Calif. A.G. Says AIDS Charity Diverted Funds

     MONTEREY, Calif. (CN) – A charity organization claiming to take care of AIDS patients used its trust assets to pay employee salaries and rent for its thrift shop, California’s attorney general claimed in a lawsuit.

     The Monterey County AIDS Project acquired property in 1999 “to house active AIDS patients, with funds derived in whole or in part from the monies derived from the residue of the estate,” Attorney General Edmund G. Brown Jr. said.
     The next year, the organization tried to sell the house since it “was not well-maintained and it was not practical to house AIDS patients so far away from medical healthcare facilities.” The Monterey County Superior Court allowed the sale, provided all the funds were “used by [the charity] solely for the purpose of providing housing for people with the HIV disease,” Brown said.
     According to the state’s complaint, the charity’s board of directors did not keep records of meetings, and violated a court order by withdrawing money from the housing endowment. There are no assets left in the housing endowment after several years of using the money on personal expenses, Brown said.
     The state sued the charity and 16 former or current board members, accusing them of diversion, improper distribution and breach of fiduciary duty.
     Brown wants the company dissolved, along with injunctive relief to protect all charitable assets.

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