Ninth in a series
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The controversial AIDS Healthcare Foundation is facing increasing scrutiny about its business practices, including campaign spending, political lobbying, conflicts of interest and mismanagement of residential housing.
The pressure is mounting as advocates in the LGBTQ community are calling for change at the top of the organization.
In this article, I will explain five reasons why change is needed.
№1) Misuse of nonprofit proceeds
The nonprofit has spent more than $70 million on political campaigns since , including $23 million in to support Prop. 10, a statewide rent control initiative that lost in a landslide, and $5 million in on Measure S, a Los Angeles County anti-housing development measure that was overwhelmingly rejected.
Undeterred by its poor track record, AHF has spent more than $15 million to advocate for the controversial Proposition 21 (a rebirth of failed Proposition 10) on the November ballot — just months after California Gov. Gavin Newsom signed into law the nation’s most comprehensive rental housing regulation law, known as AB.
Critics say AHF has transformed from an organization that once advocated for the treatment and prevention of HIV/AIDS into a wealthy and powerful lobbying group that promotes tangential causes unrelated to its mission.
Even worse, they say it’s a political lobbying group masquerading as a healthcare organization — and that it takes advantage of laws aimed at providing discounted drugs to the sick and poor, and uses the ill-gotten profits to support political causes favored by founder and president Michael Weinstein.
In an editorial, the Los Angeles Times sharply criticized Weinstein for spending millions of the nonprofit’s dollars to bankroll Measure S, which Weinstein said he launched after noticing “cranes, construction sites and new buildings rising from the ground below” his 21st floor office.
“The AIDS Healthcare Foundation has never been a significant voice advocating for more affordable housing and homeless housing in L.A. Nor has the group played a role in planning and land-use issues — at least not until a developer proposed building two 30-story towers right next to Weinstein’s office,” The Times reported.
Concern about AHF is starting to grow in Sacramento.
California state Assemblyman Evan Low (D-Campbell) introduced a bill in Sacramento in May that would prohibit nonprofits from using revenue generated from contracts with Medicare and Medicaid and a federal drug discount program to support or oppose state or local ballot initiatives. Assembly Bill seems to have been written specifically to target organizations like AHF, which use their nonprofit status and tax benefits to their political advantage in violation of IRS regulations, according to a recent article on reason.com.
№2) Attorney General investigation
The controversial AIDS Healthcare Foundation, which has diverted more than $70 million of its budget to political campaigns favored by the nonprofit’s president, is the subject of an investigation by California Attorney General Xavier Becerra.
The investigation came at the request of California state Sen. Ben Hueso (D-Chula Vista), who in June asked Becerra to investigate whether AHF is fraudulently misusing savings from the 340B federal drug discount program to fund political campaigns unrelated to providing healthcare to the poor and vulnerable.
In a letter to Becerra, first reported by Politico https://www.politico.com/states/california/story//08/19/powerhouse-aids-organization-faces-scrutiny-for-use-of-federal-money- , Hueso said the AG should determine whether the 340B cost savings “are being properly applied to California’s most vulnerable populations.”
Concerned about the new scrutiny, AHF President Michael Weinstein wrote Becerra on Sept. 3, , and falsely implied that AHF does not profit from the 340B program. In reality, 340B is a cash cow that generates hundreds of millions of dollars of profit for AHF annually, money that is used to finance political projects unrelated to AIDS/HIV prevention and treatment.
Politico reported that among recent AHF political expenditures, campaign records show AHF spent:
— $23.2 million backing Yes on 10, a failed rent control expansion measure on the ballot.
— $5 million on a failed Los Angeles ballot measure that would have restricted the building of apartment towers.
— $19.5 million in a failed effort to push Prop. 61, which only mustered 47 percent support. The ballot war prompted pharmaceutical manufacturers to drop $110 million on the matter, making the issue the focus of more spending than for any candidate for governor or Senate that cycle.
— $4.6 million on Prop. 60, a failed effort to require the use of condoms by adult film actors.
— $2.3 million for Yes on B in , a Los Angeles-area effort to require the use of condoms for adult film actors.
— $17.9 million for the failed Ohio Issue 2, a drug price standards initiative that was almost identical the California’s Prop. 61.
That’s right. Every single campaign failed. $70 million wasted.
№3) FPPC investigation
The scandal-plagued AIDS Healthcare Foundation is under investigation by the California Fair Political Practices Commission for allegedly failing to disclose secret payments to lobbyists to fight Senate Bill 50, which would have increased housing construction near transit stations.
On Feb. 20, the housing advocacy group California YIMBY asked the FPPC to investigate whether AHF failed to disclose “significant spending” on lobbying against the bill, authored by California Sen. Scott Wiener (D-San Francisco).
AHF ran “a costly advertisement and public relations campaign against SB 50,” without disclosing the lobbying expenditures as required by law, California YIMBY President and CEO Brian Hanlon said in a complaint letter to the FPPC.
The FPPC, which has the authority to impose financial sanctions but not jail time, has confirmed it is investigating the matter. If the investigation results in a fine, it would be the second time since that the FPPC has penalized AHF for violating state campaign laws.
In , the FPPC concluded that AHF and Weinstein violated campaign finance laws by failing to disclose that it was the funding source for a billboard campaign in support of Measure S, which sought to significantly limit the development of housing in Los Angeles County. That measure was soundly defeated by voters.
Now, the FPPC is investigating whether AHF violated state laws while lobbying against SB 50. Do you notice a pattern here?
