Judge Approves Receivership Request for Casa Ruby
The Attorney General's Office will name one of two receivers to oversee operations and resolve the nonprofit's financial woes.
On Thursday, Aug. 11, a D.C. Superior Court judge approved a motion setting up a receiver for LGBTQ community center and nonprofit service provider Casa Ruby, which has been accused of mismanaging funds in a way that caused the organization’s shelter and transitional housing programs to shut down.
Superior Court Judge Danya Dayson, who presided over Thursday’s hearing, heard motions from the office of D.C. Attorney General Karl Racine and Ruby Corado, Casa Ruby’s former executive director — who represented herself at the hearing — regarding the naming of a potential receiver.
A receiver is a neutral third party appointed by the court to manage and resolve the financial situation of a distressed entity, as a way of keeping it intact while avoiding bankruptcy.
The entity named as the receiver for Casa Ruby would be tasked with resolving the organization’s finances by repaying debts to creditors, potentially selling off assets or property to make the organization financially sound, ensuring Casa Ruby is in compliance with the law and other government regulations in place for nonprofit entities, and potentially hiring new management to run the organization more efficiently.
Following arguments from both sides in court, Dayson granted the AG’s request to appoint a temporary receiver to assess Casa Ruby’s financial situation.
That receiver will determine whether the organization’s outstanding debts can be resolved, and whether a board of directors who will provide necessary oversight can be reconstituted, thereby allowing the organization to remain intact and continue providing services to clients, or whether the organization would be better served by declaring bankruptcy.
According to a spokesperson at the Attorney General’s Office, two organizations — Baltimore/DC Safe Haven and the Wanda Alston Foundation, were proposed as potential receivers.
Representatives from both organizations were present at the hearing and were questioned by Dayson, who indicated that either option would be acceptable to the court.
The Attorney General’s Office will now be required to submit the name of a receiver by close of business on Friday, Aug. 12, and must submit a follow-up report to the court about the status of the receivership by Sept. 13.
Dayson also scheduled a status hearing for an update on the case on Sept. 29 at 2:15 p.m. Corado reportedly asked for time to obtain counsel, which she must obtain by the Sept. 29 hearing.
Initial court records said that Dayson ordered both parties to cease and desist making comments on social media regarding the case — which can potentially be prejudicial and serve as a distraction from what is in the best interest of the organization — but that order was later removed from the docket.
Dayson previously issued a temporary restraining order on Aug. 3 that froze all of Casa Ruby’s bank accounts and PayPal accounts, based on a complaint filed by the Office of the D.C. Attorney General Karl Racine.
In its initial complaint, Racine’s office alleged that Casa Ruby, and its former executive director, Ruby Corado, have violated the D.C. Nonprofit Corporations Act through the handling of its finances over several years.
Specifically, Racine’s office claims that Casa Ruby abused its authority under the law by ceding control of its operations and finances to Corado, without meaningful oversight — due, in part, to board members leaving their positions without being replaced, and failing to hold on-the-record meetings.
According to the AG’s office, because the board failed to exercise oversight, and Corado did not allow others access to the organization’s funds, Casa Ruby’s vendors, landlords, and employees went unpaid or were paid late, making it nearly impossible to carry out its stated mission of providing housing and other support services to vulnerable communities.
That, in turn, caused Casa Ruby to act “contrary to its charitable purposes,” in violation of the D.C. Nonprofit Corporations Act.
Additionally, because Casa Ruby received more than $9.6 million in grants from various D.C. government agencies since 2016 — ostensibly to help vulnerable communities such as homeless LGBTQ youth, LGBTQ asylum seekers, transgender individuals, and survivors of violence — Casa Ruby’s governance failures led to alleged misuse of government funds.
For example, the Attorney General’s Office claimed that Corado withdrew tens of thousands of dollars from Casa Ruby’s bank account during 2021, using over $60,000 in funds to pay bills for a charge card she controlled, and using funds for personal expenses, such as meals and transportation.
By issuing the restraining order, Dayson ensures that Corado and others will not have access to funds that are still funneling into Casa Ruby’s bank accounts.
Although the organization has shuttered its housing programs, and the D.C. Department of Human Services yanked a nearly $840,000 grant that Casa Ruby had received to provide low-barrier shelter to homeless LGBTQ youth, employees of Casa Ruby told Metro Weekly that Casa Ruby continues to receive grant money from other government agencies, such as the Office of Victim Services and Justice Grants, for non-housing programs.
Despite continuing to operate, people in charge of overseeing those programs say they have not been granted access to funds and continue to work without pay.
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