Senate releases report criticizing Wounded Warrior Project's past spending

Report urges continued improvements, but praises new leadership

JACKSONVILLE, Fla. – Following media reports last year of lavish spending by Jacksonville-based Wounded Warrior Project, the U.S. Senate launched its own investigation of the nonprofit. That Senate committee released its critical findings on Wednesday, and the nonprofit's CEO said the organization will be reviewing the report through the weekend to learn how it can improve.

The Senate Judiciary Committee said the charity “inaccurately” reported the money it spent on veterans’ programs by using “inflated” numbers and “misleading” advertisements. The committee found “excessive amounts of donor contributions that were misused” by WWP’s former leadership.

FACEBOOK LIVE: Lynnsey Gardner talks about bombshell Senate report on Wounded Warrior Project

The findings come after the committee spent more than a year analyzing confidential records, including receipts, air travel records, event records, internal and external communication reports, IRS records, and more documents provided by WWP and the public relations firm the organization hired in the wake of the spending scandal.

In January 2016, several former employees came forward to the I-TEAM to blow the whistle on “lavish spending” on fellow employees by the Jacksonville-based nonprofit instead of on substantive programs to help wounded warriors.

WATCH: I-TEAM's original investigation on WWP

Similar reports surfaced at the same time in the New York Times and on the CBS Evening News. Examples given included staff meetings at five-star hotels and resorts, first-class air travel, expensive work lunches, free snacks and food in excess. There was also concern the charity’s “mission” of “honoring and empowering wounded warriors” was gravely at stake as WWP was receiving the lion’s share of donations for veterans in the United States, raking in more than one billion dollars since its inception.

Senators also found that accelerated growth contributed to the optics of spending excess. The report says, “WWP grew very quickly and initially failed to form an organizational structure to adequately manage that rapid growth.”

The new CEO, Mike Linnington, spoke with the I-TEAM hours after the report was released. 

UNCUT: I-TEAM's full interview with Mike Linnington

"We're happy the report is out," Linnington explained, saying it has been hanging over their heads for more than a year. "We are a learning organization, and we will continue to look at ways to get better."

While Linnington said the organization has made changes in response to some of the issues raised in the report, he said the organization does not agree with all of the findings.

The organization was previously led by CEO Steven Nardizzi and his COO Al Giordano -- who both emphasized “fun” as an important core value of the charity. Of their leadership, the report authors found in their review, “this lack of organization allowed for certain spending practices that broke faith with the donating public.”

The I-TEAM repeatedly asked Nardizzi and Giordano for interviews to tell their side of the story, instead WWP's public relations team took to social media, blaming media reports for the negative press and calling reports “absurd and patently false” and demanding retractions. WJXT stood by its reporting from the very beginning.

FULL REPORT: Sen. Chuck Grassley's report on WWP investigation

The Senate Committee's report is 496 pages. We’ve combed through it and found that two weeks after our reports of questionable spending practices surfaced, two plane tickets were booked at nearly $9,000 each for an international flight in business class. Even though we’ve obtained the confidential records, it’s impossible for us to tell which two people took the trip.

Senate leaders also wrote that an "exorbitant" amount of donations were spent on air travel, adding that “WWP spent excessive amounts of donor funds on employee travel expenses.”

They reviewed records for 38,112 flights over six years and found that while 95 percent of flights were booked in economy, the remaining 5 percent were business and first-class travel. Of those 1,872 tickets booked in first or business class -- totaling $2.2 million -- senators found 43 tickets at more than $5,000 each, and we found one first-class flight booked at more than $12,000.

The flights were taken by employees, veterans, and their caregivers, although the I-TEAM found that at least 65 percent of the premium-class flights were taken by employees. Linnington promised Senate leaders that the high-priced air travel ticket purchases would stop under his leadership.

"Many of our employees are warriors themselves. Many of our employees have disabilities that need to be accommodated," Linnington said of the occasional need for first- or business-class travel.  "But what we decided a year ago when I got here was let’s just not do it."

Linnington, who took over in June 2016, added that exceptions would be made as needed.

By August 2016, he also promised leaders that WWP's “All Hands Huddle” would not continue while he was in charge.

Images of his predecessor, former CEO Steven Nardizzi, rappelling down the side of a building at a five-star resort and riding a horse into a hotel are etched into the minds of Americans, when it comes to the spending scandal. The charity's former leadership fiercely defended the meetings for their staffers at the annual "All Hands Huddle," even telling Senate staffers while under investigation that it "demonstrated the organization's commitment to 'fun' as a core value."

