The Ocean Beach Town Council is trying to find a way forward while also attempting to explain how it became engulfed in a financial scandal that led to the ouster of board President Corey Bruins and the exit of some board who served on the executive committee.
More than 70 people attending the Town Council’s January meeting learned that OBTC had lost its 501(c)(4) tax-exempt status as a social welfare organization in February 2021 when it was automatically revoked by the U.S. Internal Revenue Service for failure to file returns for at least three consecutive years. Though such organizations are exempt from income taxation, they generally are required to file annual returns with the IRS of their income and expenses.
Moreover, it was revealed that the OBTC general hip did not learn of the annulled status until recently.
“This is a gross failure of the leadership of the council and at the very least an act of non-feasance,” said Keith Fink, a former OBTC treasurer. “The OBTC is the community’s town council and not a secret club. Those on the board of directors are but stewards elected to sustainably manage it for the good of the community as per its bylaws and standing rules.”
The Town Council acts as an advocate for the community to appropriate agencies, and its monthly meetings provide a forum for discussion of local issues. It also holds an annual pancake breakfast and holiday activities.
The board has hired an independent certified public ant to conduct a thorough audit of the organization’s finances dating back to 2017, the last year returns were filed. That coincides with the year Bruins became OBTC treasurer.
Board member Shelly Parks said she filed a report with the San Diego Police Department’s financial fraud unit as a community member, not as a representative of the board.
Bruins, who was removed Jan. 22, did not respond to the Point Loma-OB Monthly’s request for comment. Neither he nor any other board member has been accused of criminal wrongdoing.
Interim President Cameron Reid said in a prepared statement that OBTC had its first meeting with the A on Jan. 19 and that the audit is still in the document-gathering process.
Thus, the board could not estimate a timeline for when the audit would be completed.
“It’s going to take some time,” said current treasurer Jenny Brengelman. “But rest assured you got people here that are concerned, and as soon as we know something, we’ll let you know. … We’re doing all we can right now.”
Reid said he would step down from the board after six years when his term expires this month.
It also was disclosed that Bruins was the sole authorized agent and signatory for OBTC’s bank s as well as those of the Ocean Beach Community Foundation, a 501(c)(3) nonprofit for which contributions by the public are eligible for charitable income tax deductions. OBTC acquired the foundation in November 2020.
Bruins’ access to the s has been ended and authority restored to the five-member executive committee.
But questions remain about how the problem began in the first place.
“That’s what everyone wants to know,” said former OBTC President Mark Winkie. “How there was just one person, the president, with access to the s and there was zero oversight on that? And more importantly, how was that just the normal operational configuration of the council and no one questioned it? … Just having one person responsible for handling the money without any oversight; not only is that against the bylaws, that’s just a really foolish way to run a nonprofit. They’re just asking for trouble.”
Winkie was replaced by Bruins in July 2021 after Winkie sent an email taking responsibility for what was described as a personal indiscretion and asking to meet with each board member. Seven hours later, he was sent a letter, signed by 10 of the 14 other board , asking for his resignation. He soon complied. Two board resigned in protest of the process for Winkie’s removal.
Arlene Fink, one of the who resigned, listed at the Jan. 24 meeting the various bylaws that confer fiduciary responsibilities on board and said such obligations are legally binding in California.
“I’m asking for — no, I’m really demanding — transparency,” she said. “If these major bylaws have been neglected, what else has been ignored? We’re entitled to know what this board has done and how they are going to move forward.”
In his statement, Reid said the delinquency on the IRS returns was first uncovered last May while OBTC was applying for a grant, but he gave no explanation of why it took eight months for the board to act.
Some board , speaking to the Monthly on condition of anonymity, filled in the gap.
According to them, the discovery was made because the IRS filings for nonprofits, known as “990s” because of the form number, were needed to complete the grant application. There were no current filings, and the June deadline was missed.
Under pressure, Bruins acknowledged the delinquencies at the June OBTC meeting, when many board first heard of the issue. However, Bruins presented a plan to bring the filings up to date, reassuring concerned board .
