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All In Minnesota failed to meet board governance requirements, including financial controls and board scrutiny of conflicted transactions

August 2, 2024 (SAINT PAUL) – Minnesota Attorney General Keith Ellison today announced a settlement with All In Minnesota (“AIM”), a youth soccer charity in Vadnais Heights founded by the organization’s former president, Mark Bigelbach, in 2017. In the Assurance of Discontinuance, Attorney General Ellison alleges that the charity’s board failed to adequately supervise the business and affairs of the organization, resulting in violations of Minnesota charities laws.

AIM is a Minnesota nonprofit corporation and tax-exempt charity that provided financial assistance for soccer players of the Minnesota Eclipse youth soccer team from 2017 until the summer of 2022. During this time, AIM held only one board meeting and failed to appoint a treasurer, maintain adequate books and records, or create policies and procedures to protect charitable assets as required by Minnesota law. The organization entered into several conflicted transactions with Bigelbach and entities founded by him, including his for-profit sports facility management company, all without following statutory procedures for approving such transactions. AIM also failed to register with the attorney general’s office (“AGO”) as a soliciting charity or charitable trust, a requirement for most Minnesota charities. And, in 2022, the organization ceased all charitable activities without taking steps to formally dissolve the organization.

The Assurance of Discontinuance provides the public with transparency into AIM’s governance violations and requires AIM to dissolve voluntarily within 180 days of the court’s approval of the Assurance.

“Irresponsible financial management and conflicted transactions of the kind we saw at All In Minnesota are extremely disappointing and risk eroding public trust in the important work done by nonprofits,” Attorney General Ellison said. “We expect much better of our charities in Minnesota.”

After receiving a constituent complaint about AIM, the Charities Division investigated the charity under Minnesota’s civil nonprofit corporation and charitable trust laws, which require nonprofit directors and those who hold charitable assets to adhere to strict governance standards and fiduciary duties. In Minnesota, the Attorney General through the Charities Division has civil, not criminal, enforcement authority over the state’s nonprofit corporation and charitable trust laws.

The Minnesota Attorney General’s Office makes available a number of publications and pamphlets providing information about charitable organizations, charitable trusts, professional fundraisers, and nonprofit organizations generally:

“A Guide to Minnesota’s Charities Laws” discusses key laws including the Minnesota Nonprofit Corporation Act, the Charitable Solicitation Act, and the Supervision of Charitable Trusts and Trustees Act, among other laws that require certain organizations to register with and provide notice to the Minnesota Attorney General’s Office.
“Guide for Board Members” covers fiduciary duties of directors of nonprofit corporations and is meant to assist board members with the important responsibilities they assume when elected to a charity’s board of directors.
“Nonprofit Organization Resources” contains a listing of resources covering charitable solicitation, professional fundraiser, and charitable trust registration, government agency contacts, and training and technical assistance providers.

Minnesotans with concerns about governance or other issues at a nonprofit may submit a complaint on the Attorney General’s website. Minnesota consumers may also contact the Attorney General’s Office by calling (651) 296-3353 (Metro area), (800) 657-3787 (Greater Minnesota), or (800) 627-3529 (Minnesota Relay).

REGISTER TODAY! 2024 NAAG/NASCO Charities Conference October 8-10, 2024 | Hyatt Regency Inner Harbor | Baltimore, Md Hosted by the National Association of Attorneys General and the National Association of State Charity Officials (NASCO) This conference is the sole annual event at which charity regulators and nonprofit organizations and their attorneys, accountants, fundraisers, and advisers can meet, learn about, and discuss issues of interest across the charitable sector. The conference will provide an opportunity to hear from regulators and others in the nonprofit sector on current issues, including sessions on: Matters of Current Interest from State Regulators Artificial Intelligence’s (AI) Role in the Nonprofit Sector Fraud Resilience Among Charitable Organizations Boards Facing Crisis Fiscal Sponsorships, Legal Framework, Benefits, and Pitfalls The Future of Charitable Registration Schedule October 8 | 8:00 a.m. – 5:45 p.m. | In-Person and Virtual Programing Open to all Registrants October 8 | 6:00 p.m. – 8:00 p.m. | Welcome Reception October 9 | 8:30 a.m. – 5:00 p.m. | Programing Open to Government Staff only October 10 | 8:30 a.m. – 11:00 a.m. | Programing Open to Government Staff only Registration In-Person Early Registration Discount Ends Sept. 13 Government: $650 Public: $755 Virtual Registration Non-Government Attendees: $250 Government Attendees: Complimentary If you have created your NAAG account and do not see the correct pricing listed, please make sure you have entered your organization under your profile. If this is the first time registering for an event, it may take up to 24 hours after you create your account before you are able to register. REGISTER EARLY AND SAVE! Continuing Legal Education (CLE)CLE is not available for this event. Accessibility Planning If you identify as a person with a disability and would like to request reasonable accommodations for this event, please complete the Accessibility Request Form.

