It's a familiar story: "Oregon's attorney general, John Kroger, is seeking to shut down a nonprofit organization that awards honorary medals to veterans, saying most of the cash the group raises goes to a commercial telemarketer." The courts have held over and over that it is not illegal for a large percent of funds raised to go to overhead or to a service provider, such as a telemarketing firm. As such, I doubt Oregon has any ground to stand on here, however bad "charities" like this make the rest of the nonprofit sector look.
I wonder, why, though, it seems that these dubious charities always seem to raise funds for veterans or police officers. I've not familiar with any cases like this where the organization in question raised funds for the environment, for example. Certainly, I don't think it's the fault of legitimate charities that work in these areas. Is it because providing relief for these folks is a cause almost everyone can get behind? Is it because there isn't a well-known name-brand charity in this area?