It also was discovered that the Ocean Beach Community Foundation had not filed 990s for two years. That issue was subsequently resolved.
By September, the board learned that Connor Harrington, the OBTC treasurer at the time, did not have access to the various Town Council bank s. Harrington resigned from the post in October.
Harrington also has stepped down from the board and told the Monthly that he plans to prioritize personal and professional commitments. He did not address his reason for leaving the treasurer position.
Tracy Dezenzo, who was the board’s corresponding secretary, also has left.
“The organization has chosen to conduct a third-party audit due to a lack of clarity across all of the board regarding the facts of the matter,” Harrington said in a text message. “For that reason, I believe it’s necessary for all interested parties to await the results of that process before making any conclusions. I know I certainly am.”
Harrington was replaced as treasurer by Brengelman, “and we thought the situation had improved,” according to a board member. “Jenny’s going to have access to all the bank s, going to be able to dig in, going to be able to find out what’s going on.”
However, Brengelman also ran into obstacles getting access to the s. US Bank’s acquisition of Union Bank, where OBTC s were held, led to more delays.
Winkie said he received a call from some OBTC board in early December asking whether he had access to the bank s, though he had been out of the presidency for 2½ years.
“I thought that was an odd question,” Winkie said. “Obviously, my answer was ‘Why are you asking me, and why don’t you have access to any of the s?’ That surely should be something all of the board should have available to them.”
OBTC bylaws state that all five of the executive committee — the president, vice president, treasurer, corresponding secretary and recording secretary — should have access to OBTC’s finances.
Though the bylaws call for that access, it is not automatically bestowed but needs to be conferred by the bank, requiring various documents and visits to the branch. As new officers were installed to the executive committee after Bruins became president in July 2021, that process was not applied to them. Bruins eventually became the last remaining signatory on the s.
Why didn’t alarm bells ring sooner for the volunteer board?
“People are busy,” one member said. “There are so many things to do and so little time. If you have somebody that you think is capable of handling stuff, you’re like, ‘Great.’”
“That’s one less thing I have to worry about,” said another board member. “I can focus on doing a cool parade or doing a good food and toy drive or a good pancake breakfast. So you don’t have to worry about the money.”
Trudy Levenson served on the board for 14 years until she stepped down during Bruins’ tenure. At the January meeting, she claimed Bruins had disparaged her to other , saying she was too old and difficult to work with.
“I am devastated, I am traumatized that one person has taken this organization down and the community down,” Levenson said. “This is the type of person … he’s very, very charming and nice-looking. But he’s stabbing you in the back. … For this board, I’m sorry. I really am because I love most of you. But you can’t let this go on. He needs to be punished and things need to be made right.”
Former board member Tony Cohen took exception when the board suggested the discovery of the various problems was abrupt.
“This wasn’t abrupt,” Cohen said. “I brought this up when I was on the board in 2022. … The people that were on the executive board since 2020-21, they were either too stupid to see it — because I saw it in three months — or complicit with it. This is nothing new. It’s been going on for years, where people who ask questions about it just get shunted out. This is not sudden.”
At the end of the meeting, Reid announced his plans to leave the board and said: “I’ll still be an asset to this board if they’ll have me. I’ll still be an asset to all of you and the other community groups if you’ll still have me after the things you’ve heard tonight and going forward.”
Some speakers urged the audience to separate the individuals on the Town Council from the institution, which they said has helped nurture the community with its events, programs and advocacy.
“There aren’t many places where you really find identity and connections and the spirit of wanting to be involved to help,” Dan Dennison said. “This really is a great place. We cannot let this terrible situation drive us down.”
Still, many seemed to walk away with the attitude expressed by former board member Nicole Ueno.
“I just want to get back to solutions and find out what the Town Council is going to do to make this right,” she said. “I hope they have a plan in place for [the Feb. 28 meeting]. We’ll be back to hear it.”
