The Senate Finance Committee has asked Quadriga Art, a direct-marketing firm, to provide financial records about its ties to the Disabled Veterans National Foundation, a charity the committee is investigating because it has spent little money on services that directly help veterans.
Most of the money the veterans' group has raised from an extensive direct-mail operation has gone to pay bills at Quadriga and its subsidiary Brickmill Marketing Services. It owes about $17-million to the two companies, a Quadriga spokeswoman said last month.
The finance committee's letter asks Mark Schulhof, Quadriga Art's chief executive, to provide details about business dealings among Quadriga, its related entities, and the veterans' charity from 2008 to 2011. It requests information about the goods and services the companies have offered, their cost, the revenue they have earned, and the money they have collected—and are still owed—by the charity.
CNN, which has broadcast numerous stories about charities affiliated with Quadriga, reported on Monday that California and New York regulators are also investigating the company.
A source close to the New York investigation confirmed that the attorney general's office had sent subpoenas asking Quadriga about its business practices. A spokesman for the California attorney general's office declined to comment on the report.
“Based on the recent media coverage, it is not surprising that we have received some inquiries from regulators," Quadriga Art said in a statement. "This is a regulated industry. We have received many inquiries over the past several decades, and we always cooperate with inquiries from industry regulators. We have always been found to have abided by all federal and state rules and regulations and have never been fined.”
Quadriga and Brickmill argue that a heavy investment was needed to get the veterans' charity off the ground and that it has helped the charity accumulate 2 million donors. The veterans group also defended its spending in a formal response to the finance committee, noting that it started in 2007, just before the recession hit, but that “our supporter file is growing, and we expect the deficit to start being reduced.”
In a new video that Quadriga has distributed to clients, Mr. Schulhof says his company has not made any profit from DVNF's business but believes it will make money in the long run.
"This is not making millions off the back of veterans," he says. "What this is is helping charities do good, helping charities build direct-mail files. Direct-mail files help charities sustain long-term survivability."
CNN's latest report highlights Quadriga Art's direct-mail campaign for St. Bonaventure Indian Mission and School, in Thoreau, N.M., an effort that left the school in debt.
Dig deeper: See The Chronicle's article about Quadriga's ties to the veterans' charity.
Send an e-mail to Suzanne Perry.