№4) Conflicts of Interest
Members of the Board of Directors of the AIDS Healthcare Foundation come primarily from two places: Charles Drew University in South Central Los Angeles and the County of Los Angeles government.
This creates conflicts of interest for the members, who are paid by their agencies at the same time those agencies have business relationships with AHF, the nonprofit they govern.
The board members who work for L.A. County are Condessa Curley (Area Medical Director, Department of Public Health), William Arroyo (Regional Medical Director, Department of Mental Health) and Curley Bonds (Chief Deputy Director for Clinical Operations, Department of Mental Health).
The health department, where Ms. Curley works, has a policy that prohibits employees from having conflicts of interest, which the policy says “may include, but are not limited to, relationships, associations, or business dealings with contractors, vendors, suppliers, other healthcare organizations, or individuals.” This is significant because AHF is one of the health department’s largest vendors.
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It is also well known within the county health department that Ms. Curley has used her taxpayer-funded County of Los Angeles account for many years to send emails related to her role with AHF. This is a violation of County policy and could be a violation of a criminal statute, California Penal Code Section 424, misappropriation of public resources.
Bonds’ and Arroyo’s work for AHF may violate the County mental health department’s Code of Conduct, Ethics and Compliance. That code strictly prohibits “any work-based activity which may affect or appear to affect private interests, financial or non-financial.”
For many years, Bonds was also employed at Charles Drew University, which also has a financial relationship with AHF. AHF Board Member Cynthia Davis is a longtime professor at Charles Drew University. Not surprisingly, AHF is a financial donor to Charles Drew University, which employs its board members, according to public records.
Ms. Davis also leads an HIV testing program through CDU; those who test positive are referred to AHF pharmacies for medication. Those pharmacies generate more than $1 billion per year in sales for AHF, making the organization one of the richest and most powerful nonprofits in the United States.
№5) Lawsuit Over Mismanaged Residential Housing
The embattled AIDS Healthcare Foundation, already facing multiple investigations by the California Attorney General and Fair Political Practices Commission, was accused in a new lawsuit of acting like a “slumlord,” and unfairly evicting low-income tenants at a hotel it purchased to allegedly provide housing for the homeless.
In recent years, AHF has tried to portray itself as an advocate for low-income people and the homeless. The group started purchasing shabby hotels in the inner city for the alleged purpose of providing housing to those in need.
But a class-action lawsuit filed March 4 in Los Angeles County Superior Court alleges that instead of helping the poor, AHF allowed one of the hotels to fall into disrepair, endangering tenants, and even went as far as evicting those who fell behind on rent — increasing the homeless population AHF claimed it would serve. (Note: The case number is 20STCV).
The Los Angeles Times wrote an interesting article about the lawsuit under the headline: “AIDS Healthcare Vowed to do Homeless Housing Better. Tenants Say It’s a ‘Slumlord.’”
To make matters worse, court records show that AHF may have evicted as many as 40 tenants since , The Times reported.
Michael Weinstein, the controversial president of AHF, said he evicted only those involved in violent incidents or those who had quit paying rent.
“In order to make the project financially viable and build self-sufficiency, we exercise tough love on paying the rent,” Weinstein said, according to The Times.
This is hypocrisy at its worst.
For years, Weinstein has tried to portray AHF as an advocate for the needy — at the same time he’s been callously throwing them back onto Skid Row to fend for themselves.
Those who weren’t evicted were forced to live in inhumane conditions, according to the lawsuit.
Tenants at the Madison Hotel on 7th Street on L.A.’s Skid Row said in the lawsuit that AHF allowed slum-like conditions to fester at the aging 220-unit building, including bedbug and roach infestation, plumbing and electricity issues and an elevator that failed to work for nine months, forcing disabled tenants to struggle up as many as five floors of stairs on foot.
In addition, one of the hotel’s community showers sat in disrepair for months, hidden behind duct tape and plastic.
“Indeed, according to class members, AIDS Healthcare Foundation is just The Madison’s newest slumlord in a long line of slumlords,” the tenants said in the lawsuit.
This is not the look that AHF wanted for the first residential hotel in its growing housing empire.
It’s more than ironic that AHF has been buying full page ads every weekend in the Los Angeles Times urging the California Legislature to continue moratoriums on evictions, when it is one of the biggest source of evictions in the state. One could argue they are doing this in order to hide their own callous actions.
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For most organizations, any one of these allegations would be reason enough to change management. To have five of them is evidence that the AHF has lost its way and can only be saved through a change at the top.
I hope these articles have provided an understanding of the reason why the word “controversial” is often inserted in front of the name, AIDS Healthcare Foundation.
It is my sincere hope that change is coming.
Controversy Clouds Mission of AIDS Healthcare Foundation
Part 1: AHF Facing Scrutiny from State for Political Spending
Part 2: AHF Investigated by AG Over Alleged Misuse of $1 Billion Pharmacy Proceeds
Part 3: AHF Investigated by FPPC for Alleged Campaign Finance Violations — Again
Part 4: AHF Faces New Evidence of Conflicts of Interest
Part 5: AHF Acted Like ‘Slumlord,’ Evicted Low-Income Tenants From its Hotel
Part 6: AHF Board and President Must Be Removed to Save Organization
Part 7: AG Must Act Against AIDS Healthcare Foundation
Part 8: AHF Malfeasance is Reason Why President and Board Must Go
Part 9: 5 Reasons Why Change is Needed at Controversial AIDS Healthcare Foundation
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