Massachusetts has sued a veterans nonprofit and its commercial fundraising contractor, alleging they deceived donors and plowed most of the money collected back into solicitations, according to The Boston Globe and the Boston Herald.

Attorney General Martha Coakley’s office claims employees of Dynamic Marketing Solution making calls for Bay State Vietnam Veterans pretended to be soldiers returning from Afghanistan and told prospective contributors all the money raised would go the charity when Dynamic was received 85 percent of collections under its contract.

The suit seeks $5,000 in civil penalties for each proven act of deception. Efforts by the Herald to reach the Somerset, Mass., charity and the Rhode Island-based firm were unsuccessful.

In Florida, retail giant Wal-Mart has suspended a veterans organizations from raising money outside its stores amid questions over how the charity uses its donations, writes Florida Today.

The Veterans Support Organization had been cited by the newspaper earlier this week in a report on military charities’ finances. The Stuart, Fla., group allocated more than half of its 2010 revenue of $5.7-million to fundraising and “work program” costs while spending $1-million on grants to other charities and a residential facility for homeless veterans.

Wal-Mart spokeswoman Kayla Whaling said the charity “is no longer welcome to fundraise or solicit outside our stores until we know more.”

Charities ostensibly serving former service members have come under increasing scrutiny by state regulators, with California suing a major national veterans nonprofit last week over its spending on executive pay and perks.