At least one major funder has pulled its monetary support from Volunteers of America Southwest, following fraud allegations revealed by Voice of San Diego .
Volunteers of America Southwest runs multiple centers that treat and house some of San Diego’s most vulnerable citizens, including those struggling with homelessness and addiction as well as veterans.
The Department of Veterans Affairs is one of the charity’s biggest funders. But a letter  obtained by VOSD shows the VA is suspending at least $1.8 million worth of grants to Volunteers of America Southwest – and that it’s already identified nearly $100,000 in fraudulent spending by the nonprofit.
The grants were supposed to be used to help homeless veterans.
In the letter, VA officials said Volunteers of America Southwest had committed multiple contract violations and that the nonprofit’s spending practices would need to be investigated.
A previous chief financial officer for Volunteers of America Southwest funneled public money into companies controlled by her sisters-in-law , who were also employees of the charity, according to multiple witnesses and auditors for San Diego County. In some cases, the companies charged significantly above market rate for goods and services, according to receipts obtained by VOSD.
Two whistleblowers informed the company’s chief executive officer of what was happening. But both employees were eventually let go, despite having 25 years combined experience at the nonprofit.
VA officials said they had already reviewed some of the suspect payments and that $87,000 in VA money had gone to “fraudulent vendors.”
“It is anticipated that the overarching lack of internal controls and fraudulent activity will be exponentially higher once a review of current grant funds are audited from a forensic criminal fraud accounting review,” the letter said.
Auditors for San Diego County – which previously provided several million dollars per year to the charity – found that as much as $1 million may have been misspent. The audit findings  were presented to Volunteers of America Southwest in October 2020.
Leaders of Volunteers of America Southwest did not inform VA officials about the audit, or about a lawsuit  filed by one of the employees who alerted company officials about potential fraud.
Both were violations of its contract, VA officials said.
Officials at Volunteers of America Southwest did not immediately respond to comment.
Volunteers of America Southwest is a local chapter of Volunteers of America, a Christian charity that has provided literacy programs, food and housing and treatment for addiction for much of its history.
Each local chapter is governed by its own board of directors.
In its letter, VA officials cited VOSD’s reporting as a reason they were suspending the contract.
In 2019, Volunteers of America Southwest brought in $23 million, according to its tax returns . The $1.8 million in suspended VA funding represents roughly 8 percent of that amount.
VA funding is divided into many pots. In this case, VA officials pulled two grants from a program known as Support Services for Veteran Families, or SSVF, which is specifically designed to help homeless veterans.
Through a different funding stream, the VA also provides money for Volunteers of America Southwest to run the Hawley Veterans Services Center, a 20-bed transitional housing center. A spokesman for the VA was not immediately able to say how much money goes to the Hawley Center.
In a 2018 lawsuit  – separate from the other employee lawsuit – another former employee alleged that SSVF funds regularly pay for employees who perform no services for the SSVF grants. In fact, the employee noted that several different funding streams are used to pay for services not related to the funding stream.
Volunteers of America Southwest has received funds from many private and government agencies, including the state of California, San Diego County, a federal probation program and some local hospital chains.
The VA letter noted that Volunteers of America Southwest could ultimately be prevented from receiving any federal funds for up to three years.