Opinion: ‘Bobby Thompson’ Case a Warning for Donors

Thin federal and state resources for charity oversight make donors the main line of defense against frauds like that of “Bobby Thompson,” the man convicted earlier this month of running a $100-million veterans charity scam, according to a New York Times opinion column.

The “most outrageous aspect” of the U.S. Navy Veterans Association case was that much of what it did—including spending up to 90 percent of donations on professional telemarketers—was legal, writes Ken Stern, author of With Charity for All: Why Charities Are Failing and a Better Way to Give. The fraud lay largely in Mr. Thompson’s adoption of a phony identity—he has been identified as a lawyer and ex-fugitive named John Donald Cody—and filing of registration documents containing false statements, Mr. Stern says.

“When it comes to frauds like these, it is neither the law nor the regulators that are the best line of defense; it will always be the careful application of caveat emptor by potential donors,” he writes.

Read a Chronicle of Philanthropy column by Ken Stern on charity oversight and the growth of the nonprofit world.