A Santa Monica based charity has been ordered to dissolve and its directors are prohibited from serving on any future non-profit board or handle money associated with a volunteer position.
Attorney General Xavier Becerra announced a $7 million settlement against the Lithuanian Assistance Foundation (Foundation), its directors and officers Albinas Markevicius, Joseph Praske, Zina Markevicius and Arunas Sodonis, and associated companies RME LLC and Washington Shores LLC on Thursday.
The settlement resolves allegations that the officers and directors either engaged in or authorized illegal self-dealing transactions, unjust enrichment, and breach of fiduciary duty by improperly transferring charitable assets to individuals who were related to, or associated with, the charity’s officers and directors, in addition to other wrongdoings.
While all parties agreed to the settlement, the individuals involved dispute any wrongdoing.
“The Foundation Parties strongly dispute the Attorney General’s findings and maintain that they acted in good faith for the benefit of the beneficiaries of the Foundation,” said the settlement. “To the extent that real estate transactions involved any of the Foundation Parties, the Foundation Parties contend that the transactions were unique, fair market value (as determined by the forensic appraisals) was paid, and the intended beneficiaries received the proceeds except as limited due to the Attorney General’s investigation. The Attorney General disagrees with these contentions.”
According to the Attorney General’s Office an investigation revealed four properties, worth about $6 million, were donated to the charity were improperly transferred to members of the board or their associates at significantly below market value.
“The investigation also showed that the defendants did not disclose the donations of the four properties, nor the transfer of these properties, in any of their regulatory filings with the Attorney General’s Registry of Charitable Trusts,” said a statement from Bacerra’s office. “Additionally, the defendants allegedly filed false registration renewal forms from 2005 through 2013 with the Attorney General’s office. Damages to the Foundation resulting from the real estate transfers exceeded $6 million.”
Under the terms of the settlement, RME LLC, Washington Shores LLC, and the directors and officers of the Foundation will pay $7 million in damages. The Foundation must also adhere to the following:
The Foundation will be required to dissolve. Dissolution will begin within 30 days after the settlement is executed and any assets remaining at the time of dissolution will be deposited with the California Community Foundation;
Joseph Praske and Albinas Markevicious must agree to not serve on a board of directors for any 501(c)(3) organization. Mr. Praske will be allowed to remain on the board that he currently serves on, but will not serve in any capacity for which he is responsible for the organization’s assets; and Zina Markevicius, Arunas Sodonis, and Joseph Praske must complete board training within 90 to 180 days after the settlement agreement is executed.
“The people of California should be able to trust that their generous donations are going towards their intended purposes. The directors and officers of this foundation knowingly used their roles to deceive donors and divert millions of dollars in charitable assets from the organization they were responsible for safeguarding,” said Attorney General Becerra. “With this settlement, we are holding the directors and officers of Lithuanian Assistance Foundation accountable for their wrongdoings and getting misdirected funds back to charity.”
The settlement resolves allegations that the defendants breached their fiduciary obligation to act in the best interest of their charitable organization.