Brown sues medical charity

by Kathy Woods |
Sep. 11, 2009, 12:00pm

SACRAMENTO, Calif. (Legal Newsline)-A UCLA professor and five other officers from a nonprofit group are being sued by California Attorney General Jerry Brown.

The attorney general's lawsuit alleges that they defendants used donations to further their personal business ventures and medical research activities.

Under California law, this activity is illegal, said Brown, a Democrat.

"California law strictly prohibits the use of charitable donations for one's personal benefit. Yet Professor Buckberg and his associates diverted donations from L.B. Research Foundation to fund their research and development projects in clear violation of California law." Brown said in a statement

Buckberg founded in the research center in 1997 for the purpose of helping people who suffer from physical and mental disabilities.

The AG's investigation was launched in 2007. It revealed that from the beginning the donations to the foundation, which was run primarily by Buckberg, have been used to fund his research and development projects as well as the research of his colleagues and friends.

The investigation revealed that the money was spent on such things as $120,000 for the production of an educational DVD to be used by medical professors. Rights to the DVD belong to The Helical Heart Company, a for-profit company that Buckberg owns.

Brown also said $1 million was used to establish an endowed faculty chair.

The AG's investigation also revealed that not all of the board members knew they were officers of the L. B. Foundation or that they were a part of the board of directors. Buckberg had sole possession of the financial records and checkbook of the charitable foundation, the attorney general's office said.

The suit also contends that the charity, among other things, failed to maintain adequate books, breached fiduciary duties, failed to maintain an independently elected board of directors, filed and distributed false and incomplete reports and engaged in unfair competition.

Brown is seeking more than $500,000 in misappropriated funds, to permanently dissolve the charity, win civil penalties of more than $100,000 and prohibit the defendants from running a charity until they provide accounting statements to his office.

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