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AG Racine Secures Emergency Relief Against Affordable Housing Non-Profit for Abandoning Mission, Attempting to Use Charitable Assets for Private Gain

Attorney General Karl A. Racine today announced that his office succeeded in stopping the Janet Keenan Housing Corporation, which provides affordable housing to low-income DC residents, from attempting to sell their property for private purposes in violation of District non-profit law.

“DC is in the midst of a housing crisis and longtime Black, brown, and low-income residents are being pushed out of the city they call home. Organizations that claim not for profit status are granted favorable tax benefits in exchange for their promise to fulfill their non-profit mission. In this case, the Janet Keenan Housing Corporation falsely said it was focused on providing needed affordable housing, when, in fact, the company prioritized profits in housing over genuine affordable housing work,” said AG Racine. “Most District non-profits follow the law, but when a tax-exempt entity—like the Janet Keenan Housing Corporation—acts contrary to its stated mission and hurts the DC residents it is meant to support, my office will use all available tools to stand up for District tenants.”

In response to the Office of the Attorney General’s (OAG) request for a Temporary Restraining Order (TRO), the court paused the property sale while it considers the Janet Keenan Housing Corporation’s request for approval to sell its property. In addition to the request for emergency relief, OAG also filed a complaint against Janet Keenan Housing Corporation for violations of the District’s Nonprofit Corporation Act (NCA) and common law.

Background on OAG’s Complaint
Janet Keenan Housing Corporation (JKHC) is a nonprofit organization with a stated mission to “preserve and promote affordable housing in the District of Columbia”. They are exempt from taxation and are required by law to operate solely for their charitable purpose.

In 2000, JKHC purchased a property at 1304 Euclid Street NW which had been used as affordable housing for low-income residents since the 1980s. JKHC committed to continue to use the house for this purpose and, since then, has operated the property as a self-run group home for low-income residents, consistent with its charitable mission. Six people currently live at the home.

On September 12, 2022 JKHC notified residents that they were planning to sell the property. By September 21 the house was under contract and the sale was scheduled to close on October 7.

OAG learned that JKHC was selling the property without the condition that the new owner maintain its charitable purpose. The house is a charitable asset and, under the District’s Nonprofit Corporation Act (NCA), non-profits must receive prior authorization from the Superior Court and notify the Attorney General in order to sell or otherwise divert the property from its charitable purpose. OAG warned JKHC that an unauthorized transfer of the property would violate the law, but JKHC moved forward with its efforts to sell.

Allegations against JKHC
By trying to sell the property and failing to ensure that it would maintain its charitable purpose without seeking prior court approval, JKHC is acting contrary to its stated charitable mission in violation of the NCA and common law on three counts:

  • Unauthorized diversion of a charitable asset;
  • Abusing or exceeding their authority; and
  • Acting contrary to their nonprofit purpose.

Additionally, JKHC has violated the NCA and common law by allowing the same person, John Keenan, to serve as both president and treasurer of the organization.

With this lawsuit, OAG is seeking to:

  • Stop JKHC from selling or diverting the property from its charitable purpose;
  • Appoint a receiver or other court-supervised official to ensure the property continues to be used as housing for low-income District residents and to reform JKHC’s board of directors; and
  • Create a trust or other form of monetary relief over any non-profit funds received in violation of District law.

A copy of the complaint is available here.

The case is managed by Assistant Attorney General Tabitha Bartholomew, under the supervision of Public Integrity Section Chief Adam Gitlin. Investigator Willie Haynes also assisted in the investigation.

OAG’s Nonprofit Enforcement Work
Under AG Racine, OAG has invested resources to expand its capacity to enforce District laws governing nonprofits. OAG has litigated and resolved actions against several charter schools and the president of a nonprofit that owned an affordable housing building for mismanagement of nonprofit funds. In May 2022, AG Racine clawed back $750,000 in misspent nonprofit funds from the Trump Organization and Presidential Inaugural Committee. The office has also sued several organizations for misuse of charitable funds, including a local fraternity and the NRA Foundation. Additionally, OAG has obtained an order that District nonprofit Howard Theatre Restoration, Inc. dissolve for failing to function in support of the District’s historic Howard Theatre, investigated the closure of Providence Hospital to ensure nonprofit assets were not improperly removed from the District, and intervened to resolve a board dispute at an internet freedom organization. 

