Peninsula nonprofit's tax forms show $1M in personal expenses, CBS News Bay Area finds
Ecumenical Hunger Program recently celebrated 50 years of serving the East Palo Alto community. A banner outside their main facility marks the milestone. They're a South Bay charity that provides food, clothing, furniture and other assistance to families in need.
But CBS News Bay Area uncovered evidence that some donations were used to cover personal expenses. Tax documents show program officials spent more than $1 million for things like personal mortgages, car payments and rent.
We talked to three different experts to help dig deeper into the nonprofit's financials.
"This would be a red flag," Brandon Philips, assistant professor of public administration and affairs at Cal State East Bay, said. "Forensic accounting is using accounting in the court of law. So, we're looking for any indicators of whether or not someone is doing something nefarious or inappropriate with funds. And we are focused primarily on following the money, following the money trail in the financial statements."
"I see several red flags," Erick Bell, UC Berkeley forensic accounting professor, said.
"Certainly raises eyes as to impropriety," tax attorney Sam Brotman said.
According to their website, Ecumenical Hunger Program is a family affair. Lesia Preston is the executive director, who succeeded her mother, Nevida Butler. Preston's daughter, Lakesha Roberts is the associate director.
"Particularly when you're using money that is being earmarked for public use, to misuse even a dollar of that could be problematic," Bell said.
From 2023 to 2024, the nonprofit said it served nearly 20,000 people through its emergency food program. In that same year, however, public tax filings show that the nonprofit paid thousands and thousands of dollars to Preston's family, including in-laws.
"Looking at the 20 pages of payment of personal expenses, that just stood out, and it wasn't clear on the website to what these payment of personal expenses were," Bell said. "It's good to know that they're being honest and direct in but it doesn't change the fact that this does raise questions."
Documents show that Ecumenical Hunger Program spent more than $47,000 for Preston's sister and husband's personal debts, utilities, insurance and other costs. More than $35,000 for her daughter-in-law's personal debts, mortgage and others. Filings show that Preston's son received more than $4,000 for DMV fees. Additionally, nearly $47,000 for an employee's personal expenses, including a year of rent, was provided. And even a past employee received more than $9,000 for personal expenses.
"For people who teach or are involved in nonprofit management, this would be a red flag. It's a concept that we call inurement, which is where individuals are profiting from a nonprofit. Typically, with grants, government support funding, community donations and things like that," Philips said. "Money is typically only allocated for services outgoing things like helping clients and other services that the organization provides. So, this type of spending is very much a red flag when you look at a form like this."
"It would be misleading donors, as to what money that is being donated to the organization is being actually used for," he added.
Philips said there should be more accountability in the nonprofit sector.
"When these documents get submitted to the IRS, they should be going over them, and doing oversight, and holding organizations accountable. But because of some of the disarray happening in the federal government, there is probably things like this that is falling through the cracks," he said.
The nonprofit's IRS 990 form shows that they generated more than $7.9 million in revenue, but also lost more than $642,000 between 2023 and 2024.
"It definitely stands out, this allocation of money stands out, they're pretty stark to someone like me who has researched and is involved in nonprofit management," he said.
CBS News Bay Area reached out to the nonprofit to see if they'd sit down with us for an interview, but Preston declined.
"The issues in the tax filing that you are referring to are still being researched and final determinations have not been made at this time. Accordingly, I am not at liberty to discuss these issues with the press at this time," she wrote in an email.
Ecumenical Hunger Program has a board of directors to help oversee operations. In the tax filings, the nonprofit also noted that each member gets a copy of the document.
"I find it curious that you got all these expenses, which is you know, an effort to be transparent. And there is this section on the tax return that noted that they did an independent audit, whatever that means. But at the same time, they are freely disclosing that they are engaging in these private benefit transactions, without context, it does look very suspect," Brotman said.
Brotman is a tax defense and strategy attorney based in San Diego.
"Over a million dollars of benefits that run through these things, you could pretty clearly see it on the tax filings. With that said, when you sign tax filings, they're signed under penalty of perjury, and somebody takes the overall responsibility for the content of return. So, I would think there is some level of ownership or knowledge over these are the things these are the financial transactions this charity engages in, and there are tax consequences of those," he said.
CBS News Bay Area reached out to board chairman, Jim Anderson, for comment. He emailed back this statement:
"I am not aware of any funds being used for personal matters by Ecumenical Hunger Program's Executive Director. Ecumenical Hunger Program did administer a Family Sustainability Program that was started during COVID that provided financial assistance to families in need in our community. This Program is no longer in existence. The Board is researching and making determinations whether all the grants under this former Program were properly administrated, which I believe is what you are referring to in our tax filing. Until the Board has finished its research and made the determinations it needs to make, I am unable to discuss this further."
He also clarified that the COVID program ended in June 2024.
"Did they conduct an independent audit? That box is checked. But on the other side, you see things that are not common for, you think an organization that goes through an audit, that's a pretty substantial step. And this doesn't pass the test of what that usually looks like," Brotman said.
We also reached out to the board treasurer who signed off on the documents, but did not hear back.
Experts said that in past cases where wrongdoing was found in nonprofits, there were consequences.
"Consequences in California, California corporations including nonprofit corporations are governed by the corporations code. So, when there are situations of self-dealing, the attorney general could get involved. There are sanctions associated with that, and there's charitable oversight arm within California," Brotman said. "They can conduct an audit, there are civil fines, penalties and sanctions that are commonly associated with these. Those are some of the examples on the state side. On the federal side, there are tax consequences to these transactions."
CBS News Bay Area contacted the Attorney General's office, and a spokesperson responded back with this statement below.
"To protect their integrity, we are unable to comment on, even to confirm or deny, potential or ongoing investigations," the AG's office said.
"If you look at their form 990s from the previous year, it was one line item that said payment of personal expenses. And it had everything lumped into one. Which makes me want to ask the question, if that was broken out, how much will see of the employees' personal expenses?" Bell asked.