Hermandad spinoff group in the soup
Housing group may lose $50,000
Hermandad spinoff Citizens in Action failed to file a '99 tax return.
June 4, 2001
By COURTNEY PERKES and MARIA SACCHETTI The Orange County Register
SANTA ANA - A nonprofit housing group spun off from troubled Hermandad Mexicana Nacional stands to lose a $50,000 state grant because it failed to file its annual tax return.
Citizens in Action Community Development Corp., a group whose founding board members include Hermandad leader Nativo Lopez, had its corporate status suspended in January because board members did not file the group's 1999 tax return, according to the state Franchise Tax Board. The 1999 tax return is nearly eight months overdue.
The suspension by the Franchise Tax Board prompted Assemblyman Lou Correa, D-Anaheim, to ask that the $50,000 grant for Citizens in Action be pulled. The money was approved by the Legislature last year.
"It's not normal for a not-for-profit or for any corporation to have their corporate status suspended," Correa said last week. He sent a letter May 24 to a legislative committee asking that the funding be stopped.
The potential loss of funds leaves Citizens in Action following a pattern similar to that of Hermandad, which had its corporate status suspended in August 2000 for failing to file tax returns three straight years. Hermandad also has been cut off from state grants.
Citizens in Action Chief Operations Officer William Parker expressed confidence that the state money would not be taken and that the group's corporate status would be restored within 10 days. He said the group did file its tax return, but he would not release it. Nonprofits are required to make tax records available.
"All that will be rescinded," Parker said Friday. "Trust me."
Losing the money would threaten the group's efforts to launch a computer-technology center for low-income families at 825 N. Broadway.
Citizens in Action bought the Broadway building from Hermandad for $1.2 million in October 1998 - three months after Hermandad faced state scrutiny over how it spent public funds, records show.
Citizens in Action formed earlier that year. Lopez was a board member in 1998, records show. He says he left in 1999.
Lopez said Hermandad sold its building because Hermandad was near bankruptcy. Hermandad now faces more trouble. Last month, the Department of Education filed a $17 million lawsuit against Lopez and Hermandad, contending that the immigrant rights group cannot account for millions in grants intended for English and citizenship classes. Lopez denies any wrongdoing at Hermandad. Hermandad continues to have the flagship presence in the Broadway building where Citizens in Action operates. But Parker said there are no current direct ties.
"They're a tenant; that's what they are," he said.
Lopez said Citizens in Action was created to provide much-needed economic development to the Hispanic community. The group initially sought $2 million in state grants to help pay off its building. Although the $50,000 was approved last year, it has yet to reach Citizens in Action. The group also has built one home for an immigrant family in Stanton.
The Stanton house was sold to Sidney and Consuelo Aramayo for $180,000 last summer, records show. The family had nothing but praise for Citizens in Action. The group has kept a low profile. When the Aramayo family moved in, there was no ceremony at the new house.
"I've never heard of them," said Helen Brown, president of Santa Ana's nonprofit Civic Center Barrio Housing Corp.
Citizens in Action Chairman Juan Garcia acknowledges that the group has done a poor job of self-promotion. Board member Abel Medina, who heads Hermandad's operations in Ontario, said the group hopes to do more housing projects.
In the meantime, Citizens in Action is selling its building to Michael Harrah, who owns much of downtown Santa Ana.
"Sometimes it's hard for a young group like this to have a big building," Medina said.
Register staff writer Ron Campbell contributed to this report.