April 17, 2024

Settlement Will Ensure Oversight & Transparency, Safeguard Against Improper Spending

WASHINGTON, DC – Attorney General Brian L. Schwalb today announced a resolution in the Office of the Attorney General’s (OAG) lawsuit against the National Rifle Association (NRA) and the NRA Foundation for misusing nonprofit funds and other violations of the District’s Nonprofit Corporation Act (NCA). The terms of the settlement require thorough oversight and extensive operational changes to ensure that the Foundation operates independently from the NRA and fully complies with District nonprofit laws.

“Donors are entitled to know that their charitable contributions will be used in furtherance of a nonprofit organization’s stated charitable mission. The NRA Foundation—the charitable arm of the NRA—violated this sacred public trust, allowing the NRA to use them as an unchecked piggy bank,” said Attorney General Schwalb. “Caving to pressure from the NRA, the Foundation diverted millions of dollars to the NRA in grants and risky loans that were repaid only after OAG filed its lawsuit. Tax-exempt nonprofits are a form of public trust—abusing that trust as the NRA did violates both the public interest and District law. Today’s outcome builds on our longstanding commitment to safeguarding nonprofit donors’ money and ensuring that all nonprofits operating in the District of Columbia follow the law.” 

The NRA Foundation collects tax-deductible contributions to be used for charitable, educational, and scientific purposes related to firearms, firearm safety, hunting safety, firearm history, and marksmanship, and it is authorized to provide grants and sponsorships to organizations across the country related to these specific charitable purposes. While the Foundation can provide financial support to the NRA, it can only fund NRA activities consistent with its stated charitable purposes.

OAG’s 2020 lawsuit alleged that the Foundation disregarded its duty to protect its donors’ contributions and to operate independently, instead permitting the NRA and its executives to dictate its spending. The NRA tapped the Foundation’s coffers for grants and loans when the NRA needed money due to financial problems, decreasing membership, and lavish spending by its executive leadership. A New York jury recently found such spending to be part of a pattern of corruption and mismanagement by the NRA and its leaders.

Under the terms of the settlement, the NRA Foundation must:

• Adhere to its articles of incorporation and bylaws in all decision-making processes, in and outside of formal Board meetings.
   
• Conduct annual nonprofit compliance training for every Board member or officer.
   
• Form an Audit Committee to ensure Foundation’s financial affairs are in order and work with an external auditor.
   
• Establish a new conflict-of-interest policy.
   
• Adopt new policies governing grantmaking, loans, shared services, and other activity with the NRA to ensure transparency, Foundation independence, and adherence to the Foundation’s nonprofit mission.
   
• Report any Foundation policy changes to OAG within 30 days of approval for the duration of the agreement.

The District’s nonprofit statute, as currently drafted, does not authorize the collection of penalties; rather, its focus is to bring nonprofits in violation of the law into compliance, ensuring transparency and accountability for nonprofit funds. The agreement remains in effect until December of 2026, provided that the Foundation complies with mandated changes within 180 days.

The full settlement is available here.

This case was handled by Assistant Attorneys General Cara Spencer, Leonor Miranda, William Margrabe, and Anna Rosenfeld, Senior Trial Counsel Ryan Wilson, Paralegals Amanda Bangle and Leland Held, and Antitrust & Nonprofit Enforcement Section Chief Adam Gitlin.