If you suspect that a nonprofit doing business in the District of Columbia is violating District law, please contact OAG at (202) 727-3400. 

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And the FTC Bureau of Consumer Protection Partner Award goes to . . .

We’re told the name Nebraska comes from the Otoe term Ñí Brásg, meaning “serene water.” The Platte River flows across the state until it converges with the Missouri. From there, it meets the Mississippi, creating the unstoppable force that gives it the name “mighty.” Who doesn’t enjoy a bit of heartland geography, but our purpose today is to draw an analogy to the most recent recipient of the FTC Bureau of Consumer Protection’s Partner Award: Nebraska’s favorite daughter – and among the FTC’s favorite partners – Abigail Stempson.

Director of the National Attorneys General Training and Research Institute’s (NAGTRI) Center for Consumer Protection at the National Association of Attorneys General, Abby has devoted her career to the cause of consumer protection. Before coming to NAAG in 2017, Abby was Chief of the Consumer Protection Bureau in the Nebraska AG’s Office, where she was a formidable leader in the fight against fraud and deception. At NAGTRI, Abby heads the nation’s only entity dedicated solely to providing training, research, and expertise to the staff of AGs’ offices and other government agencies committed to protecting the public from consumer fraud and abuse.

In honoring Abby with its Partner Award, the FTC Bureau of Consumer Protection acknowledges her preeminent role as an advocate, a uniter, and a teacher. Our point with the initial geographical reference – and we have one, we promise – is that like the Platte River, Abby’s efforts as an Assistant Attorney General extended across the Cornhusker State from Scottsbluff to Omaha, improving the lives of Nebraskans at all points in between. 

To carry the analogy a step further, Abby’s true superpower is the force she unleashes when she joins with law enforcers nationally to tackle the most challenging consumer protection issues of the day. Consumers and consumer protection agencies have benefited from her leadership at NAGTRI, where she proves every day that we’re best when we work together and her cooperative partnerships with the Bureau of Consumer Protection demonstrate that. Whether it’s crafting law enforcement responses to tech support scams, bringing members of the community together at FTC-AG Common Ground conferences, or meeting the challenges of the COVID pandemic, our joint efforts are more effective thanks to Abby’s legal expertise, leadership, and “can do” approach to collaborative enforcement and education.

Abby has ensured her legacy as a valued partner through her role as an inspiring teacher. She has trained hundreds of State Assistant Attorneys General in the basics – and intricacies – of consumer protection enforcement. Whether through formal training programs or the shoulder-to-shoulder example she sets as she works in the consumer protection trenches, we carry out our shared mission to protect and educate more effectively, thanks to Abby.

For these reasons, the FTC Bureau of Consumer Protection is privileged to present its Partner Award to the mighty Abigail Stempson.

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IRS joins effort to fight charity fraud during international recognition week

The Internal Revenue Service announced its continued support by joining international efforts to fight fraud during Charity Fraud Awareness Week, October 17-21.

The IRS partners in this effort as part of its ongoing commitment to fight fraud against charities, businesses and individuals. It’s estimated that charitable organizations will lose 5% of their revenue each year to fraud, according to the Fraud Advisory Panel, a UK-based organization leading the effort by organizing this week of awareness. Experts say cybercrime is on the rise, including attacks on charities, their supporters and beneficiaries.

Charities, regulators, agencies, law enforcement and other not-for-profit stakeholders around the world are working together to raise awareness about fraud and cybercrime that affects charities. These efforts resulted in seven days when supporters actively discuss fraud, share best practices and offer helpful resources.

How to verify a charity

“We’d like to thank the Fraud Advisory Panel for reminding donors to remain vigilant,” said IRS Director of Exempt Organizations & Government Entities Rob Malone. “Unfortunately, natural disasters, like Hurricane Ian, provide an opportunity for charity scammers to take advantage of genuine efforts to help. I urge donors to verify a charity’s tax-exempt status at Tax Exempt Organization Search before donating goods, services or money.”

