This story was produced by El Tiempo Latino. La puedes leer en español aquí.

Monday is the deadline for the D.C. Office of the Attorney General to file an updated civil action against Casa Ruby and its director, Ruby Corado. By that date, Corado must also identify her legal representation.

The nonprofit, which served unhoused and otherwise vulnerable LGBTQ+ people, shuttered in July. A Washington Post report revealed staff and landlords had gone unpaid and an El Tiempo Latino investigation found the organization had been financially mismanaged for years. The attorney general’s office filed a complaint at the end of that month, leading to a receiver and trustee (a neutral third party) being appointed by the court to assess what remained of Casa Ruby. The trustee ended up being Wanda Alston Foundation, another local organization serving the LGBTQ+ community. Their first report recommended that Casa Ruby be dissolved.

The second audit report by the organization notes, among other things, that Corado did not pay taxes on wages and failed to report details on the payment of salaries and other labor benefits for the organization’s employees. It also points out the “absence” of records of official affairs: meetings, and administrative procedures that the entity’s board of directors is expected to produce.

The report — filed with D.C. Superior Court last month — highlighted that three individuals listed in tax returns as members of the board of directors and accountants all hold Corado responsible for these faults. As stated in the document received by Judge Danya Dayson, “The statements of a few members of the board of directors suggest that [Corado] acted without any type of authorization to set up parallel companies and take substantial salary increases.”

Bank reports of Casa Ruby’s accounts obtained during the audit of the organization’s finances show that founder and director Ruby Corado withdrew $420,000 in cash from ATMs in the United States and during her trips to El Salvador in 2021.

The documents detail that the cash withdrawals, between April and September of that year, include two transactions of $100,000 made in one week, “numerous cash transactions in CashApp” and other “various” withdrawals of $505.65 each, in ATMs located in El Salvador.

In addition, the report underlines that in September 2021 Corado made several payments totaling $170,000 to the freight and transportation company TI Global Logistic. A source close to the process said on condition of anonymity that these payments were to transport merchandise that Corado bought in the United States and sent to El Salvador.

By the time the audit began, Casa Ruby’s accounts had less than $15,000. Because they were linked to Corado’s personal accounts, a court order was necessary for the banks to turn over the transaction history, the report states. New information indicates that Corado used the organization’s bank accounts for “other parallel enterprises” to her work in Casa Ruby, “without any separation of expenses.”

Of the individuals interviewed during the investigation who were listed as members of Casa Ruby’s board of directors, none could provide evidence that the meetings mandated by law to discuss expenses, operations, and salaries of the organization were held.

“All three said the board of directors never functioned as such and there is only record of eight emails exchanged” between the group’s members and Casa Ruby’s director — most of which contain their resignations, according to the report.

At a hearing in September, Corado asked multiple times for the court to issue a gag order to prevent the media from reporting on the audit of her alleged embezzlement and other financial irregularities. Corado similarly accused the attorney general’s office and Wanda Alston Foundation staff of sharing only “one side of the story.” The judge made it clear that the court cannot prohibit or prevent the media from reporting on the development of the case or on the audit reports — they are all public.

El Tiempo Latino has repeatedly contacted Corado seeking an interview or statement over the course of months since Casa Ruby first closed. She has provided neither.

Casa Ruby’s accountants were aware of the irregularities

According to statements from the accounting firm Ayala, Vado and Associates, “the company repeatedly expressed its concern to Casa Ruby’s director that the organization was not making timely payroll tax payments and attempted to convince Corado to correct the situation.”

The firm was in charge of Casa Ruby’s financial reporting and tax return preparation from 2016 to 2020. The company did not respond to the trustee’s request for information until the D.C. Court ordered a formal subpoena.

The report notes that Ayala, Vado and Associates assured that Corado “broke the payment plans that the firm had agreed with the government of D.C.” This resulted in the suspension of the grants that Casa Ruby received, which would have been lifted once the organization presented its “Clean Hands” certificate.

During the investigation, the accountants said they stressed to Corado in 2018 the importance of making outstanding and delinquent payments, and that all expenses should be reviewed and approved by the board of directors. The firm also said they struggled to provide accurate accounting because Casa Ruby “never provided the appropriate documentation to justify all the expenses.”

Nelsón Ayala, one of the firm’s owners, was indicted in Maryland in 2017 by the Department of Justice for bribing a Prince George’s County Council member to divert public funds to a nonprofit organization he had founded — and for lying about it. At that time, Ayala was already working as an accountant for Casa Ruby and its director.

Former clients and employees continue to struggle

With two audit reports submitted and the updated complaint due Nov. 28, Judge Danya Dayson will soon begin determining liability for Casa Ruby’s failing.

Wanda Alston Foundation identified several key questions in its second report:

• Does the transfer of money by Casa Ruby’s director with the board’s authorization constitute “misappropriation” of the organization’s assets?
• Did the board members act with passive negligence, or should they be considered consciously complicit?
• Are these financial irregularities part of a scheme of fraud committed against the local government and the institutions that granted public funds for running Casa Ruby’s programs?

In addition to making those determinations, the court must take actions “to attempt to recover the organization’s property or impose liability for the organization’s losses,” the report said.

In the trustee’s first report presented in September, it was detailed that the organization’s debts, outstanding invoices, accounts payable, and employee balances totaled more than $2 million. Of that total, Casa Ruby owes more than $1 million to the Internal Revenue Service.

Meanwhile, the situation of the employees who reported the irregularities and to whom Casa Ruby owes salaries, compensation, and other labor payments will remain unanswered. The organization’s debts to the local and federal government must be settled first. (Two organizations have been fundraising to support those employees.)

And as El Tiempo Latino previously reported, thousands of undelivered immigration documents, driver’s licenses, and letters belonging to Casa Ruby’s former clients were found in vacated Casa Ruby properties. They are being processed by volunteers and members of the Wanda Alston Foundation. Former Casa Ruby employees have worked for nearly two months to help deliver those documents and others that continue to arrive. Another group is working to inform senders about the situation so that the offices where documents, citations, or immigration notifications were issued know that they have not been delivered.

Once the attorney general’s office files their amended complaint, Corado will have until Dec. 19 to submit a formal response to the allegations against her.