Orange County sued a nonprofit, Viet America Society, based on allegations the NPO misappropriated millions of dollars allocated for meal delivery during the Covid-19 pandemic.
The county seeks to recover the millions it paid to retain the NPO to deliver nutritional meals to elderly and disabled residents of Orange County.
The county alleges multiple co-conspirators formed the nonprofit in June 2020 in order to obtain federal and local funds. These people then "conspired to embezzle pandemic relief funds by executing contracts that they never intended to perform, instead using the funding streams as their own personal banking accounts."
The county accuses the defendants of "pervasive self-dealing" and using local and federal funds to finance "lavish purchases that include real property and repairs and improvements on such property."
Viet America Society also allegedly failed to complete a Vietnam War memorial that it received funding to build.
Defendants include Viet America Society, Warner Wellness Center, Perfume River Restaurant and Lounge, and several leaders of the nonprofit.
The day before the lawsuit was filed, two Orange County supervisors called for investigations and an audit into the public funding of Viet America Society and another nonprofit.
The attorney for Viet America Society said the organization was short-staffed and "had a hard time documenting" every meal it delivered. The attorney said many of the nonprofit's drivers "failed to get required paperwork" because they were practicing social distancing. However, one of the Orange County supervisors, who called for the investigation, responded that the requirement was to document the meal deliveries in real time, which other vendors were able to do.
An accounting firm found $25,000 in unaccounted funding after auditing Viet America Society in January 2024.
However, Orange County officials are demanding that the nonprofit pay back approximately $4.2 million. Paul Anderson "Orange County sues Huntington Beach nonprofit led by Do's daughter, alleges misappropriation of millions of dollars" www.latimes.com (Aug. 15, 2024).
Commentary and Checklist
Documentation, no matter the circumstances, is important to blunting claims of services fraud. In this matter, lack of documented proof will be the cornerstone of the self-dealing charge as well as the fact that other NPOs and vendors were able to document deliveries and adhere to social distancing.
Visual documentation was possible in the above matter. Drivers could have taken an image of the meal and the address, rung the doorbell, practiced social distancing while the recipient picked up the meal and signed the paperwork for it (if signature was required), and then retrieved the paperwork after the recipient shut the door.
NPO leaders are fiduciaries of funds donated or granted, and must adhere to the purpose for which the monies were received and accurately account for them.
