WASHINGTON, D.C. – Attorney General Karl A. Racine today announced that the Superior Court granted the District’s motion for summary judgment in a lawsuit to resolve a dispute over control of the Open Technology Fund (OTF), an internet freedom nonprofit. The Court ruled that the attempt by Michael Pack, the Trump-appointed CEO of the United States Agency for Global Media (USAGM), to remove and replace OTF’s Board of Directors was unauthorized; that the nonprofit’s original board is the valid, operating board of directors; and that any actions taken on behalf of OTF by Pack or the replacement board he appointed are invalid. The ruling resolves a July 2020 lawsuit filed by the Office of the Attorney General (OAG) under the District’s Nonprofit Corporations Act after Pack’s improper actions caused a leadership crisis at OTF and paralyzed the organization. In a separate matter, the Office of the Attorney General is investigating alleged misuse of funds by Public Media Lab, a nonprofit organization controlled by Michael Pack.
“The public benefits when nonprofits, including the Open Technology Fund, have clear leadership and governance and can fulfill their charitable missions,” said AG Racine. “This court victory demonstrates that the Office of the Attorney General will act on behalf of the public interest when disputes or problems prevent District charities from functioning.”
OTF is an independent 501(c)(3) charitable organization incorporated in the District of Columbia. The internet freedom nonprofit funds the development of secure, open-source tools that allow activists, journalists, and ordinary citizens in repressive societies to circumvent online censorship. Over two billion people rely on tools supported by the Fund, including Signal, an encrypted messaging tool, and Tor, software that allows users to browse the web anonymously. OTF receives grant funding from USAGM.
Under the District’s Nonprofit Corporations Act (NCA), the Attorney General is responsible for protecting charitable organizations and their assets, and for ensuring nonprofits are acting in the public interest. OAG can seek a court order to resolve disputes that prevent an organization from fulfilling its charitable purpose.
In June 2020, USAGM CEO Michael Pack illegally replaced OTF’s Board of Directors, a move that was contested by the original Board. This dispute left the organization without clear leadership, as two groups claimed control. It also left OTF unable to fulfill its mission of promoting internet freedom. OAG filed suit under the NCA to resolve the dispute.
In its lawsuit, OAG asked the court to issue an order declaring that the removal of OTF’s Board by USAGM CEO Michael Pack was unauthorized, that the original Board is the valid operating Board, and that any actions taken on behalf of OTF by Michael Pack or his replacement Board of Directors are invalid. In an October 14 order granting the District’s motion for summary judgment, the Court did just that.
A copy of the order is available at: https://oag.dc.gov/sites/default/files/2020-10/OTF-Summary-Judgment.pdf
OAG’s Nonprofit Enforcement Work
Under AG Racine’s leadership, OAG has invested resources to expand its nonprofit enforcement capacity. Already, OAG has litigated and resolved actions against several District charter schools, and the president of a nonprofit that owned an affordable housing building, for mismanagement of nonprofit funds. The office has also sued the 58th Presidential Inaugural Committee and the NRA Foundation for misusing charitable funds, took action against Howard Theatre Restoration, Inc. for failing to properly obtain financial audits, and investigated the closure of Providence Hospital to ensure nonprofit assets were not improperly removed from the District. Several additional investigations remain open, including an investigation into the alleged misuse of funds by Public Media Lab, a nonprofit controlled by Michael Pack.
If you suspect that a nonprofit doing business in the District of Columbia is violating District law, please contact OAG at (202) 727-3400.