OAG’s Nonprofit Enforcement Work

Since 2015, OAG has steadily expanded its capacity to enforce District laws governing nonprofits. Most recently, OAG sued the former Treasurer of an elementary school’s parent-teacher organization for using nonprofit funds for personal enrichment. OAG also resolved actions against a lodge of the Fraternal Order of Police for running an illegal off-premises liquor sales program, the Coast Guard Auxiliary Association for improper payments to its Board President, and Delta Phi Epsilon, Inc. for using nonprofit funds for personal gain. OAG has also litigated or resolved cases against several charter schools, including Options Public Charter School, as well as the president of the Park Southern Neighborhood Corporation, an affordable housing building, for mismanagement of nonprofit funds. OAG has also sued several organizations for misuse of charitable funds, including Casa Ruby, a DC organization that misused funds intended to serve LGBTQ+ youth. Additionally, OAG has obtained a court order requiring District nonprofit Howard Theatre Restoration, Inc. to dissolve for failing to function in support of the District’s historic Howard Theatre, and secured $950,000 from the Washington Hebrew Congregation’s preschool for violations of the NCA in addition to several childcare safety violations that put children at risk, and intervened to resolve a board dispute at an internet freedom organization.  

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

March 4, 2024

Board Member Abused Leadership Role at Parent-Teacher Organization, Stole Nonprofit Funds from District Elementary School

WASHINGTON, DC – Attorney General Brian L. Schwalb today filed a lawsuit against Robynn Chandler-Mitchell, the former Treasurer and board member of the nonprofit Parents Organized for the Power of Powell School (POPPS), the parent-teacher organization created to support the teachers, students, and staff of Powell Elementary School, a District public school in Ward 4.  The lawsuit alleges that Chandler-Mitchell abused her leadership role with the organization by spending POPPS’ funds that had been raised by the Powell community on personal expenses such as car payments and groceries, and at shoe stores, restaurants, and nail salons, in violation of the District’s Nonprofit Corporation Act (NCA).

“Any nonprofit operating in the District of Columbia must follow DC law and ensure that its funds are used for designated nonprofit purposes—in this case to support the Powell Elementary community—not for personal, private gain,” said Attorney General Schwalb. “Ms. Chandler-Mitchell exploited her trusted position as Treasurer of POPPS, misappropriating money meant for school supplies, a community garden, and other school initiatives. She admitted—under oath—to taking these funds, which she has yet to repay, so we’re filing suit to ensure she returns the money.  The Office of Attorney General will continue to enforce the laws governing nonprofit and charitable organizations, ensuring that charitable funds are not improperly used or diverted.”

“The Powell Padres Parent-Teacher Association appreciates the Office of the Attorney General’s efforts to recover funds on behalf of the Powell Elementary School community and its volunteer-run PTA,” said the POPPS Board of Directors. “The Powell Padres Board of Directors will continue to cooperate throughout this process.”

An investigation by the Office of the Attorney General (OAG) revealed that, between October 2021, shortly after being elected Treasurer, and September 2022, when she unilaterally closed the POPPS bank account, Chandler-Mitchell transferred POPPS funds to herself, used the organization’s debit card for personal expenses, and withdrew cash from the POPPS bank account, spending a total of $18,747.11 meant for Powell Elementary School. During that time, Chandler-Mitchell repeatedly informed the POPPS Board that its finances were sound, even when her personal spending caused the bank account to carry a negative balance for several months.

With this lawsuit, OAG is seeking to:

• Ensure Chandler-Mitchell repays POPPS the misappropriated funds in full.
• Permanently ban Chandler-Mitchell from ever serving as a director or officer of a District nonprofit.

The full complaint is available here.

This case is being handled by Assistant Attorneys General Leonor Miranda, Cara Spencer, Anna Rosenfeld, and Antitrust & Nonprofit Enforcement Section Chief Adam Gitlin.

About the District’s Nonprofit Corporation Act

Nonprofit organizations are set up to benefit the public—their funds are a form of public trust. The NCA broadly empowers the Attorney General to police nonprofits operating in the District of Columbia to ensure that nonprofits operate and spend their funds consistent with the public purpose for which the nonprofits were created. A nonprofit abandons its public purpose when it allows any portion of its funds to be spent in ways that are designed to benefit private persons or companies. This well-established nonprofit principle—the prohibition on private inurement—is provided in the NCA and is a fundamental tenet of the common law.

