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DC Files Case against Peaceoholics, WEALTHY, and Their Principals for Unlawful Diversions of District Grant Funds

Friday, June 21, 2013

DC Files Case against Peaceoholics, WEALTHY, and Their Principals for Unlawful Diversions of District Grant Funds

WASHINGTON, DC – District of Columbia Attorney General Irvin B. Nathan announced today that following an extensive investigation, the District has filed two civil enforcement actions in D.C. Superior Court for unlawful diversions of District grant funds:  one against Peaceoholics, Inc., its co-founder and CEO Jauhar Abraham, and its co-founder and former COO Ronald Moten, and the other against WEALTHY (Washington East of the River Academy of Entrepreneurship, Arts, Life Skills, Technology and Health for “Youth on the Rise”), its Executive Director Dianna Robinson, its accountant Darrell Johnson, and Johnson’s firm.  The cases seek a total of $1.47 million in treble damages, over $200,000 in restitution for unjust enrichment, and civil penalties.

Peaceoholics

The case against Peaceoholics seeks to recover over $100,000 in District grant funds that the District alleges were unlawfully used in 2007-2009 towards the purchase of two “luxury” sports utility vehicles for CEO Abraham.

The lawsuit also alleges that Peaceoholics obtained a total of $178,455 in District grant funds as a result of a false grant application it submitted in January 2009 to the D.C. Children and Youth Investment Trust Corporation (CYITC).  With that application, Peaceoholics submitted a federal tax form (Form 990) that falsely reported the payments that Peaceoholics had made to Abraham and Moten for compensation and reimbursements in 2006.  Specifically, Peaceoholics reported paying Abraham $66,652 that year, when it had actually paid him at least $158,301.  Peaceoholics also reported paying Moten $63,414 that year, when it had actually paid him at least $98,381.18.

The District’s complaint includes a claim under the False Claims Act for treble damages for the $178,455 in District funds that Peaceoholics obtained through its false grant application, in addition to claims for single damages for the District funds used towards the purchase of the SUVs.  From 2005 to 2010, Peaceoholics obtained approximately $5.2 million in District funds for violence intervention and gang prevention programs serving D.C. youth.

WEALTHY

The case against WEALTHY seeks to recover over $120,000 in District grant funds that the District alleges were unlawfully paid to Executive Director Robinson and to Johnson’s accounting firm out of a fiscal year 2009 earmark for summer youth programs in D.C.

The earmark budget prepared by WEALTHY, which was submitted to and approved by CYITC, allocated no more than $50,400 in salary to any one position.  The District alleges that Robinson alone received $141,500 in compensation from the earmark funds.

The earmark budget also allocated $24,000 for accounting services.  The District alleges that Johnson’s accounting firm received a total of $65,198 in fees from the earmark funds.   

According to the District’s complaint, WEALTHY submitted monthly expenditure reports to CYITC that falsely reported how the funds were being spent, and CYITC, relying on these reports, paid out a total of $310,400 in District funds to WEALTHY.  The complaint seeks treble damages under the District’s False Claims Act for these unlawfully obtained funds.

Attorney General Nathan said, “District grants, no matter how large or small, must be spent for their intended purposes.  All entities that receive money from the District treasury must be on notice that we demand integrity in the expenditure of public money, for the benefit of all District residents.  These cases resulted from a year-long, independent investigation by our office into nonprofits receiving aid from CYITC.”  The Attorney General commended Ellen Efros, Deputy Attorney General for the Public Interest Division, Bennett Rushkoff, chief of the division’s Public Advocacy Section, and Assistant Attorneys General Catherine Jackson and Nicholas Bush for their work on these cases.

CONTACT:  
Ted Gest, Public Information Officer
202-727-6283
ted.gest@dc.gov

Bennett Rushkoff, Public Interest Division
202-727-5173
bennett.rushkoff@dc.gov

Attachment(s): 
AttachmentSize
Peaceoholics Complaint468.56 KB
WEALTHY Complaint526.17 KB