any other cohorts, to ensure that those responsible are held accountable for what they have done."
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A copy of this news release may be found on the attorney general's web site here.
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