Fund Dispute Prompts Shakeup in Latino Group

Leaders of the nation’s largest and oldest Latino civil rights organization wrested control of its charitable foundation from the foundation’s board of directors Friday in a continuing dispute over the failure to account for up to $88,000 in donations.

“This should be a lesson to all of us that we shouldn’t be so loose with public money and the public trust,” said Ruben Sandoval, special legal counsel to the president of the 140,000-member League of United Latin American Citizens.

“A lot of those checks were payable to cash,” Sandoval said. “We have no idea where the damn money went.”

By a vote of 14 to 10, LULAC’s national executive board ratified a slate of seven members who will operate a new charitable foundation intended to take the place of the existing LULAC Foundation. The vote came on the first day of a two-day national board meeting at a Capitol Hill hotel.

Eduardo Morga of Huntington Beach, a past president of LULAC who heads the old foundation’s 10-member board, suggested that his group may fight the plan to create a new foundation.

“Our position is that the (general membership) is the only body that can undo the present foundation,” Morga said after the vote.

Later, however, Morga said the boards of the old and new foundations may negotiate a compromise in which some of the old members would be seated on the new board.

The old board is composed entirely of past presidents of the San Antonio-based Latino organization and includes three prominent California Latinos. They are Morga, Hector G. Godinez of Santa Ana and Mario Obledo of Sacramento.

Godinez, president of LULAC in 1960-61, is a prominent Republican activist in Orange County and manager of the U.S. Postal Service office in Santa Ana. Morga was LULAC president in 1977-78 and is a financial consultant in Huntington Beach.

Obledo, who declined to comment to The Times, was the former California secretary of health and welfare under Gov. Jerry Brown.

“I just feel very satisfied with the outcome of this,” said Jose Garcia De Lara, president of LULAC for the past 15 months. “I think we’re on a trajectory of resolution.”

The controversy over the unaccounted funds, which passed through a secret bank account controlled by former LULAC president Oscar Moran, deeply split the Latino group. During a day of acrimonious debate, members shouted charges and countercharges in a meeting that was closed to the public.

Moran, who served on the foundation’s board for the past year, denies that any of the money was used improperly.

“Where the money went was for normal LULAC operations,” Moran said in an interview after the vote. “It was a contingency account . . . a rainy day account.”

Although the account was opened in August, 1985, when Moran became LULAC president, its existence was not discovered by LULAC’s executive board until last March, said Sandoval, the LULAC attorney.

He said Moran had control of the account at Plaza National Bank in San Antonio during his presidency and maintained it when he left office and joined the board of the charitable foundation.

Sandoval said about $88,000 passed through the account, which now has a balance of $179. The money came almost exclusively from corporate benefactors. Some was intended for the charitable foundation, while the rest was to support regular LULAC activities, Sandoval said.

He charged that foundation members failed to investigate what happened to the money when they were told of the account last spring.

De Lara also said in a public meeting last month that the Internal Revenue Service has launched a criminal investigation into the matter. Morga and Godinez, however, said they have not been contacted by any investigators. An IRS spokesman, Robert Giannangeli in Los Angeles, also said the agency cannot confirm or deny any investigation in progress.

At stake, both sides agree, is the credibility and political strength of an organization that was founded in 1929 and now claims up to 140,000 members nationwide. They said the victims of the battle will also be those who rely on LULAC’s charitable services.

“Today there is a tremendous need for a Hispanic grass-roots organization for leadership training; role models to combat the dropout problems, the health, the drugs, teen-age pregnancy, housing and unemployment--and LULAC has been temporarily sidetracked,” said Tony Bonilla, a former president of the organization in an earlier interview.

Moran, Morga and other members of the old foundation board have strongly rejected allegations of impropriety, saying De Lara and his officers are pursuing a personal campaign to silence their critics. They complained that De Lara and his allies are operating outside of LULAC’s established procedures.

“These people are bent on usurping 60 years of LULAC history . . . for political reasons and reasons of vendetta,” Morga said in an earlier interview. “The hate is there. These people really don’t know how to behave in terms of the LULAC constitution and they really don’t care.”

They have also pledged to file a libel and slander suit against De Lara, Sandoval and other national leaders of LULAC.

“The LULAC organization is the one that has the problems, and not the foundation,” Godinez said, also in an earlier interview. De Lara “ought to take care of his own dirty linen on his own side of the house.”

Other foundation members who were asked to resign include Manuel Gonzalez of Waco, Tex.; Oscar Laurel of Laredo, Tex.; Ed Pena of Washington; Roberto Ornelas of Dallas; Pete Villa of Seattle and Paul Garza of Laredo.