States investigate Gig Harbor charity

American Veterans Coalition raises $1.5 million, gives 1 percent to vets

Paige Richmond

of the Gateway

Eileen and Sy Young have never heard of the American Veterans Coalition, a Gig Harbor-based charity that says it is “dedicated to assisting the brave men and women who have done so much for their country.” Eileen Young, who co-founded the Key Peninsula Veterans Institute with her husband, assumed she knew all of the veterans’ charities in the area.

Both she and Sy have been active in supporting veterans in the past two decades: Sy was State Commander for Washington’s VFW in 1985 and 1986.

Eileen thinks it’s odd that no one from the American Veterans Coalition has attempted to contact her or anyone at the KPVI.

“It raises a red flag, with all the help we give people out here on the peninsula,” she said.

The Youngs may not know about the AVC, but the charity — which states in IRS forms that its primary purpose is to “provide financial aid & education re: disabled veterans” — has caught the attention of the Washington State Attorney General, as well as those in Arkansas and Kentucky.

Both Arkansas and Kentucky have settled claims against the charity, alleging it violated the Consumer Protection Act by making false and misleading statements to donors about how contributions would be used.

The AVC has stayed well-hidden in Gig Harbor. Robert Friend, Jr., and Shao Mei Wang, a married couple, run the charity, but neither they nor AVC have a functioning office in the area. Friend and Wang own a $400,000 home near Henderson Bay, according to the Pierce County Assessor-Treasurer’s Web site.

The mailing address listed on the charity’s financial documents is a private mailbox at Copy It, Mail It on Judson Street. The secondary office on file with the Secretary of State’s office is incorrect, since the space — located off Wagner Way in Gig Harbor — has been occupied by a construction company for at least three months.

Calls and e-mails to the AVC requesting comment were not returned. The charity’s fax number has been disconnected. A Gateway reporter also knocked on the door of the couple’s home but got no answer.

AVC has raised huge sums of money since moving to Gig Harbor in 2004, but a small portion of it has been used to support the charity’s cause, according to IRS documents filed with the Secretary of State’s office. Of the $1,579,521 raised in 2007, only 21 percent went to program services, which are defined as any activities that support a charity’s purpose. Most of those program service dollars went to direct mail campaigns, education and soliciting volunteers.

Less than 1 percent went directly to veterans and their families.

The couple also operates three other charities in Gig Harbor: Cancer Assistance Network, Disabled Firefighters Foundation and National Association of Disabled Police Officers. All three have donation records similar AVC’s: Only 33 percent of the combined $1.8 million raised between the three went to program services.

Those numbers from Friend and Wang’s charities should give potential donors pause, said Kristin Alexander, a media relations manager for Washington Attorney General Rob McKenna.

“From records on file with our state here, it appears that AVC gives very little money to actual veterans,” Alexander said. “Almost all the funds they bring in go to other expenses.”

Those other expenses include $1,157,160 in 2007 to hire professional fundraising firms, none of which are based in Washington.

Alexander said a 70 percent donation rate “is a good benchmark” for charities. Charity Navigator, a nonprofit charity watchdog group, says on its Web site that most reputable charities donate about 75 percent of their revenue to program services.

Other Gig Harbor charities meet that benchmark: Secretary of State records show the Gig Harbor Peninsula FISH Food Bank gives 90 percent to program services, and the Prison Pet Partnership Program affiliated with the Washington Corrections Center for Women gives 87 percent.

Other veterans charities give more than AVC does. The Disabled American Veterans Charitable Service Trust, a Kentucky-based charity that raises funds in Washington, donates 96 percent to program services. The Washington State Chapter of U.S. Navy Veterans Association donates 79 percent.

But spending too much money on operating costs and fundraising is not enough for the Washington attorney general to bring charges against AVC. Just like in Kentucky and Arkansas, consumers would need to complain that AVC made promises it didn’t keep, and McKenna, the attorney general, would need to prove those allegations.

“First off, it’s important for people to know there’s no law in Washington regarding what amount of charitable donation actually has to go to the cause,” Alexander said. “Although we have not taken enforcement against this organization, we are aware of concerns raised.”

The case in Kentucky was settled just last month, requiring Friend and Wang to pay the Commonwealth of Kentucky $10,000 and to refund $9,927.50, the entire amount AVC and its associated charities raised in the state.

The Arkansas attorney general settled a similar suit against AVC last July for $33,749. The charity is now barred from operating in either state for several years.

Both suits centered around allegedly false claims made by AVC — namely, that fundraisers told donors a certain percentage of money collected would go directly to veterans, but, according to the IRS documents, the charity didn’t live up to the promise.

“It wasn’t just that they didn’t give ‘X’ amount,” said Della Justice of the Kentucky Attorney General’s office. “It’s about what they told people they were going to do with the money.”

AVC’s program services in 2007 included $83,283 spent on “seeking and coordinating volunteers” and “advocating and educating” the public about veterans issues and $239,160 on direct-mail campaigns. Only $9,000 provided financial assistance to veterans’ “families individually or through organizations devoted to the needs of veterans,” IRS documents show.

None of that outreach happened in Gig Harbor, as far as local residents can tell. State Sen. Derek Kilmer, D-Gig Harbor, who has made veterans’ programs a central part of his legislative focus, said the name of the charity didn’t ring a bell. Gary Helmick, the unit commander of the Veterans of Foreign Wars District 4 Honor Guard and a Key Peninsula resident, said he’d never heard of the American Veterans Coalition.

“I know (they) are NOT involved with any of the veterans groups normally helping or support for veterans and/or families in this area that I’m aware of,” Helmick wrote in an e-mail. “And I usually deal with them all.”

Friend and Wang “formed one of (the) last big charity clients” of Mitch Gold, who built a $70 million charity empire in Orange County, Calif., according to reports in the Orange County Register. Gold was sent to federal prison for fraud in 2002.

According to reports in the Des Moines Register, Iowa’s Consumer Protection Division is planning to investigate the charity’s fundraising practices in the state.

By the numbers

In 2007, American Veterans Coalition raised $1,579,521, giving $9,000 directly to veterans, less than 1 percent.

But according to IRS documents, AVC gave 21 percent to “program services,” which includes things like direct mail campaigns, education and soliciting volunteers, on which AVC spent $331,443.

Here’s how those numbers break down:

$83,283 was spent on “seeking and coordinating volunteers” and “advocating and educating” the public.

$9,000 was spent on providing financial assistance to veterans’ “families individually or through organizations devoted to the needs of veterans.” None of that money was given to Gig Harbor or any other Washington state residents.

$239,160 on a “joint public awareness/solicitation campaign” through information provided by mail.

Source: 990 IRS forms filed with Washington Secretary of State’s Office

Questions to ask before making a charitable donation

There are no laws in Washington state about how much a charitable organization must give to its cause.

Consumers can ask any phone solicitor these questions to be safe:

What is the full name, address and phone number of the charity?

Do you work for the charity or are you a paid fundraiser?

How much of my contribution will go to the charity and how much to the solicitor?

What will the charity use my contribution for?

Is my contribution tax-deductible?

Is the charity registered with the Office of Attorney General?

Is the solicitor registered with the Office of Attorney General?

What percentage of its total income does the charity spend on its charitable purpose?

Can I obtain a copy of the charity’s IRS Form 990 or other financial statements showing the percentage of donations spent on fundraising and administrative expenses?

Source: Kentucky Attorney General’s Web site