An update on the investigation of missing funds at the defunct Ocean Beach Town Council evolved into a full-blown discussion of measures needed for ideal transparency as the councils successor, the Ocean Beach Community Foundation, held its October public meeting.
The presence at the meeting of Margaret Morghen and Nicole Murray, two former board members who resigned in September just two months after being elected, extended a level of skepticism toward OBCFs assurances of openness. Such doubts also led to a realization that rebuilding the community’s trust in the organization could be a protracted process.
Nonetheless, several of the approximately 30 people attending the meeting offered suggestions on how to improve transparency as OBCF tries to emerge from the Town Council scandal.
OBCF, a charitable 501(c)(3) nonprofit organization founded in 2000, was acquired by OBTC in November 2020. The former Town Council board adopted the OBCF name in the wake of the scandal.
“We hear that the community wants resolution really soon, but this stuff takes time,” said foundation President Shelly Parks. “We are as impatient as you guys are with it. I want it to be wrapped up yesterday. This is not a fun thing to be going through. We know the community wants answers. We want answers ourselves.”
The Town Council failed to file required forms with the U.S. Internal Revenue Service during the tenure of former board member Corey Bruins, first when he was treasurer beginning in 2017 and then when he was president starting in 2021. That led the IRS to revoke the Town Councils tax-exempt 501(c)(4) nonprofit status as a social organization.
Bruins had became the sole authorized agent and signatory of the council’s primary bank accounts. Though he has not been formally accused of wrongdoing, an independent audit reported in preliminary findings in May that thousands of dollars were unaccounted for in the various bank accounts and credit cards held by the Town Council, some of which have been charged off and sent to collections.
Bruins was ousted from the board in January this year.
The San Diego Police Department’s Financial Fraud Unit is probing the scandal, according to Parks, who said police have gained access to account data previously unavailable to the board.
Parks said she was informed that the investigation and any potential prosecution may take up to three years to complete.
“If you want to know how long these things take to investigate, Google it,” Parks said. “Find out from police departments. Don’t watch a ‘Law & Order’ episode and [believe] it’s going to get wrapped up in 30 minutes. That is not the case.”
Repercussions from the scandal continue to mount. About six weeks before the Oct. 23 meeting, the OBCF board learned when it applied for a permit for this year’s Ocean Beach Holiday Parade — one of the annual events formerly presented by OBTC — that the parade was in arrears to the city of San Diego for previous police and fire coverage.
Instead of depleting OBCF’s finances to pay off the debt, a no-interest monthly payment plan was instituted with the city and the first payment was made Oct. 1, Parks said.
“We shared with you in May that we didn’t know if there were unpaid bills,” Parks said. “I remember somebody asking and Jenny [Brengelman, OBCF treasurer] said that if there’s an unpaid bill, let us know. We have some debt. We will get it taken care of.”
Denny Knox, executive director of the Ocean Beach MainStreet Association, said she’s been approached by potential donors to OBCF’s Holiday Food & Toy Drive who were worried that their contributions might be diverted to pay off outstanding debts.
Though general fundraising is used for OBCF operational costs, which include debts, Parks said the foundations website, obcommunityfoundation.org, contains a link for donations earmarked for the Food & Toy Drive.
“If you want restricted funding, go specifically to that link,” she said. “If you [pay entry fees to] put your float in the parade, that may pay past parade debt. That may pay for current parade expenses.
Parks said OBCF is in good standing with the IRS as well as the California secretary of states office and is ready to file its Form 990 for 2023, due Friday, Nov. 15. The form discloses its income and expenses.
In a nod to transparency, Parks said OBCF posted its past 990s on its website following a request from the community.
“I keep hearing the community say We want transparency, but I don’t get exactly what you want,” Parks said. “If there’s something specific that you want, be specific in the asking.”
Requests became specific during the discussion. Knox inquired whether the board would provide OBCF’s monthly financial balances, which Bruins did every month during OBTC meetings.
“I think that might be helpful because you’re going to need to raise money from people and they’ve got to be comfortable that the money is going toward that,” Knox said.
“Do we make that public?” Parks said. “I don’t know in what format. Nobody’s come to us and said we would like to see this exact format.”
“No one’s asked for that?” Murray said from the audience. “I find that hard to believe.”
Resident Keith Fink recommended that the board incorporate four new items into its monthly newsletter: updates on the investigation, the current balance sheet, minutes from the boards monthly closed meeting, and summaries of open meetings.
“Every single monthly newsletter, boom, it’s all right there,” Fink said. “You can’t do much more than that.”
Parks countered that the release of any information about the investigation is best suited for the foundations quarterly public meetings.
“If you received an email that said we owe some money to the city of San Diego and you didn’t have the opportunity to have discussion and ask questions, that’s where we’re kind of stuck a little bit,” Parks said. “We feel like this is a better mode to share those things, where we can have dialogue.”
Parks added that there are limits to what the board can reveal about the investigation so as to not compromise any potential case that police are building.
“We’ve been told it’s on a right-to-know and need-to-know basis, she said. So we’re not intentionally hiding things. We have been instructed.”
Still, Kara Fitzpatrick said the community needs to know where the boundary lies in order to be reassured.
“I just think there’s a misalignment between the word ‘transparency’ and what you all have been doing and what the public expects,” Fitzpatrick said. “You can’t be transparent about something because it’s an active investigation. Tell us what those things are so we don’t hold you to a standard that doesn’t fit.”
“We can’t talk about Town Council finances,” Parks said. “We can talk about the OB Community Foundation. It’s not quite that clear, but if today I had to say [it], that’s the line. That’s as close as we can get today.”
When Murray asked if the audit started in January by an independent certified public accountant has been completed and whether findings would be released publicly, board member Gary Gartner replied that “there’s an active investigation by the Police Department, OK?”
So airing dirty laundry is not helpful to that investigation, he added. It’s being performed and we are cooperating with it. An audit was done and it’s part of the investigation. But we get more information as the police uncover more situations, which we don’t want to talk about.”
Morghen retorted from the audience that “I like Nicole’s airing dirty laundry. I think she’s helping us in the community better understand what’s going on.”
Morghen argued that the OBCF board is under pressure to leave the Town Council behind while trying to continue events founded by OBTC. She said the future will be bright only when the past becomes clear.
“As time moves on without the case being concluded, this has left and continues to leave openings for rumors and narratives to take hold,” Morghen said. “These rumors can only be countered by the truth that can only be found with the conclusion of an official investigation, which we’ve now learned can take several years. So we’re going to have to all move through this together somehow.”
Cody Machado agreed, saying that both OBCF and the community will have to make concessions to muddle through the process.
“On [the boards] part, I think more specifics as well as sharing what you can and cannot share would probably be a very good idea,” Machado said. “I think from the public side, we need to have a level of self-awareness where it’s very easy to recognize that the Community Foundation is trying to share with us what they can. To keep prodding at it seems like beating a dead horse at a certain point.”
Gary Millar expressed what appeared to ultimately be the consensus opinion among the audience.
“I wanted to thank all of you who volunteer and stepped up to do this, because it’s a thankless job,” he said. “I salute literally each and every one of you for doing this and bringing it back from what could have been the death.”