A bequest of $1.8 million given to the Monterey County AIDS Project (MCAP) for use in housing AIDS patients was allegedly diverted to other purposes, according to a lawsuit filed on May 21 by Attorney General Jerry Brown.
On Monday, Brown said MCAP directors used the funds for salaries, rent for the charity's thrift shop, and various personal expenses. The suit further alleges that another $1 million in unrestricted funds was diverted, misappropriated, and/or misused for personal and for-profit ventures. The suit aims to shut down MCAP and to recover the $2.8 million.
Defendants include the former executive directors Wayne Johnson and Kathleen Banks and 14 other staff and board members. The lawsuit is seeking an order that would ban those individuals from ever serving in nonprofit agencies.
The $1.8 million bequest by Douglas Madsen, who died in 1999, involved a Big Sur ranch with the restriction that its sole use be for housing persons with AIDS. In 2000, a judge granted the MCAP board's request to sell the property, but ordered the proceeds placed in a housing endowment in keeping with the spirit of Madsen's wishes, according to the suit. While the property sold for $1.55 million, the profit was not placed in the Madsen bequest account, which held $373,149 cash, it said.
Today, "there are no assets left in the housing endowment," the complaint states.
In 2009, MCAP services were consolidated with those of the John XXIII AIDS Ministry under the umbrella agency Central Coast HIV/AIDS Services. That agency is not listed in the suit. News of the action quickly spread throughout the nonprofit community.
"It's difficult because it puts a pall on all the organizations and programs that provide services in AIDS-related cases, and it's dispiriting for people who work in that field," said Mary Adams, president of United Way of Monterey County. "Whenever anything like this happens, the community loses faith in all nonprofits."