SALEM, Ore. (CN) - The director of three charities that ran foster homes pocketed millions of dollars intended for vulnerable, predominantly black children, Oregon's attorney general says, and spent the money on tropical vacations, luxury handbags and shoes.
Oregon claims Mary Holden Ayala "plundered" three charities she ran, diverting and wasting more than $2 million of state money for foster children.
The state sued Ayala and the Alfred Yaun Child Care Centers, and the Albina Women's League Foundation in a derivative securities lawsuit on Wednesday, along with six of the charities' directors, in Marion County Court.
Ayala's third charity, Give Us This Day Inc., is not a defendant, but the state says she used the other charities "to increase her ability to divert funds away from" it.
Ayala had run Give Us This Day since 1999, as a foster home and child care center that also certifies other foster homes. Since then, the attorney general says, she siphoned more than $2 million from it, spending it on an "extravagant lifestyle" that included trips to Jamaica, Hawaii and Las Vegas, luxury handbags and shoes, launching her own for-profit businesses, remodeling her home and pocketing more than $280,000 in cash from the charity's bank accounts.
Ayala agreed to a civil settlement in September that dissolved Give Us This Day, included a $500,000 settlement payment from the charity's insurer, and barred her from serving as a member of an Oregon nonprofit for seven years. The charity's board members are barred for five years.
But Ayala is still running two related Portland charities that she took over to help her loot the foster home, Oregon says.
Alfred Yaun Child Care Centers and Albina Women's League Foundation were both founded in 1969 to benefit the historically black Albina neighborhood in northeast Portland. Since Ayala took control, the two charities have completely abandoned their services, the state says.
Ayala became president and director of the board for Alfred Yaun Child Care Centers in 1999. She arranged for the charity to lease its only physical property, Rodney House, to Give Us This Day for $1 per year.
Ayala took control of Albina Women's League Foundation in 2012, becoming its president, secretary and treasurer. Since then, the foundation has leased space to Give Us This Day, but has never collected any rent. Ayala became the only bank signatory for the foundation and installed her own for-profit business in the space formerly occupied by Give Us This Day.
Ayala stacked the boards of both charities with her friends and family, most of whom exercised no control over charity operations, according to the complaint.
She let the charities lose 41 years of tax-exempt status by neglecting to file the necessary forms, Oregon claims, and rather than investigate or trying to reinstate the tax-exempt status, the boards for both charities did nothing.
Since then, the charities have racked up tens of thousands in unpaid property taxes, the state says.
Ayala and defendant board members Mercedes Garcia, Flora Judon, Delores Moore refused to testify at state hearings.
When Ayala signed the settlement agreement for claims involving Give Us This Day, she agreed to sign an agreement for Alfred Yaun Child Care Centers, but she never did, the attorney general says. Attorney General Ellen Rosenblum says that Ayala planned to use her family, Give Us This Day employees and Alfred Yaun's property to ditch her obligations under the settlement.
Ayala raided the coffers of Give Us This Day, knowing the state was about to seize the assets, and left foster parents in the lurch, according to the complaint.
Then she started a profit-seeking business, Trinity of Oregon, and installed it in Rodney House, which was owned by Alfred Yaun Child Care Centers, though she knew the property was facing foreclosure. Ayala had a former employee of Give Us This Day pay $50,000 in cash to get Rodney House out of foreclosure and preserve a space for Trinity, according to the complaint.
"Defendant Ayala's efforts to save Rodney House from foreclosure were not an eleventh hour realization that the asset should be used for charitable purposes," the lawsuit states. "Instead, she acted to ensure that she could continue to financially benefit herself at the expense of foster children."
Oregon seeks an accounting and damages and wants Ayala and the other defendants barred from acting as officers, directors, trustees, fiduciaries, key employees or managers for any charity ever again, even as volunteers.
The other defendants are Jacqueline Williams, Opal Strong and Henry McDowell.
The Attorney General's Office declined comment.
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