Vets charity accused of illegal accounting

Vets charity accused of illegal accounting
By David Fitzpatrick and Drew Griffin
CNN Special Investigations Unit
August 9, 2012

STORY HIGHLIGHTS
NEW: Charity's officers were "lining their pockets," attorney general says
California sues Help Hospitalized Veterans, accusing it of misspending donors' money
The state seeks $4 million in penalties for solicitations it calls misleading
The charity's president says it "looks forward to the chance to tell its story"

Winchester, California
(CNN) -- California authorities are taking a controversial veterans' charity to court, accusing it of paying officers "excessive" salaries and making "imprudent" loans, totaling hundreds of thousands of dollars, to a leading conservative activist's company.

In a civil lawsuit announced Thursday, the state attorney general's office asked a judge to remove the president and the entire board of directors of Help Hospitalized Veterans. The complaint asks for the board and president to pay more than $4 million in penalties to compensate for "misrepresentations" in solicitations by the charity.

The charity "has helped some veterans," Attorney General Kamala Harris told CNN's "Anderson Cooper 360." But she said nearly two-thirds of its revenue went to overhead, and the officers named in the complaint "have basically been lining their pockets off the compassion that Americans have for our veterans and servicemen and women."

"They have really tugged, I think, at the heartstrings of Americans who want to help our veterans," Harris said. "And, instead, they've had gulf club memberships and condominiums, and they've been lining their pockets -- their personal pockets."

The complaint accuses the charity -- which reported more than $31 million in donations in 2010 -- of making false statements on its tax filings, paying "excessive" compensation, using donors' funds to buy a country club membership and a suburban Washington condominium, and unlawfully diverting money to start another nonprofit.
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