Key Elements of New York’s Settlement With Veterans’ Charity and Its Vendors

The New York Attorney General’s Office says it believes a $25-million settlement it reached this month after investigating a veterans charity and its direct-mail vendors is the largest financial relief ever obtained in the United States for deceptive charitable fundraising. These are the key accusations and results of the settlement:

• Quadriga Art and its affiliates, which provided high-end fundraising materials to the charity, will pay $9.7-million in damages, forgive $13.8-million owed to it by the charity, and pay $800,000 to New York State for costs and fees.
• Convergence Direct Marketing, which advised the charity on its fundraising strategy, will pay $300,000 in damages.
• The $10-million in damages will go to programs to help disabled veterans, including $1-million for spinal-cord research at the James J. Peters VA Medical Center, in the Bronx; $1.25-million for research on mental-health issues; and $750,000 for research into women’s medical issues.
• Quadriga and Convergence must fully disclose all potential conflicts of interest, refrain from dealing with start-up charities that do not have their own legal counsel, and perform “due diligence” to ensure fundraising appeals are accurate. They must also provide more information to charities about the costs involved in fundraising campaigns when they cover up-front expenses.
• The Disabled Veterans National Foundation must replace all of its founding board members, create a committee to reexamine its business model, refrain from using Quadriga or Convergence for three years, and end misleading fundraising pitches. It must also terminate its relationship with Charity Services International, a group that it paid to obtain donated goods for veterans while failing to ensure that the goods “had any useful purpose.”