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AG Bonta Fines Nonprofit for Misdirected Donations

  • California AG Rob Bonta reached a settlement with defunct San Francisco nonprofit ZeroDivide and its directors and officers (collectively, “ZeroDivide”) to resolve allegations that it misspent donations in violation of California charitable trust laws. The complaint also alleges that members of ZeroDivide’s board of directors knew of this activity and in failing to stop it, breached their fiduciary duty to the nonprofit’s donors.
  • According to the complaint, ZeroDivide—which focused on bringing technology to low-income communities—redirected over $606,000 in donations specifically earmarked for two charitable programs to other expenses such as salaries and other unrelated programs from 2013 until it ceased operations in 2016. During that time, the nonprofit’s directors and officers allegedly knew of and failed to prevent this conduct, thereby breaching their fiduciary duties to donors.
  • Under the terms of the stipulated judgment, ZeroDivide will pay $326,008 in damages and $138,525 in penalties, late filing fees, and attorney’s fees. ZeroDivide must be dissolved and its remaining assets distributed to one of the intended donation recipients, and two of its officers will be prohibited from leading or working at a charity in California for three years, among other things.