But the committee's new report considered the spending on the events excessive, finding costs ballooned over four years from $129,460 total in 2011 to $987,209 by 2014. That equated to $2,379 a person for more than 400 employees who attended at the Broadmoor resort in Colorado Springs. That figure is notably more than the charity admitted to as public pressure swirled around initial media reports.

Report: More needs to be done by WWP

According to the Senate committee's report, at issue is the charity's consistent statement that it spent 80.6 percent of all donations on programs for veterans. To get that percentage, Wounded Warrior Project counts TV commercials and mailers asking for money as program expenses, saying they helped educate the public about the organization’s work and mission.

In 2016, the I-TEAM reported charity watchdog groups including Charity Navigator and Charity Watch, put the actual percentage of donations spent directly on programs to help veterans closer to 54 percent to 60 percent, WWP called these claims "absurd and patently false" and demanded retractions.  

Wounded Warrior CEO Responds

The new Senate report sided with charity watch groups, finding the 80.6 percent WWP still touts to the public is in actuality "inaccurately inflated," and believes the accurate number is 67.5 percent of all donations is spent on veterans’ programs in the latest fiscal year examined, with the rest spent largely on fundraising and overhead.

Specifically, the report states, “including donated media in program expenses, WWP inaccurately reports that it spends a greater percentage of donor funds on program expenses that directly benefit veterans.These inaccuracies add up to serious overstatements about WWP’s commitment to supporting veterans and understates the actual amount of money that WWP spends on program activities in pursuit of its mission.”

Before coming to that conclusion, Senators examined dozens of pages of IRS Form 990 along with WWP’s Consolidated Financial Statements.

Linnington singled out that finding as one the charity takes offense with.

"I think we have been very clear that we follow the IRS reporting rules in how we categorize program expenses versus other expenses, like fundraising and administrative costs," Linnington said, adding WWP will continue to count TV commercials and mailers as an educational program expense.

Based on financial documents, the Senate investigation also concluded that WWP, “inaccurately reported spending $65.4 million on Long-Term Support Programs for veterans,” saying advertisements pushing that claim are "misleading.”

The committee found that as of last year, 251 injured veterans pre-qualified for the trust, yet not a single penny has been spent on wounded service members. Instead, the only money spent out of the trust was to Barclays for wealth management at a price tag of $134,721.

Taking a closer look at the money shifted between WWP accounts, the report found $55 million of donor money had been put in the trust, “instead of spending it on program activities.” An additional $10 million was spent on something WWP called the "Independence Program," which is separate from the Trust. 

The report laments further that “the advertisements [on the Long-Term Support Trust] are at best misleading because $65.4 million has not actually been spent on veterans. Rather the money has simply been transferred…Misleading advertisements undercut the public’s trust in any organization.”

While facing questions from Capitol Hill, the ads were plucked from rotation last summer.  Wednesday afternoon, Linnington told the I-TEAM he "respectfully disagrees" that the support trust was misleading, explaining that as a trust fund, the money is set aside in the instance of a loss of a caregiver.

"It's a program expense because we don't have access to those funds. We've set it aside at the behest of those families, and that money is in a vault, if you will, to take care of them long term," Linnington said. He explained that the money will be spent in the future as warriors and their caregivers age.

The committee also found the charity's much-touted alumni program "lacks proper oversight" writing a significant portion of the events were in fact "sporting events" like former employees told the I-TEAM in 2016.

The committee obtained confidential records from 2013 and 2014 and found 71 percent - 76 percent of all events held by WWP were categorized as alumni events but some events had “low rates of participation.” 

An I-TEAM analysis of the events listed in the report found 18 percent of the more than 7,500 events had just one participant, and nearly half of all events had five or fewer participants. 

The report goes on to state, "WWP often invited the same veteran to multiple sporting events, but reported the activity as supporting multiple veterans.”

Other events flagged as "questionable" include:

  • A food and wine festival
  • Texas Hold 'Em poker and casino events
  • A Midnight Pool Party
  • Multiple resort getaways for just one person

The Senate committee found the charity should better track how many staffers attend these events versus wounded warriors, adding that "WWP should...reconsider [events] focused on drinking and gambling."

Linnington stood by the charity's events for alumni, calling them "all great events."  

"Getting warriors together in groups is really what I believe is the most important first step in their rehabilitation," Linnington said of the importance of those programs. "Anybody can cherry pick one or two events out of there and say it looks bad, but until you get into the depths of it and see what it really means, it’s really about the 'connect' piece of our mission -- to connect, serve and empower -- connecting warriors with each other."

