AG Racine Secures Emergency Relief Against Affordable Housing Non-Profit for Abandoning Mission, Attempting to Use Charitable Assets for Private Gain

With Lawsuit, OAG Seeks to Ensure Low-Income Tenants Are Not Forced Onto the Street; Builds On Efforts to Hold Non-Profits Who Abuse Tax-Exempt Status Accountable

WASHINGTON, D.C. – Attorney General Karl A. Racine today announced that his office succeeded in stopping the Janet Keenan Housing Corporation, which provides affordable housing to low-income DC residents, from attempting to sell their property for private purposes in violation of District non-profit law.

“DC is in the midst of a housing crisis and longtime Black, brown, and low-income residents are being pushed out of the city they call home. Organizations that claim not for profit status are granted favorable tax benefits in exchange for their promise to fulfill their non-profit mission. In this case, the Janet Keenan Housing Corporation falsely said it was focused on providing needed affordable housing, when, in fact, the company prioritized profits in housing over genuine affordable housing work,” said AG Racine. “Most District non-profits follow the law, but when a tax-exempt entity—like the Janet Keenan Housing Corporation—acts contrary to its stated mission and hurts the DC residents it is meant to support, my office will use all available tools to stand up for District tenants.”

In response to the Office of the Attorney General’s (OAG) request for a Temporary Restraining Order (TRO), the court paused the property sale while it considers the Janet Keenan Housing Corporation’s request for approval to sell its property. In addition to the request for emergency relief, OAG also filed a complaint against Janet Keenan Housing Corporation for violations of the District’s Nonprofit Corporation Act (NCA) and common law.

Background on OAG’s Complaint
Janet Keenan Housing Corporation (JKHC) is a nonprofit organization with a stated mission to “preserve and promote affordable housing in the District of Columbia”. They are exempt from taxation and are required by law to operate solely for their charitable purpose.

In 2000, JKHC purchased a property at 1304 Euclid Street NW which had been used as affordable housing for low-income residents since the 1980s. JKHC committed to continue to use the house for this purpose and, since then, has operated the property as a self-run group home for low-income residents, consistent with its charitable mission. Six people currently live at the home.

On September 12, 2022 JKHC notified residents that they were planning to sell the property. By September 21 the house was under contract and the sale was scheduled to close on October 7.

OAG learned that JKHC was selling the property without the condition that the new owner maintain its charitable purpose. The house is a charitable asset and, under the District’s Nonprofit Corporation Act (NCA), non-profits must receive prior authorization from the Superior Court and notify the Attorney General in order to sell or otherwise divert the property from its charitable purpose. OAG warned JKHC that an unauthorized transfer of the property would violate the law, but JKHC moved forward with its efforts to sell.

Allegations against JKHC
By trying to sell the property and failing to ensure that it would maintain its charitable purpose without seeking prior court approval, JKHC is acting contrary to its stated charitable mission in violation of the NCA and common law on three counts:

  • Unauthorized diversion of a charitable asset;
  • Abusing or exceeding their authority; and
  • Acting contrary to their nonprofit purpose.

Additionally, JKHC has violated the NCA and common law by allowing the same person, John Keenan, to serve as both president and treasurer of the organization.

With this lawsuit, OAG is seeking to:

  • Stop JKHC from selling or diverting the property from its charitable purpose;
  • Appoint a receiver or other court-supervised official to ensure the property continues to be used as housing for low-income District residents and to reform JKHC’s board of directors; and
  • Create a trust or other form of monetary relief over any non-profit funds received in violation of District law.

A copy of the complaint is available here.

The case is managed by Assistant Attorney General Tabitha Bartholomew, under the supervision of Public Integrity Section Chief Adam Gitlin. Investigator Willie Haynes also assisted in the investigation.

OAG’s Nonprofit Enforcement Work
Under AG Racine, OAG has invested resources to expand its capacity to enforce District laws governing nonprofits. OAG has litigated and resolved actions against several charter schools and the president of a nonprofit that owned an affordable housing building for mismanagement of nonprofit funds. In May 2022, AG Racine clawed back $750,000 in misspent nonprofit funds from the Trump Organization and Presidential Inaugural Committee. The office has also sued several organizations for misuse of charitable funds, including a local fraternity and the NRA Foundation. Additionally, OAG has obtained an order that District nonprofit Howard Theatre Restoration, Inc. dissolve for failing to function in support of the District’s historic Howard Theatre, investigated the closure of Providence Hospital to ensure nonprofit assets were not improperly removed from the District, and intervened to resolve a board dispute at an internet freedom organization. 

If you suspect that a nonprofit doing business in the District of Columbia is violating District law, please contact OAG at (202) 727-3400.