GLOVERSVILLE - Three local veterans organizations are trying to get back money embezzled by a veteran who was sentenced to prison last November.
The veteran, city resident Ralph VanAlstyne Sr., was ordered to pay restitution, but so far, the veterans groups have received nothing.
"We are teetering on the edge of bankruptcy," said Kevin Jones, commander of the Veterans of Foreign Wars Bernard Kearney Memorial Post 2077. "If things don't improve, we may have to close down."
Ralph VanAlstyne Sr.
VFW Post 2077 Cmdr. Kevin Jones, shown outside the VFW on Third Avenue in Gloversville, says the post is “teetering” on bankruptcy.
The Leader-Herald/Levi Pascher
"We want back what should be returned," said John Rose, a trustee and former commander of the American Legion Harold Wilmont Post 137.
VanAlstyne, who held positions of control at the VFW post, the American Legion post and the Disabled American Veterans Chapter 122, was sentenced to two to six years in state prison after admitting to stealing at least $186,000 from the three groups. He also was ordered to pay restitution.
The court ordered VanAlstyne to pay the VFW $70,930, the American Legion $50,917 and the Disabled American Veterans $65,679.
The groups claim at least $300,000 actually was taken, but authorities could prove only the theft of $186,000.
In separate legal action, the VFW and the American Legion also are seeking $100,000 - $50,000 for each group - from NBT Bank. The groups claim the bank improperly cashed checks signed by VanAlstyne.
"Our losses from this theft is estimated by us to be right around $250,000," said the VFW's Jones.
He claims a lot of the money taken was in cash, so there was no actual record of it. The VFW says it determined the total based on previous profit margins.
American Legion Cmdr. Gary Meher estimated almost $80,000 was taken from his group.
The legion and VFW filed a joint lawsuit through their attorney, Charles G. Mills, against NBT Bank about three years ago to get some of the money stolen by VanAlstyne returned, said Jones.
After going through court documents, the two groups decided NBT Bank failed to follow check-cashing agreements.
The groups claim NBT Bank allowed VanAlstyne to cash dozens of checks written to the American Legion or the VFW and put them in his personal checking account, said Jones. He estimated nearly $6,000 in checks made out to the American Legion and $13,000 in checks made out to the VFW were deposited into VanAlstyne's personal account.
"The bank should have never cashed checks made out to us or the American Legion into his personal account because that is against New York State Banking Law," said Jones.
The VFW also says the bank should have required two signatures from VFW representatives on checks. He claims NBT Bank allowed $83,542 to be withdrawn from the VFW accounts that were signed by one person.
Jones said one of those checks was made out to Mac's Antique Auto Parts for antique parts for a car VanAlstyne owned.
"What would the VFW be doing buying antique auto parts?" Jones said. "He was restoring a car of his own with our money. This is just one example of hundreds of checks that require two signatures that the bank cashed with just one."
A couple of weeks ago, the VFW and American Legion received a response from an NBT Bank attorney stating the bank is not responsible for the losses and is seeking to have the case dismissed.
NBT Bank denies every allegation. The bank claims the plaintiffs granted VanAlstyne the authority to negotiate, deposit checks and make withdrawals on their behalf.
The bank also states the VFW and American Legion "failed to exercise reasonable care and diligence in discovering the alleged unauthorized transactions referenced."
"Basically, what they are saying is we gave him permission to do that, and it is our responsibility," said Jones. "However, by our checking agreements with NBT, no check should ever be honored by the bank that doesn't have two signatures on it.
"If we have set up all of our accounts to require two signatures and the bank honors them with one, how do our internal controls even stand a chance to work?" said Jones. "They should have refused to accept the checks."
An attorney for Hinman, Howard & Kattell, representing NBT Bank, was unavailable for comment. Florence Doller, senior vice president of marketing and corporate communications for NBT, declined to comment.
If the VFW doesn't receive any restitution in the near future, it could have to close the organization, which is located on Third Avenue, Jones said.
Since VanAlstyne's activities were uncovered, the VFW has had to pay thousands of dollars in back taxes to New York State Racing and Wagering, $12,000 to the New York State Department of Taxation and Finance and is in debt to private creditors for bills never paid, Jones said.
"We wound up in trouble with a lot of state agencies because they don't accept that it was [VanAlstyne's] criminal doing. Since we are an organization we have the financial responsibility to pay for those criminal acts," Jones said.
"We want back what should be returned," said Rose from the American Legion. "People should understand to take care of veterans, not cheat them like they are doing right now."
The VFW has about 300 members, but the majority of them are not active, said Jones.
The VFW will try to improve its financial condition with a Halloween party Oct. 27 at the VFW. The event will include a free children's party from 2 to 4 p.m., and an adult party at 7 p.m. for a $4 entry fee. The event will feature 50-50 raffles and door prizes to raise money for the VFW.
The VFW also will host Friday night dinners and start a pitch league that will cost participants $5 a week for 12 weeks.
Workers' comp case
The VFW also was in trouble with the state Workers' Compensation Board. The VFW was facing hundreds of thousands of dollars in fines for not carrying workers' compensation and disability insurance.
While the VFW has no paid employees, it has volunteers who work regular hours, such as bartenders, and because their time is regulated by the organization, the VFW is required to carry workers' compensation and disability insurance for the volunteers.
The organization carried coverage until 2006, when VanAlstyne stopped paying the bills. Since 2006, fines and penalties against the VFW reached more than $300,000.
However, the VFW has been negotiating with the Workers' Compensation Board, and the fine will be reduced to $250, said Jones.
He said the VFW now has proper insurance coverage and workers' compensation for its volunteers.
"I think this issue could be resolved because we are a nonprofit, and the other part of it is a lot of the problems we had revolved around the man that is now in jail for what he did," said Jones. "He is gone, but we are left here to clean it up."