OAG’s Nonprofit Enforcement Work

Since 2015, OAG has steadily expanded its capacity to enforce District laws governing nonprofits. Most recently, OAG resolved actions against a lodge of the Fraternal Order of Police for running an illegal off-premises liquor sales program, the Coast Guard Auxiliary Association for improper payments to its Board President, and Delta Phi Epsilon, Inc. for using nonprofit funds for personal gain. OAG has also litigated or resolved cases against several charter schools, including Options Public Charter School, as well as the president of the Park Southern Neighborhood Corporation, an affordable housing building, for mismanagement of nonprofit funds. OAG has also sued several organizations for misuse of charitable funds, including Casa Ruby, a DC organization that misused funds intended to serve LGBTQ+ youth. Additionally, OAG has obtained a court order requiring District nonprofit Howard Theatre Restoration, Inc. to dissolve for failing to function in support of the District’s historic Howard Theatre, and secured $950,000 from the Washington Hebrew Congregation’s preschool for violations of the NCA in addition to several childcare safety violations that put children at risk, and intervened to resolve a board dispute at an internet freedom organization.  

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

December 18, 2023

Settlements with DC Fraternal Order of Police Local, Coast Guard Auxiliary Association, and Delta Phi Epsilon, Inc. Build on OAG’s Work to Enforce DC Nonprofit Laws & Safeguard Nonprofit Assets

WASHINGTON, D.C. – Attorney General Brian L. Schwalb today announced the successful resolution of three separate enforcement actions that will safeguard nonprofit assets and ensure DC nonprofits comply with the law. To resolve allegations of nonprofit violations related to an illegal liquor sales scheme, the Fraternal Order of Police, Jerrard F. Young Lodge #1, will be required to implement extensive new financial compliance measures and appropriately train its personnel. To resolve allegations related to unauthorized use of nonprofit funds, the Coast Guard Auxiliary Association must adopt new compliance measures to ensure that nonprofit funds are not improperly diverted. Finally, to resolve allegations of misusing nonprofit funds for personal gain, Terrence Boyle—a former officer and director of the Delta Phi Epsilon, Inc. and the Delta Phi Epsilon Foundation for Foreign Service Education—must pay $100,000 in restitution and is permanently banned from participating in the governance of either organization.

“Nonprofits operating in the District are legally obligated to faithfully serve their stated charitable purposes, and to contribute to the public good – they are not permitted to enrich private interests,” said Attorney General Schwalb. “The Office of the Attorney General will continue to ensure that nonprofits fully comply with the law so that nonprofit assets are used in furtherance of a public benefit.”

About the District’s Nonprofit Corporation Act

Under the District’s Nonprofit Corporation Act (NCA), the Attorney General has the authority to oversee nonprofit activities and ensure that nonprofit entities operating in DC use their funds for the public purpose specified in their articles of incorporation and in accordance with rules designed to prevent conflicts of interest and private benefit. A nonprofit’s funds are a form of public trust and cannot be used to benefit a private individual or company—especially an individual who exercises control or influence over the organization.

Fraternal Order of Police, Jerrard F. Young Lodge #1

The Fraternal Order of Police, Jerrard F. Young Lodge #1 (FOP Lodge), is a nonprofit corporation whose membership includes active and retired officers of law enforcement agencies headquartered in the District. OAG opened an investigation into the FOP Lodge after the Washington Post reported on its “Jack Daniels Committee” which was running an extensive illegal off-premises liquor sales program. The Post’s reporting indicated that the liquor sales were intended to raise funds for the FOP Lodge, but that nearly a third of the hundreds of thousands of dollars taken in by the Committee were paid to Committee chair Michael Kruggel as “reimbursements” for travel and lodging expenses he allegedly incurred. OAG’s investigation uncovered that the Lodge violated numerous alcohol and beverage regulations and did not have sufficient oversight or procedures for credit card usage or reimbursements.

Under the terms of the settlement, the Lodge will be required to:

• Comply with the District’s alcohol and beverage code;
• Ensure key personnel take courses in nonprofit governance and financial accountability;
• Implement policies governing credit card use and reimbursements; and
• Cooperate with any continuing investigation into Mr. Kruggel.

A copy of the settlement agreement is available here.  

This matter was handled by Assistant Attorneys General Leonor Miranda and Will Margrabe and former OAG attorney Arthur Durst. 

The Coast Guard Auxiliary Association
The Coast Guard Auxiliary Association is a nonprofit organization that “provides the financial stability that the Coast Guard Auxiliary must have to ensure readiness to meet its mission to save lives.” In November 2021, OAG received a tip about improper payments from the Association to its Board President, Vincent Pica.

OAG’s investigation revealed that in 2017, 2018, and 2019, Pica donated a total of $315,000 to the Coast Guard Foundation (the Foundation)—a Connecticut nonprofit—to buy tables at the Foundation’s annual fundraising gala dinners. The Foundation then returned $302,716 of Mr. Pica’s donations to the Association. Rather than using these funds to support its charitable programs, the Association transferred the funds back to Mr. Pica. The Association’s board never approved or ratified these payments.

