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Group Told Not to Seek Donations : Fund-raisers: The attorney general's office complained that the American Veterans Committee misrepresented its tax status and failed to disclose how much it raises and spends.

February 14, 1991|PHIL SNEIDERMAN | TIMES STAFF WRITER

A Los Angeles Superior Court judge has shut down a Glendale-based fund-raising organization for veterans amid allegations that it has falsely claimed that donations to the group are tax-deductible.

Acting on a complaint filed by the state attorney general's office, Judge William Huss granted a temporary restraining order Feb. 7 against American Veterans Committee.

The committee has misrepresented its tax status and repeatedly failed to disclose how much it raises and spends as required by state law governing charitable groups, according to the complaint.

"They are required to make annual financial reports to our office," said Deputy Atty. Gen. Belinda J. Johns. "This organization has made no filings since 1987. We don't know what they do or where their money goes. They have not complied with the laws in California, and I don't want them soliciting until they do."

The restraining order prohibits the Glendale group from doing any further fund-raising.

Investigators believe that most of the solicitation has been done by a telephone crew based in Bellflower. The judge ordered the organization not to spend any funds raised through its solicitations, except for $6,700 needed to pay outstanding debts, including a $3,000 telephone bill and rent for the Bellflower office.

At a hearing scheduled for Feb. 22 before Huss, the attorney general's staff will seek a preliminary injunction against the organization, which was founded as a nonprofit public benefit corporation in 1986.

State officials pursued the civil case after Long Beach police and a number of private citizens said they were suspicious of the group's fund-raising tactics, Johns said.

The complaint states that American Veterans Committee also operates as the Blind Children's Society, Battered Women's Society, Child Abuse Network and United Missions. These also are restrained by the judge's order.

Investigators say the group seeks donations by telephone and through direct solicitation outside stores. Johns said its literature states that donations are tax-deductible.

But the group does not have federal tax-exempt status from the Internal Revenue Service, IRS spokesman Michael Shuler said Tuesday. And last spring, American Veterans Committee lost its state tax-exempt status because of its failure to file annual financial statements.

The attorney general's complaint also charges that the organization violated the state Business and Professions Code because its literature does not properly inform donors where to obtain an audited financial statement of the groups' expenses.

Glendale accountant Frank E. Burford, who heads American Veterans Committee, characterized the civil complaint as "just a little bureaucratic blunder."

"They came in with a lot of allegations that were completely baseless," he said Tuesday. "We have furnished all the documentation and forms that they want. I think the attorney general's office and ourselves will be able to work out any problems."

Burford, who described himself at a World War II Navy veteran, said he volunteers his services to the committee and receives no financial gain from its fund-raising. "I would like to continue the organization," he said. "I think we have done a lot of good. I don't know why we're getting so much flak on this thing. If this continues, I will just shut it down."

American Veterans Committee came under scrutiny by Los Angeles officials early last year when Burford sought a license to seek donations by telephone in that city. Many neighboring cities do not require such a license.

During the Los Angeles review, two national veterans organizations criticized Burford's group, one for using its name and the other for using its logo.

The incomplete financial records that Burford's group provided to the city showed that less than 10% of the money it raised went to charitable purposes. Most of the remaining funds covered operating expenses, its records showed.

Robert Burns, general manager of the Los Angeles Social Service Department, said city officials could not use this information to deny a permit to the group. The U.S. Supreme Court has ruled that a local government cannot mandate what percentage of the revenue a fund-raising organization must give to a charitable cause, he said.

Still, because the group lacked federal tax-exempt status, the Los Angeles Social Service Commission denied American Veterans Committee a fund-raising license last April 23.

Since then, the organization has continued to seek donations outside Los Angeles.

In November, Long Beach police received a call from a concerned resident who had received solicitation calls from the Child Abuse Network and the Blind Children's Society on successive nights. Michelle Eads, a Long Beach police employee who investigates permit requests, said the resident was told that all questions about how donations were used could be directed to Frank E. Burford.

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