City Council candidate’s nonprofit poses complications for campaign

Tomas O’Grady faces a delicate balancing act as he makes his second bid for a spot on the Los Angeles City Council.

For nearly four years he has run EnrichLA, a nonprofit that builds school gardens and figures prominently in his stump speeches. And his Los Feliz home has served as headquarters for both the charity and his campaign — a situation nonprofit experts say can be legally precarious. Charitable nonprofits like EnrichLA are required by federal law to steer clear of aiding candidates and their campaigns or risk losing their tax-exempt status.

Last year, two former EnrichLA interns filed a complaint with the city Ethics Commission alleging O’Grady repeatedly blurred the lines between his election effort and the charity, claims he denies. Beyond those allegations, nonprofit experts say the EnrichLA board appears to have run afoul of state requirements limiting employees and relatives on charity boards.

Former interns Ana Greenberger, 22, and Izzy Armenta, 27, said they applied for positions with the nonprofit but were asked to take on campaign work, which they agreed to do. They received payments from both organizations, but said they spent most of their time working for the campaign. Greenberger also said O’Grady repeatedly gave campaign assistants an EnrichLA debit card to buy campaign supplies.

“I mentioned it a few times and said, ‘Wait, we can’t do that,’” Greenberger said. She claimed O’Grady replied that EnrichLA would be reimbursed.

O’Grady and his staff dispute the allegations. He said both interns actively sought to get involved in the campaign and that Greenberger was hired for both campaign and nonprofit work. The candidate said he cooperated with the city inquiry and hadn’t heard from the ethics agency about it since December. After Times inquiries, O’Grady said Sunday that EnrichLA was relocating to donated space at a school.

The Ethics Commission does not confirm or deny receiving complaints and has announced no action involving O’Grady. “I can only infer that if the Ethics Commission believes that we have misbehaved, they would not hesitate to take enforcement action,” O’Grady said.

Greenberger, who said her campaign work included arranging meet-and-greets and coordinating a fundraiser, maintains there was little separation between the campaign and the nonprofit. “We would do EnrichLA work in the campaign office, and campaign work in the EnrichLA office,” she said.

Armenta said “there was no real effort to keep it separate.”

Both interns said they aren’t supporting any candidate in O’Grady’s race, which includes a crowded field seeking to replace termed-out Councilman Tom LaBonge. O’Grady described Greenberger as “disgruntled,” saying she left after he criticized her for failing to get a composting program off the ground. Greenberger said that was “completely false.”

The nonprofit and the campaign had some workers and volunteers in common, including an EnrichLA employee who had volunteered as campaign treasurer. Greenberger, originally an unpaid intern, provided copies of two checks she got in October — $750 from EnrichLA and nearly $320 from the campaign.

The campaign paid her and Armenta for helping with fundraising, according to its city filings.

Such dual roles can be “fraught with risk” for nonprofits, particularly if space is shared, said attorney Ryan Oberly, whose Chicago-based firm advises nonprofits. Oberly said he would recommend keeping detailed records of hours worked for each entity and maintaining separate computers and equipment.

O’Grady said the two organizations had separate printers and WiFi networks, but he didn’t track the hours Greenberger or Armenta devoted to the different organizations because they were paid based on projects. He said neither the campaign nor the nonprofit, which has a budget of about $200,000, should spend their limited funds on rental space.

Last year, the O’Grady campaign reimbursed EnrichLA for about $360 in supplies, according to a financial filing. When asked about the reimbursement, O’Grady and former EnrichLA development director Shana Baiz said the EnrichLA debit card was used only once, inadvertently, for campaign expenses. O’Grady said that after hearing from the ethics agency, he took added steps to clearly divide the campaign and the nonprofit, including placing signs that labeled where each was operating.

Experts also noted state law bars paid employees or their family members from making up half or more of a nonprofit corporation board. EnrichLA reported its 2013 board consisted of O’Grady — who reported being paid about $26,000 that year as executive director — his wife and a third person. O’Grady said that as of July, the board had five members, including himself, his wife and Baiz. However, experts said that does not appear to have met state requirements either, because Baiz was also paid by EnrichLA at the time.

“Failing to have a majority of independent directors would not comply with California law,” Oberly said.

Attorney Arthur Rieman of the Law Firm for Non-Profits said violating the board makeup rule can open the way for the state attorney general to reverse board actions on things such as setting salaries of employees who also serve on the board. O’Grady said he wasn’t familiar with the law and would seek legal advice as EnrichLA formed a new board.

emily.alpert@latimes.com
Twitter: @LATimesEmily