U.S. Senate Committee on Small Business & Entrepreneurship

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December 11, 2008

Kerry-Snowe Investigation Reveals Veterans Corporation Abused Taxpayer Dollars

Executives dine out on federal dime at the expense of veterans

WASHINGTON - Sen. John F. Kerry, Chairman of the Senate Committee on Small Business and Entrepreneurship, and Sen. Olympia J. Snowe, the Committee’s Ranking Member, today released the results of their investigation finding gross mismanagement and lavish spending by the National Veterans Business Development Corporation, better known as The Veterans Corporation (TVC). In light of TVC’s poor stewardship of federal dollars, veteran entrepreneurs have not received the resources they so rightfully deserve.

Kerry and Snowe are recommending that no future federal funds go to TVC, created in 1999 to assist veterans. Instead, the responsibility and funding for the three veterans’ centers under TVC’s care – in St. Louis, Mo., Boston, Mass., and Flint, Mich. – should go to the Small Business Administration’s Office of Veterans Business Development.

The most shocking revelation from the investigation was the thousands – perhaps millions – of wasted taxpayer dollars spent on extravagant dinners, luxury hotels, first class travel, high executive salaries, ineffective programs, and other dubious expenditures. Among TVC’s expenses were:

• Meals at exclusive D.C. restaurants, including Bobby Van’s, Fleming’s, Morton’s, Ruth’s Chris and McCormick & Schmick’s. TVC executives racked up a tab of over $1,500 at McCormick & Schmick’s alone.
• Bloated salaries. TVC’s top two executives received almost a quarter of the non-profit’s federal allotment, far higher than average for the typical charity.
• Failed fundraising efforts. In FY2007 alone, TVC spent $240,000 in taxpayer funds to raise just $64,000 from private donors.

The Massachusetts, Michigan and Missouri veterans’ centers are in danger of closing because the nonprofit group has refused them sufficient funding needed to survive. TVC’s primary mission was to create and maintain a national network of these veterans centers. But since it was formed, TVC has spent only 15 percent of its funding on the centers. Last year that meager allotment dropped to just 9 percent.

Multiple leadership changes over the course of TVC’s history have not helped because the problems at the organization lie deeper than the leadership level, as the report indicates.

The Committee launched its bipartisan investigation of TVC last March, after repeated concerns were raised by the Committee and members of the veterans community over TVC’s use of federal funds. Previous reports by the Government Accountability Office (GAO) also pointed to problems at the organization. Additionally, various veterans’ organizations have expressed their frustration with TVC, including the American Legion, which withdrew its support for the group in August. Subpoenaed information, interviews with past and present TVC board members and bank records collected throughout the investigation have made clear that the organization has largely abandoned its primary mission.

“This investigation made me angry as someone who has worn the uniform of my country,” said Kerry. “It’s appalling that an organization created to aid our nation’s heroes would instead squander taxpayer dollars, wining and dining their executives instead of helping veterans. Our veterans put their lives on the line for our freedom and we owe them our full support when they return home. Certainly the more than 25 million veterans in our country deserve better than this.”

“It is deeply regrettable that The Veterans Corporation squandered the well-intentioned efforts of so many to create a national veteran entrepreneurship network,” said Senator Snowe. “I am confident that, with sufficient funding, the Small Business Administration can more efficiently and effectively oversee valuable veteran entrepreneurship programs and centers.”

Please click here to read the report.

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