D.C. AG Reaches Three Settlements over Alleged Nonprofit Law Violations

  • District of Columbia AG Brian L. Schwalb reached three separate settlements regarding alleged violations of the District’s nonprofit laws.
  • The AG’s office settled with the Fraternal Order of Police, Jerrard F. Young Lodge #1, Washington, D.C. to resolve allegations that the police lodge violated the District’s alcohol and beverage code and nonprofit laws by operating an illegal liquor sales program that was intended to raise funds for the lodge. The AG’s office further alleges that a third of the hundreds of thousands of dollars taken in by the program was paid to its chair for alleged travel and lodging expenses. Under the terms of the settlement, the lodge must ensure compliance with the relevant laws and assist in the continuing investigation of the program chair.
  • Separately, the AG’s office settled with the Coast Guard Auxiliary Association, Inc. to resolve allegations that the Association’s president personally donated hundreds of thousands of dollars to the Coast Guard Foundation to purchase tables at fundraising dinners, and that the money was then transferred from the Foundation to the Association, which in turn improperly transferred the funds back to the president. Under the terms of the settlement, the Association must make ongoing compliance reports to the OAG and provide information regarding transactions involving officers and directors.
  • The AG’s office also reached a settlement with Delta Phi Epsilon, Inc. (DPE), as well as a related Foundation and a former DPE officer and director. The settlement addresses allegations that the individual improperly used nonprofit funds for personal gain, including to subsidize the purchase of his private home. Under the terms of the settlement, the individual must provide restitution to the Foundation and is banned from serving as an officer or director of a DC nonprofit. The Foundation must issue educational scholarships within a year and provide detailed reports to the OAG on scholarship announcements and fund distributions for three years.