Fake Charities

In addition to cybercrime targeting charities, criminals who create fake charities are also a problem. Fake charities are part of the IRS’s Dirty Dozen tax scams for 2022. As noted above, taxpayers should verify legitimate and qualified charities using the Tax Exempt Organization Search tool on IRS.gov. Donors should never feel pressured to give immediately.

Links to more information

A special website was created for Charity Fraud Awareness Week and features information to help partners, charities and other tax-exempt organizations and non-profits find:

  • Details about the awareness week
  • Free resources
  • A fraud pledge for organizations
  • A listing of webinars and other events

Those encouraged to participate in the week’s activities include:

  • Trustees, staff and volunteers from charities, non-government organizations and non-profits
  • Organizations that represent the interests of non-profits
  • Accountants, auditors and those acting as professional advisors to non-profits
  • Regulators, law enforcement officials and policymakers working to safeguard non-profits
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AG Healey Launches Online Portal for Charities Filings in Massachusetts

New Online Feature Allows More Than 25,000 Charities and Non-Profit Organizations To Streamline Annual Disclosures

Attorney General Josh Stein today reminded North Carolinians to be on the lookout for charity scams and shared tips to help avoid charity scammers ahead of the holiday season as part of National Charity Fraud Awareness Week. So far in 2022, more than 4,538 reports about charitable solicitation scams have been filed with the Federal Trade Commission.

“When you donate of your hard-earned money, you should feel confident that it’ll help others, not line some scammer’s pocket,” said Attorney General Josh Stein. “As we near the holidays, please take care so scammers don’t exploit your goodwill.”

Here are some tips to make sure your donation helps those in need:

  • Choose charities you know and want to support, or whose work is local to your community.
  • Don’t just give to a charity because it sent you a letter, called, or emailed you – it may not be legitimate.
  • If you’re feeling pressured to give immediately, don’t. Legitimate charities won’t pressure you.
  • Ask questions about how much of your donation actually goes to help those in need. Sometimes, telephone solicitors will pocket a large percentage of a donation.
  • Research a charity before you commit to giving them money. You can determine whether charities are licensed in North Carolina and look up their annual reports on the North Carolina Secretary of State Charities & Fundraisers Search (sosnc.gov). You can also check with Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar, or call the North Carolina Department of Justice at 1-877-5-NOSCAM.
  • When you’re making your donation, pay with a credit card through the charity’s website or by calling a phone number you know to be legitimate. Credit cards are best for security and tax purposes, and so you can dispute the charge later if there’s a concern.
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Attorney General Josh Stein Cautions North Carolinians About Charity Scams

Attorney General Josh Stein today reminded North Carolinians to be on the lookout for charity scams and shared tips to help avoid charity scammers ahead of the holiday season as part of National Charity Fraud Awareness Week. So far in 2022, more than 4,538 reports about charitable solicitation scams have been filed with the Federal Trade Commission.

“When you donate of your hard-earned money, you should feel confident that it’ll help others, not line some scammer’s pocket,” said Attorney General Josh Stein. “As we near the holidays, please take care so scammers don’t exploit your goodwill.”

Here are some tips to make sure your donation helps those in need:

  • Choose charities you know and want to support, or whose work is local to your community.
  • Don’t just give to a charity because it sent you a letter, called, or emailed you – it may not be legitimate.
  • If you’re feeling pressured to give immediately, don’t. Legitimate charities won’t pressure you.
  • Ask questions about how much of your donation actually goes to help those in need. Sometimes, telephone solicitors will pocket a large percentage of a donation.
  • Research a charity before you commit to giving them money. You can determine whether charities are licensed in North Carolina and look up their annual reports on the North Carolina Secretary of State Charities & Fundraisers Search (sosnc.gov). You can also check with Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar, or call the North Carolina Department of Justice at 1-877-5-NOSCAM.
  • When you’re making your donation, pay with a credit card through the charity’s website or by calling a phone number you know to be legitimate. Credit cards are best for security and tax purposes, and so you can dispute the charge later if there’s a concern.