The Washington PostDemocracy Dies in Darkness

Casa Ruby founder allegedly diverted funds to herself, violated wage laws

D.C. attorney general files new charges in civil case against troubled LGBTQ nonprofit, which shut down earlier this year

Fabiola Caal Choc, 35, right, of Guatemala with Ruby Corado, the founder of Casa Ruby. The nonprofit closed earlier this year, leaving landlords, former employees and creditors unpaid. (Sarah L. Voisin/The Washington Post)

The founder of a nonprofit serving D.C.’s LGBT community diverted hundreds of thousands dollars meant for the group’s indigent clients to her personal bank accounts, the District said in a court filing Monday.

The city also alleges that Casa Ruby and its founder, Ruby Corado, violated District laws by paying workers less than the minimum wage and not paying workers all of the wages they earned.

The latest set of accusations against Casa Ruby and Corado comes from an ongoing lawsuit filed by D.C. Attorney General Karl A. Racine (D). The nonprofit shut down earlier this year.

In an amended complaint, Racine’s office alleges that Corado set up three companies as part of a federal program to distribute drugs that prevent HIV transmission to uninsured and underinsured clients. The companies bought the drugs at a discount, the filing said, but could be reimbursed by insurers for the full price, and under federal rules, Casa Ruby was allowed to keep the difference.

Corado allegedly set up bank accounts for the firms and, between 2019 and 2022, withdrew more than $100,000 and transferred more than $400,000 into personal bank accounts in El Salvador without authorization from Casa Ruby’s board of directors, the filing said.

In a phone interview Tuesday from El Salvador, Corado did not address specific allegations in the filing and instead gave a blanket denial. She said she had been targeted by city officials who never accepted her as an activist who is an immigrant, Latina and transgender.

“After 30 years, you know, my work speaks for itself,” she said. “But they painted me as a person who was not trustworthy. ... That was the best way to collapse the work of the organization.”

Since 2016, various city agencies have given Casa Ruby $9.6 million in grants to serve the needs of the Latino and LGBTQ youth communities in D.C., city records show. In addition to the pharmacy program, it ran a homeless shelter on Georgia Avenue NW as well as transitional housing at multiple locations across the city, among other initiatives.

As Casa Ruby’s funding increased, so did Corado’s salary as executive director — from about $32,000 in 2014 to just over $260,000 in 2020, tax records show. According to the new court filing, she “supplemented her rapidly increasing salary by paying herself additional funds from Casa Ruby’s bank accounts.”

Corado allegedly regularly withdrew thousands of dollars without explaining the purpose and without evidence that the board had authorized it, the complaint said.

In one instance, she allegedly wrote herself a check from Casa Ruby’s account for $28,000, falsely claiming in the memo line that the money was a “performance bonus” approved by the board. In another, she said without evidence that the board approved $500,000 to build another shelter in El Salvador, the complaint said.

In September of last year, the D.C. Department of Human Services declined to renew one of Casa Ruby’s largest grants. Corado stepped down in October 2021. The organization, which Corado founded in 2012, shut down most of its operations in July, and Racine’s office began its investigation in August.

That month, D.C. Superior Court Judge Danya A. Dayson granted Racine’s request to freeze the group’s bank accounts. Until then, the filing said, Corado was still drawing funds from Casa Ruby accounts, which she retained control of after she resigned. Dayson later appointed June Crenshaw, executive director of Wanda Alston Foundation, which also serves homeless LGBTQ youth, to serve as a court-appointed receiver for Casa Ruby.

At the time, at least four landlords told city agencies Casa Ruby had not paid rent on properties the nonprofit leased for its shelter and transitional housing programs. Former employees of the nonprofit also said they had gone months without pay.

In September, the receiver told the court in a report that Casa Ruby has more than $2 million in unpaid claims and should be dissolved, which the judge declined to do.

Crenshaw said in an interview that the attorney general’s new allegations were not a surprise.

“The premise of Casa Ruby was such a success because the need in our community is so great,” she said. “I do not believe that those services should be handled under the umbrella of Casa Ruby or by Ruby Corado.”

Monday’s filing added more details about the alleged wage law violations. Many unpaid employees earned just $15 per hour, less than the District minimum at the time, the complaint said. And none of these employees received the full wages they earned.

Casa Ruby has also allegedly not paid its 2022 federal employment taxes, according to the filing, and as of June 2022, it owed the IRS more than $127,000.

Racine’s office asked the court to force the organization to pay its workers their unpaid wages and sought penalties for minimum-wage violations as well as a jury trial.

Taylor Lianne Chandler, who held several positions at Casa Ruby, including public relations manager, estimated that between unpaid wages and supplies she paid for out of her own pocket, Casa Ruby owes her about $3,000. She said she and others told officials at the D.C. Department of Human Services about the unpaid wages and other issues at Casa Ruby but got little response.

A DHS spokesperson did not immediately respond to a request for comment.

“On Casa Ruby’s side, there was no true oversight. There wasn’t a functioning board at all,” Chandler said. “Everyone providing grant money — it was easy for them to give money and look the other way so they didn’t have to deal with the poor little trans youth. It was out of sight, out of mind. There were red flags forever.”

Casey Parks contributed to this report.