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Charity that Builds Custom Homes for Wounded Veterans Once Again Facing Fraud Allegations

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When Army Sgt. 1st Class Scott Lathan returned home from his second tour in Iraq, finances were tight. Lathan had been severely injured in Balad, Iraq in 2006 when 155mm rounds blew apart the Humvee he was riding in, leaving him with a traumatic brain injury, cognitive disorders, PTSD, and knee, back, and hip problems. The young soldier, who had a wife and young child, could no longer work.

The family struggled without Lathan's income, and money became an even bigger problem when Lathan's wife Sarah, who became breadwinner after his injuries, had to resign from her job to have heart surgery. Saddled with car and mortgage payments, the Lathans worried constantly about how to make ends meet.

But everything changed in September 2012, when Helping a Hero, a local nonprofit group that builds custom homes for veterans that have suffered severe injuries in war, contacted Sgt. Lathan. The charity's director, Meredith Iler, offered to build the Lathans a 2,400 square foot home with four bedrooms in exchange for a small mortgage, $50,000 over 10 years at 3.5 percent. It was a home they could better afford, and it seemed like the answer to their problems.

Lathan says all that Iler asked for in return was that they come to Houston in October 2012, one month later, to attend some seminars and go on home visits in preparation for their "forever home." While in Houston, Lathan says Iler told him that construction on his home would start in November. She asked him to sell his current home in preparation, so he did.

And then, says Lathan, the family waited. And waited. And waited.

Lathan is now suing the Houston charity with the help of local attorney Chad Pinkerton for, among other things, fraud. This is the second time in under a year that Pinkerton has filed against HAH on behalf of a Texas veteran.

According to the lawsuit Lathan filed this month, HAH kept coming up with excuses for why his house wasn't built. At first, Iler told the couple that groundbreaking would be delayed in December 2012 because the builder was on vacation. Soon, they had a hard time getting a hold of Iller.

The next time the Lathans asked about the home, Iler said they had to switch builders, because HAH already owed the original contractor $60,000, according to the lawsuit. By the time the sale of their Round Rock home closed in March 2013, Lathan says his family had no place to go.

The Lathan held off on signing a long-term lease at Iler's advice, he says, and would do so for the next nine months, hopping between hotels and short-term leases before settling in one bedroom of Lathan's adult son's home to wait.

Lathan says he tried to back out of the HAH deal in May 2013, after one too many broken promises, but Iler returned saying she'd found a builder that would break ground that July. The home would be smaller, though --1,900 square feet -- and the mortgage would be $67,000. Iller blamed the smaller house with a larger mortgage on too few community donations, since Scott Lathan had "not lost any limbs," according to the lawsuit.

But after the soldier turned down that offer, he says Iler returned with another offer -- this time a 2,600 square foot home with a $120,000 mortgage. Lathan reluctantly agreed.

Once the home was built, the builder signed the home over to the Lathans at a public ceremony on December 20, 2013, according to the lawsuit. But once the cameras left, Lathan says the charity asked him to sign a document transferring the house back over to HAH.

In order to received a home from HAH, the veteran must sign a contract that binds the veteran to to the charity for ten years, during which the soldier must meet all of the conditions -- which include yearly appearances at galas or other charity events, and timely mortgage payments -- or the charity can opt to "buy-out" the home for the cost of the mortgage, should they decide to.

But Lathan says that the mortgage, which had been promised at 3.5 percent financing, was impossible to acquire. No bank would offer a reasonable rate under the terms of the HAH contract, he says, because it effectively makes the charity a lien-holder of sorts, and the risk to the bank is too great.

The options that were offered for financing were much higher than 3.5 percent, says Lathan, and the couple can't afford any of the higher interest options or a balloon payment on their budget. Without a mortgage, the property stayed in HAH's name, and without title, the couple says they can't even get home insurance.

In light of the mortgage issues, Lathan says HAH offered them a "lease" of sorts that allowed them to stay in the home, but he says they've been told to get a mortgage or get out. And now, on top of everything else, Lathan says taxes on the home are delinquent, too.

Here's what's so strange about that little hitch: Taxes wouldn't even be owed on the house were it in Lathan's name. Texas has an exemption for disabled veterans that would cover their home. But it's the charity's property.

With no other housing options on the horizon, Lathan says he now worries his family may be kicked out of the house.

"Every day I'm worried that my family and I will have to find a new place to go," he says.

