Disabled veterans dispute boils over into lawsuit

WASILLA — A national disabled veterans group cancelled the charter of a local chapter, then filed a lawsuit alleging local officers transferred more than $1 million in assets to a third group to keep it for themselves.

Disabled American Veterans (DAV) claims officers with the Disabled American Veterans Mat-Su Chapter #3 (designated DAV3 in court filings) formed the Mat-Su Veterans Foundation specifically with the intent of diverting funds to that group.

The national organization revoked the charter of the local group on May 28, 2015.

DAV advances the interests of all disabled veterans. Nationwide, the group has about 1.7 million members, men and women injured or disabled in the line of duty during war. Prior to the charter revocation, the local chapter had about 300 members.

In the early 2000s, the group received a sizeable inheritance from the estate of Walther Frisch, a Palmer resident. The estate included several parcels of property and taxi licenses, according to members of the local group. Frisch — who grew up in World-War-II-era Germany — wanted to leave part of his money to local veterans and part of the money to his wife, members of the organization said.

The veterans’ portion of the inheritance presented the Mat-Su DAV chapter with a problem. The organization’s charter allowed only a maximum of three times the previous year’s operating expenditures to be kept by the organization at any given time, and the inheritance put them over that amount (court documents for the national organization don’t give a direct valuation of the estate).

The national group claims in its complaint that in October 2005, the national organization placed the local chapter under a spend-down plan, a way to get rid of the excess money by spending it on service programs. Instead of spending the money on service activities, the national group says DAV3 officials Craig Wade, Alvin Clime, Will Lee, and William Farling created the Mat-Su Veterans Foundation to serve as a collection point for the extra money (Wade doesn’t appear on the group’s incorporation documents). National officials say they weren’t told that the Veterans Foundation existed at all, and financial reports for the 2014 fiscal year weren’t supplied until February 2015. When national officials looked at the reports, eventually supplied in February 2015, they spotted a lot of missing money and incomplete information about property held in the foundation’s name. They also say the meeting minutes provided by the local chapter didn’t match the financial reports.

During roughly the same period, national officials claim the asset reports for the Mat-Su Veterans Foundation went from $100 reported in July 2013 to $500,000 reported in June 2014.

While the $500,000 amount is listed in court files, the actual amount could be much higher, said DAV Inspector General Edward Hartman. DAV officials say more than $1 million could have been improperly diverted over the years the Mat-Su Veterans Foundation has existed. They’ve asked for the opportunity to prove the maximum amount at trial.

“This came about over many, many years of the chapter not doing what it was supposed to be doing and spending money inappropriately,” Hartman said.

The money should go through the DAV’s state department to be distributed, he said.

The lawsuit languished in Anchorage courts for a year before being transferred to Palmer in early January over concerns that the defendants would be unable to make frequent trips to Anchorage. On Jan. 28, court officials granted a temporary stay in the proceedings for 30 days, allowing both sides time to work out an agreement.

Hartman said the mediation was confidential, but said the defendants in the lawsuit made an offer, and officials with DAV made a counter offer.

DAV3 members tell a different story. They say they approached officials with the national organization about the increases and were given a spend-down plan they didn’t like, said Lee, the current gaming committee chairman for the foundation. When local chapter officials tried to discuss the matter, the national organization ignored their concerns, said Lois Whittaker, who anticipated becoming the Mat-Su Veterans Foundation’s treasurer shortly.

Every step of the way was done in consultation with an attorney, including the formation of the Veterans Foundation, Whittaker said. National officials never objected to any of the measures until a political dispute emerged between DAV3 and the Anchorage Chapter, Disabled American Veterans Metro Chapter #7. The Mat-Su group believes members of Metro Chapter #7 used connections in the national organization to prompt the lawsuit, Whittaker and Lee said.

“Defendants admit that one of their motivations for the actions Plaintiff challenges ... was to protect assets and monies from waste or conversion by others, including person in the Anchorage DAV Chapter and the DAV State Department,” the group’s answer reads in part. “Plaintiff is either duped by those third persons or is operating in collaboration with them against the interest of the Matanuska-Susitna based veterans in plaintiff’s current effort to confiscate the asset and hand them over to those third persons.”

The national group saw an opportunity to take the veterans foundation’s assets for themselves, Lee said.

“We’re not playing their game,” he said.

What DAV3 members see as a principled stand has come at a personal price, Whittaker said.

“Not only did DAV national dissolve the chapter, they took everybody’s memberships,” she said.

When Lee and the other defendants in the lawsuit sought membership with the Anchorage chapter, they were rejected, she said. They subsequently received letters from the national organization revoking their lifetime memberships, Whittaker said.

“So you’re telling these guys that have done nothing but work for the DAV all these years that that they’re no longer members?” she said. “It’s a really bad deal.”

Nor is it true that the Veterans Foundation isn’t a service organization, Lee said. The group holds two gun shows at Lumen Christi Catholic High School in Anchorage per year, and fishing trips and other activities for veterans. It also has a wider purpose than the national organization, by serving veterans injured or disabled outside of combat, Lee said.

When the lawsuit was initially filed, the courts ordered the Foundation’s assets frozen. The freeze has been loosened enough for the defendants to fund their legal defense, and for the gun shows to resume, Whittaker said.

The national organization is demanding $525,000 through mediation, she said.

“They’re still playing their games,” she said.

Several people reached via phone at the Anchorage chapter directed comments to the national organization. Hartman said the Anchorage chapter didn’t play any role in the investigation, apart from rejecting some of the members of DAV3 for membership based on their past actions.

“They (Chapter 7) have in no way, shape, or form been a catalyst, other than the fact that there is a long-standing dispute between Chapter 7 and Chapter 3, and the two chapters compete, rival, and feud, just about everything,” he said. “But in no way was Chapter 7 instrumental or a catalyst to initiate the revocation.”

Instead, the primary catalyst for the lawsuit had been the discovery that the pace of transfers to the Veterans Foundation had accelerated over the last year, Hartman said.

The organization will meet informally later this month to decide whether or not to accept the counter offer, Whittaker said.

Mediation hasn’t solved anything, Lee said.

“They (the national organization) still want everything,” he said. “They refuse to re-establish DAV Mat-Su Chapter 3 out here in the Valley. The four of us named in the lawsuit will be thrown out of the DAV. They’re going to unceremoniously tell us to go fly a kite.”

Contact reporter Brian O’Connor at 352-2270, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.