WASHINGTON, D. C. – Attorney General Racine announced today that his office has secured a judgment against Rowena Scott, the former board president of the non-profit Park Southern Neighborhood Corporation (PSNC), for abusing her authority and acting contrary to the charitable mission of PSNC by siphoning non-profit funds from its 360-unit affordable apartment building at 800 Southern Avenue SE.
While the building fell into disrepair and financial distress, to the detriment of its tenants, Scott paid herself tens of thousands of dollars a year and gave herself free rent for a period of nearly nine years. After a trial to determine the amount of funds Scott improperly diverted from PSNC, the Superior Court of the District of Columbia has ruled that Scott must return $242,605.01 to the non-profit.
“Preserving habitable affordable housing is a top priority for my office. The people charged with carrying out a not-for-profit mission to support such housing cannot be allowed misappropriate funds for their own benefit,” said Attorney General Racine. “This recovered money will go toward the original mission of supporting safe and affordable housing for District residents.”
The Superior Court had previously ruled that Scott violated the District’s Nonprofit Corporations Act by diverting PSNC’s money into her own pockets and away from its non-profit mission of providing low-income housing. The Nonprofit Corporations Act requires directors of non-profit corporations to act in good faith and in the best interest of the organization. It also authorizes the Attorney General to take action when a non-profit organization violates the law’s provisions.
After a two-day trial, Judge John M. Mott concluded that Scott had unlawfully taken at least $242,605.01 in improper salary payments and free rent. He ordered a constructive trust to be imposed over those funds and that Scott pay those amounts back to PSNC or its successor organization.
During Scott’s tenure leading the non-profit, the Attorney General’s suit alleged, the building fell into serious disrepair, including:
- Defective fire extinguishing equipment;
- Faulty water heaters;
- Unsafe or non-working ventilation fans;
- Defective electrical outlets;
- Damaged floors;
- Infestations of roaches, bedbugs, and mice;
- Damp and cracked ceilings and walls; and
- Non-functioning bathrooms.
PSNC also defaulted on its financial obligations on a District loan, and was in substantial debt to vendors and utility providers.
This ruling is the latest action in litigation by the Office of the Attorney General (OAG) against PSNC and Scott that began in 2014. In 2016, Attorney General Racine secured rulings that helped pave the way for the election of a new PSNC Board of Directors and the building’s sale in January 2017, which provided the resources required to remedy problems stemming from the prior PSNC Board’s mismanagement. The building was purchased by a joint venture, including a tenant organization, pursuant to the District’s Tenant Opportunity to Purchase Act (TOPA) and is now under new management.