According to Helping a Hero, the homes they build are customized to meet the needs of each soldier, and are valued at about $250,000 each. That money comes from a number of sources: the veteran's $50,000 mortgage; the developer, who donates the lot worth about $50,000; and the homebuilder matching with a donation worth $50,000.

HAH also asks that the veterans use their VA grants to offset any other building costs -- usually the SAH grant, which helps veterans with certain permanent and total service-connected disabilities to help buy a house, or modify an existing home to accommodate their disability -- and can cover up to $70,465 of the home's cost.

HAH also solicits donations from the community for each home. Sometimes the homebuilder even opts to donate the entire house. More than enough money was raised to cover the cost of the home, Lathan insists -- somewhere around $250,000. But even if he's wrong, the charity took in $4 million in charitable donations in 2013.

Even as the terms for Lathan's home began to shift, the charity doled out large sums of money for other expenses, including their yearly galas, which run into the millions. In 2012, the charity states on their 990 form that they had direct expenses of $1,252,673.00 for the gala, and grossed $1,565,897.00 -- netting the charity about $313,000. In 2013, the charity paid George W. Bush a $100,000 appearance fee to headline the gala.

While it's clear that there is quite a bit of money going in and out of the charity, it's still difficult to know where the charity actually stands financially. The nonprofit doesn't detail their financial donations, in-kind or otherwise, on their 990s. A number of investigators and reporters have asked for access to detailed records, but the financial data was either not turned over, or was incomplete.

Some of what was turned over was reviewed by former investigative reporter Wayne Dolcefino, who worked as a consultant for Harris County District Attorney candidate Kim Ogg. Ogg eventually filed a complaint with the DA's office on behalf of some veterans earlier this year. Dolcefino claims that in many cases, the charity turned over bills but no receipts, or flight information but made no note of who traveled or why.

In other cases, Dolcefino says that there were checks written to reimburse Iler out of a veteran education fund, but it's unclear why she was being reimbursed. Dolcefino also says the board never voted to approve the education fund to begin with, but money was transferred over, and checks were written to Iler anyway.

Like Sgt. Lathan, a number of other critics have spoken out against the charity in recent months, including the family of Hunter Levine, who sued the charity with the help of Pinkerton earlier this year. The Levines sued HAH for the right to Hunter's home after he passed away of a heart attack. Under the terms of the contract, the charity had a right to "buy-out" the house, which they attempted to do. The case settled out of court recently, and according to Pinkerton, and the Levines kept the home.

The charity has instigated legal action of its own, too. In August, they filed suit against two former board members, Karen Lloyd and Judy Dubose, accusing them of conspiring to defame the charity after speaking out against the organization.

In the lawsuit, Iler claimed that, in part, Lloyd posted that over $500,000 in donations to HAH were "unaccounted for" on her Facebook, which caused a flurry of negative publicity that, according to Iler, lost the charity hundreds of thousands of dollars in expected donations. Lloyd and Dubose, on the other hand, accused Iler of trying to silence them and intimidate future critics by filing suit against them. The lawsuit settled out of court recently, and the terms of the settlement have not been disclosed.

The charity is now being investigated by both the Attorney General's office and the Harris County District Attorney's office, which Chris Titico, attorney for Helping a Hero, confirmed. He says the charity is working closely with the Attorney General's office, and says he's confident HAH will be cleared of any wrongdoing.

Titico also addressed Lathan's accusations, saying that the charity gave the veteran a number of cash grants, including $8,500 in emergency funds to pay for a wedding caterer, among other things, and also paid off a high interest car loan for the Lathans, and subsequently acquired a free car for the couple.

There is no lack of internal control, insists Titico, and the October 2014 audit proves it. He also says that the higher cost incurred by the Lathans for their home is due to upgrades they asked for, like nicer counter tops and better appliances, including an extra TV.

Titico says the charity wrote a $176,000 check to the builder in December 2013 to close on the house, and Lathan agreed to have his loan by March 2014. And now, after the charity has told them to either get the loan or give the home to another veteran, they are opting to sue.

"There are just some people you can't do enough for, and that is the Lathans," says Titico. "There are five veterans on the waiting list for Helping a Hero, and I want to know which one of them Scott Lathan is going to pick and call to say 'Because of me, you won't get your home.'"

Lathan says he's not sure if his family will have a home in the coming months. Still, he wants to make one thing very clear: his lawsuit is against a charity, not its donors, and he's very grateful to the community who chipped in for his home.

"Thank you so much for the Americans that love us enough to do that," Lathan said at a recent press conference. "But this charity is doing the wrong stuff. They need to know that."

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