Attorney General Schwalb Sues Former Affordable Housing Nonprofit Director for Misappropriating More Than $1.25 Million

OAG Seeks to Recover Nonprofit Funds Improperly Diverted from H Street Community Development Corporation to Pay Unauthorized Bonuses


Attorney General Brian L. Schwalb today filed suit against Kenneth Brewer, Sr., the former executive director of the nonprofit H Street Community Development Corporation (HSCDC), for misusing nonprofit funds and awarding himself more than $1.25 million in unauthorized bonuses.

In its lawsuit, the Office of the Attorney General (OAG) alleges that Brewer, who served as executive director of both HSCDC and its for-profit subsidiary, the H Street Investment Corporation (HSIC) from July 2010 until his retirement in June 2023, improperly caused HSCDC funds to be transferred to HSIC to fund increasingly larger annual bonuses for himself. The suit also alleges that Brewer’s bonuses were improperly funded in part by the sale of HSCDC-owned properties. The lawsuit seeks to recover the nonprofit funds Brewer diverted for his own personal gain.

“Nonprofit organizations exist to benefit the public, and nonprofit directors are legally required to use nonprofit dollars in furtherance of their organization’s public mission,” said Attorney General Schwalb. “Brewer violated that legal duty, diverting $1.25 million intended to support the H Street small business community to pay himself lucrative bonuses. As the District’s independent Attorney General, I will always use the law to hold bad actors accountable, and will now work to recover these illegally diverted funds, and ensure that they are used for their intended purpose of fostering economic opportunity and affordable housing on and around H Street.”

HSCDC is a nonprofit focused on preserving, managing, and expanding affordable housing and increasing economic opportunity for DC residents. In March 2024, HSCDC filed suit against Brewer for abusing his position of authority and misappropriating nonprofit funds.

After independently investigating the allegations against Brewer, OAG intervened and filed its own complaint. OAG’s lawsuit alleges that Brewer violated District law by:

  • Diverting $1.25 million in charitable funds for his personal benefit. Between 2017 and 2023, Brewer abandoned the authorized procedure for his performance reviews and bonus awards at HSCDC. Instead of going through the authorized process—which required review by an outside law firm and approval by HSCDC’s board—Brewer submitted requests for bonuses to the board of HSIC. Without informing the HSCDC board, the HSIC board authorized bonuses directly to Brewer in the amount of $150,000 in 2017, $155,000 in 2018, $250,000 in 2019, $350,000 in 2021, and $350,000 in 2022. This significantly increased Brewer’s total compensation for these years compared to previous years.
     
  • Selling nonprofit property and illegally using the proceeds of the sales to fund his bonuses. Brewer unlawfully authorized the transfer of proceeds from the sales of HSCDC-owned properties to the bank accounts of HSIC to fund his bonuses. Under DC law, the proceeds of the sale of a charitable asset may not be diverted from the organization’s designated charitable purpose without a court order.
     
  • Violating his duty to act in good faith and in the best interests of HSCDC. Brewer kept HSCDC’s board in the dark about the large bonuses authorized by HSIC. In April 2023, the HSCDC board discovered the bonus authorized in 2022 and voted to rescind it. However, Brewer did not return any of the bonus funds to the organization and retired in June 2023. As a result of the $1.25 million in unauthorized bonuses paid to Brewer, HSCDC is facing significant financial challenges.

With this lawsuit, OAG is seeking to recover the nonprofit funds that Brewer misappropriated.

A copy of the complaint is available here.

This matter is being handled by Assistant Attorneys General Martine Wilson and Cara Spencer; and Adam Gitlin, Chief of the Antitrust and Nonprofit Enforcement Section.

 

About the District’s Nonprofit Corporation Act

Under the District’s Nonprofit Corporation Act (NCA), the Attorney General has the authority to police nonprofit activities and ensure that nonprofit entities operating in DC spend their funds to serve their stated missions. Nonprofit organizations are set up to benefit the public, and nonprofit funds cannot be spent to benefit a private individual or company—especially an individual who has influence over the organization.

OAG’s Nonprofit Enforcement Work

Since becoming an independently elected Attorney General’s office, OAG has steadily expanded its capacity to enforce District laws governing nonprofits. Recently, OAG sued the Executive Director of a police accountability nonprofit and the former Treasurer of an elementary school’s parent-teacher organization for misusing nonprofit funds. OAG also secured a revised deal to sell the Providence Hospital campus for residential redevelopment that protected $5 million in healthcare resources for the District and ensured that the proceeds of the sale of property owned by an affordable-housing nonprofit would still be used to provide affordable housing in the District. OAG also resolved actions against a lodge of the Fraternal Order of Police for running an illegal off-premises liquor sales program, the Coast Guard Auxiliary Association for improper payments to its Board President, and Delta Phi Epsilon, Inc. for using nonprofit funds for personal gain.

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