Under the terms of the settlement, the Association will be required to make ongoing compliance reports to OAG for two years. The Association also will report to OAG all meeting minutes regarding either the election or appointment of officers and directors, or the review and approval of conflicted transactions between the Association and an officer or director.

A copy of the settlement agreement is available here.  

This matter was handled by Assistant Attorney General Cara Spencer and former OAG Attorney Geoffrey Comber.

Delta Phi Epsilon, Inc.; Delta Phi Epsilon Foundation for Foreign Service Education; and Terrence Boyle

Delta Phi Epsilon, Inc. (DPE) is a District nonprofit organization established to promote international trade and foreign service education. The Delta Phi Epsilon Foundation for Foreign Service Education (the Foundation) is a separate nonprofit organization established to serve as the charitable arm of DPE and to provide scholarship awards to individuals studying foreign service. Terrence Boyle is a former long-time officer and director of both DPE and the Foundation.

OAG sued DPE, the Foundation, and Boyle, alleging that Boyle violated DC law by using nonprofit funds for personal gain and disregarding the entities’ nonprofit purposes. The lawsuit also laid out numerous other violations, including failures to comply with nonprofit governance requirements and the improper sale of the DPE’s Alpha Chapter House (3401 Prospect St, NW).

The DC Superior Court granted partial summary judgment in favor of the District, ruling that Boyle illegally enriched himself by using Foundation funds to finance his private home in Georgetown, that the Alpha Chapter House was improperly transferred without the required approval of the DPE membership, and that Boyle had breached his fiduciary duties to both nonprofits. 

Under the terms of the settlement, Terrence Boyle must:

• Pay $100,000 in restitution to the Foundation: Boyle must make a $100,000 payment to the Foundation as restitution for illegally using Foundation funds to subsidize the purchase of his private home. Boyle originally used $150,000 of Foundation funds as a downpayment on his home and used the Foundation as a co-signer on his mortgage. He later repaid only the original $150,000 to the Foundation, without any interest, and obtained sole ownership of the home. 
   
• Never again participate in governance of the Fraternity or the Foundation: In August 2021, Boyle resigned as both an officer and a director of the Fraternity and as an officer of the Foundation. He is now permanently banned from serving as a manager, officer, director, or trustee of the DPE or the Foundation either in name or in practice. He may not participate in the governance of either organization in any way, including by acting on behalf of directors or officers, hosting or managing meetings, participating in the management of Foundation real estate, or controlling bank accounts. He is also permanently banned from being paid as a contractor or employee of either organization.
   
• Abstain from serving as an officer or director of any other DC nonprofit: Boyle is similarly banned from serving as the officer or director of any other District nonprofit for 10 years.

Under the terms of the settlement, DPE and the Foundation will be required to:

• Elect or appoint new, independent officers and directors: DPE must elect or appoint new officers and directors who are independent from Boyle and were not involved in previous governance failures. Anyone who served as an officer or director of DPE or a trustee or officer of the Foundation between January 1, 2017, and February 1, 2023, may not serve as a DPE officer or director for 10 years.
   
• Use the proceeds from the Alpha Chapter House sale for appropriate nonprofit purposes: The proceeds of the Alpha Chapter House sale must be used to support the organizations’ purposes. The Foundation has proposed a plan to purchase a new property to use as a library, meeting space, and historic and cultural center to benefit the organizations and the public. This plan must be approved by DPE members.
   
• Make significant changes and provide reports to OAG: The Foundation must begin issuing educational scholarships consistent with its purpose within one year and must provide documentation to OAG on scholarship announcements and disbursement of funds to recipients for three years. The Foundation must also provide annual reports to OAG on the use of the proceeds from the sale of the Alpha Chapter House for five years to ensure funds are used appropriately. Both the Foundation and DPE must comply with DC nonprofit laws governing regular meetings and financial reporting. 

A copy of the settlement agreement is available here.  

This matter was handled by Assistant Deputy Attorney General Will Stephens and former OAG Attorney Tabitha Bartholomew.

OAG’s Nonprofit Enforcement Work 
Since 2015, OAG has steadily expanded 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, OAG 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 Casa Ruby, a DC organization that misused funds intended to serve LGBTQ+ youth, 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, 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.