While the committee found “excessive” amounts of donations were spent on administrative and fundraising events, they also found executive salaries were reasonable. While “high nonprofit executive salaries are always a concern,” Senators found Nardizzi's and Giordano’s compensation was between the median in the nonprofit sector, nearing the 75 percentile.

Nardizzi took home around $496,000 in salary and benefits. In contrast, Linnington will be paid $280,000 annually.

Additionally, WWP had conducted a “substantial” amount of outreach to reach veterans, including 150,065 phone calls from 2013 to 2015 and 114,343 emails to wounded service members.

The committee pointed out that WWP is taking action to address some issues. Linnington promised Senate leaders that WWP will increase investments in mental health care -- especially for those who suffer from Post-Traumatic Stress Disorder and traumatic brain injuries in two ways: using the Long-Term Support Trust and through community events.

Linnington also vowed to improve accountability and transparency.

In the wake of the charity's scandal, Wounded Warrior Project not only ousted its two top executive officers but also slimmed its executive staff by 50 percent overall. It also closed regional offices to reduce overhead and WWP decided to layoff around 100 employees.

WWP has vowed to make serious changes to its travel policies and procedures. For example, if someone goes to reserve a business or first-class flight, that person is shown a screen that reminds them of the policy against such bookings. The charity also put in new policies to oversee employee expense accounts and got rid of complimentary snacks and drinks. Linnington said employees, from the top down, are now being more mindful of their expenses, and that leaders are reviewing spending regularly.

The lengthy U.S. Senate committee report concludes with saying that WWP’s new leadership -- on the guidance of Linnington -- has been responsive and open to making changes but warned that more needs to be done to increase transparency and accountability, stating that “WWP has a tremendous responsibility to be a force for good in the veteran community…It is clear that a substantial number of Americans trust the WWP to properly spend the money that they donate…It remains unclear if it [WWP] is doing all that it can to appropriately convert donor funds into services for wounded veterans…Americans want WWP to be successful for the sake of our veteran population.. WWP is rightly focused on making changes, but, more must be done.”

Linnington said he hopes the report does not set back the charity's efforts to regain the public's trust. He also said veterans in need should continue to reach out first to WWP, and he hoped donors see the changes and continue to be generous in supporting wounded veterans.

In a statement accompanying the release of the report, Grassley said, “it’s good news that the Wounded Warrior Project used negative findings to try to turn itself around.”

"Some high profile charities do the opposite when confronted with problems. They hunker down instead of embracing their responsibilities to the people who are meant to benefit from their charitable mission, the donating public and the taxpayers," Grassley continued.  "It’s the taxpayers who forgo revenue to the federal Treasury to make tax-exempt organizations possible. The Wounded Warrior Project is right to recognize why it exists and what it needs to do to restore the public’s trust.”

Before Linnington spoke to the I-TEAM, the Wounded Warrior Project released this statement in response to the Senate committee's report:

We appreciate Senator Grassley and his team working together with us on this comprehensive memo, and we share in his optimism about Wounded Warrior Project’s future in service to those who have given so much for our country.

Throughout the process, our team has had multiple conversations with Senator Grassley’s staff, including in-person meetings, and provided detailed written information. As noted in the memo, we’ve been forthcoming and transparent in providing information about Wounded Warrior Project, how donor dollars are invested, and how we deliver programs to those we serve.

Over the last year, as the report outlines, we’ve made significant changes to ensure that we are focused on running the most efficient, effective organization possible. We’ve brought in new leadership at the CEO level, consolidated positions on the executive team, made alterations and new appointments to the Board of Directors, updated our travel and expense policies, and adjusted our programs and services to focus on mental health care, long-term support, and areas that allow warriors to connect with their communities.

We respectfully disagree with the memo’s assessment of the Long Term Support Trust. Currently no government program exists that allows severely wounded warriors to continue to live in familiar settings and receive care should they lose their caregiver. The Trust dedicates funds for the future to ensure care will continue so they can maintain their independence, instead of being placed in a nursing home or other institution. We remain firmly committed to serving the long term needs of those most critically injured, and we follow all IRS and accounting rules in reporting on this program.

We look forward to another impactful year of helping our wounded warriors and families. We're humbled to be recognized as a top charity operating with transparency by the Better Business Bureau, Charity Navigator and Guidestar. 

Former WWP employee Erick Millette, also a veteran himself, came forward to the I-TEAM as a whistleblower in January of 2016, to expose what he felt were improper practices at the charity. Millette reached out again to the I-TEAM following the release of the Senate report.

“Maybe now people will see that we were telling the truth and that we were not disgruntled employees," Millette said. "It’s even more satisfying to see that the report found WWP to be directly lying to the public, its donors and sadly, veterans as to what they do with the money.”