Law enforcement authorities with search warrants on Wednesday conducted a four-county raid on the operations of two charities that allegedly have used homeless veterans to bilk the public of millions of dollars.
The raids are the result of an ongoing investigation of the activities of American National Veterans Inc., a nonprofit group based in Colton, and another nonprofit organization called the National Organization on Smoking, Alcohol and Drugs, known as NOSAD, headquartered in Huntington Beach.
American National Veterans has solicited donations at dozens of Orange County locations and has been under fire in recent months from officials who have revoked the group's charitable solicitation permits in Los Angeles, La Verne, Azusa and Pasadena. Costa Mesa officials recently suspended the group's permit after receiving complaints that solicitors were harassing shoppers in front of a Fedco store.
On Wednesday, the state Department of Industrial Relations cited American National Veterans for failing to collect employee withholding taxes on $1.4 million in wages. Both NOSAD and American National also are being audited by the state attorney general's office, said Deputy Atty. Gen. Belinda Johns.
Neither American National Veterans President Mark Sporn nor NOSAD President Judith Clark could be reached for comment Wednesday.
Attorney Paul Sollami, who represents American National Veterans, denied that the group has engaged in fraudulent activities and said that it has only sought to help former servicemen who are homeless and suffering from drug and alcohol abuse.
"We are being audited by the (attorney general's) office and they haven't made any derogatory comments about what our funds are being used for," Sollami said.
Sollami said he had not heard of the citation issued by the Department of Industrial Relations but argued that American National is not subject to its regulations because it considers its solicitors to be volunteers rather than employees.
Authorities allege that both groups have fraudulently solicited more than $4.6 million in donations in Orange, Los Angeles, Riverside and San Bernardino counties but that little of the proceeds have actually been used to support veterans or their activities.
Authorities also allege that the groups have exploited and victimized their solicitors, the majority of whom are homeless veterans or other homeless people who allegedly are promised a sizable percentage of the take for their services.
Investigators from law enforcement agencies served 20 search warrants on homes, offices, mail drops, banks and solicitation sites, seizing financial documents, computers, file cabinets, even tables and chairs used by solicitors. Participating agencies included the state attorney general's office, the state Department of Industrial Relations, the state Employment Development Department, the Riverside County district attorney's office and the Orange County Sheriff's Department.
Riverside Police Lt. Rick Albee, whose department headed up the raids, said no arrests were made Wednesday but that evidence will be turned over to the Riverside district attorney and the state attorney general for further investigation.
American National Veterans and NOSAD, which also operates under the name of United States Veteran's Assn., are only two of several storefront operations that have sprung up in recent months to prey on a surge of patriotism engendered in part by the Persian Gulf War and lingering guilt over treatment of Vietnam veterans, authorities said.
The groups operate by taking homeless veterans off the street and setting them up with tables and collection boxes in front of supermarkets, department stores, post offices and other locations. Once in front of the stores, say officials, the solicitors use aggressive tactics to collect donations and some have been accused of verbally harassing shoppers.
Authorities say American National Veterans Inc. employs about 75 solicitors and NOSAD about 35. Many of the veterans receive bed, board and counseling at a motel in Devore that is leased by American National.
The solicitors are promised about 30% of their take. However, the organizations take back enough money to pay for motel expenses, transportation, food, and even the tables and flags, authorities said.
"They can average about $200 on a good weekend but may have $60 a day taken out of that for motel expenses," Albee said. "They are being victimized as well."
Albee said the solicitors were not targeted in Wednesday's raid and were provided with housing referrals and information about where to get financial aid and other assistance.
The groups have reaped a windfall from unwary citizens and have damaged fund-raising efforts and reputations of legitimate veterans organizations, officials say.
"What happened today is welcome news," said Orange County veteran's services officer Ron Melendez. "I won't go so far as to say those groups are not legitimate but what they are doing with their funds is in question. They have given a sort of black eye to legitimate organizations."
Melendez said the county's Veteran Advisory Council has received numerous complaints about NOSAD and American National from the public and other veteran's groups.
The council has established a task force to gather information on veteran's groups soliciting in the county and permit requirements in individual cities for a proposed countywide database that could be used by police or the public. The council has also developed a standardized complaint form.
"The concern is that people are donating money thinking they are helping needy veterans when they may not be," Melendez said.