UPDATE: Court orders One Church One Family into receivership

WEDNESDAY, Feb. 26 — A Lansing attorney was designated the receiver today for One Church One Family, a nonprofit that was headed by Joan Jackson Johnson, the former director of the Lansing Human Relations and Community Services Department who the federal government is investigating for alleged conflicts of interest and financial mismanagement. 

A motion for the appointment went unopposed in 30th Circuit Court after nobody filed an appearance to represent the nonprofit. Judge Joyce Draganchuk named Tom Woods to take control of its assets, which in this case include nine homes in Lansing. 

Woods, whose firm is Cummins Woods Law in Lansing, specializes in administrative and commercial legal matters, business formation, real estate, trusts and estates, wills, probate law, mediation and receiverships. Woods said he does receiverships around the state. 

“I don’t know the lady involved, but I know her reputation through a lot of people,” Woods said. “I think a lot of people think she has done a good job in this community. I only know what I’ve read, but I personally didn’t know her, so I think I should be able to handle the work.” 

Woods will manage — and perhaps liquidate — the nonprofit’s remaining assets. Lansing filed the motion last month to “safeguard” thousands of dollars in grant funds and ensure services for the homeless continue, according to court records. City officials had expected it would prevail before today’s hearing began. 

State law allows judges to appoint a receiver over nonprofit organizations and their assets after they’ve essentially been abandoned by their leadership. Those assets, which in this case involve nine homes in Lansing to house at-risk, homeless families, can be returned “whenever it appears to be in the best interest” of parties involved, according to state law. They can also be handed off to another entity willing to take responsibility for them. 

City Attorney Jim Smiertka reassured Draganchuk that local homeless families living in the homes won’t be left “high and dry” after Woods takes over. He said  Lansing Mayor Andy Schor has been “very concerned” about their well-being after Jackson Johnson’s departure and has plans to turn over the homes to one of three other interested nonprofits. 

Lansing officials, in their motion, contended One Church One Family has failed to provide any records of how it spent nearly $250,000 in grant funding and is operating without a registered agent or any legitimate board of directors — leaving the only choice for a local judge as appointing someone else to take control over the nonprofit. 

“Because of the failure of the defendant to comply with the contract and provide documentation of grand fund use, unless a receiver is appointed to take possession, custody and control of the assets of the defendant, the city will suffer irrevocable loss and irreparable harm,” according to the city’s complaint. 

Woods is now tasked with ensuring homelessness prevention services continue for dozens of local families, including those housed at nine Lansing homes owned and operated by the nonprofit. He’ll also be able to take a closer look at financial records and to track about $500,000 in federal grants it received in the last two years. 

“I will be prepared to come in and take over those properties under the supervision of the court,” Woods added. “Normally, a receiver wouldn’t be charged with investigating prior acts. They generally just manage the assets and sometimes liquidate them. I usually just marshal the assets and pay the debts and go on my merry way.” 

A recent forensic audit report pointed to mismanaged funds, conflicting interests and grant-funded nepotism within Lansing’s Human Relations and Community Services Department after at least $1.38 million in city funding had been funneled into various nonprofit groups tied to Jackson Johnson or her immediate family. 

One Church One Family received the bulk of that cash — nearly $500,000 — while Jackson Johnson simultaneously served as department director and as president, secretary and treasurer of the nonprofit. Those findings have since been forwarded to federal investigators for a review of possible criminal charges. 

Schor said his only choice was to place Jackson Johnson on paid leave after being notified of the conflicting roles by the U.S. Department of Housing and Urban Development late last year. But auditors also found the city was aware of the situation before then, letting it continue unchecked since at least 2006. 

Reports state that Jackson Johnson repeatedly met with the City Attorney’s Office to discuss “her board positions at entities receiving funds from the city and the conflicts they cause.” Further, a copy of Jackson Johnson’s resume also contained handwritten notes that indicated she planned to resign from her board roles. 

It’s unclear why the conflicting interests weren’t spotted years ago. Schor insisted the situation was handled “appropriately and immediately.” Others suggested that given former Mayor Virg Bernero had appointed Jackson Johnson to the nonprofit's board, it had been allowed to operate as a charitable arm of the city by design.  

“A city official serving on the board of a community nonprofit isn’t an issue as long as there is transparency and accountability with regard to any perceived or actual conflicts of interest,” Bernero told City Pulse. “Any contract I signed would have been vetted by the city attorney, so I had no reason to question the legality.” 

The city has also demanded reports and a full-fledged audit of One Church One Family’s finances in hopes of keeping its community services operational — including the lease of nine homes for at-risk families — and to prevent the waste of grand funding and “otherwise safeguard the interests of the city,” court records state. 

The nonprofit allegedly breached its contract with the city by failing to provide required documentation, financial reports, inventories or any accounting of the income generated through the program. Wood might help sort out the uncertainties, but for now, he’s focused on ensuring the nonprofit’s homes are properly managed. 

“Now it’s about getting around to the homes, making sure they’re insured, safe and protected,” Wood said. 

Schor has also proposed an amended ordinance to strengthen financial controls and increase spending oversight within its Human Relations and Community Services Department, now under the acting leadership of Kim Coleman, who was once considered for the deputy director position, and was on track to become the director. 

The city ordinance, which calls for 1.25% of general fund dollars to be used for basic human services, is expected to be amended to include additional purchasing policies, a more transparent process for grant applications and additional financial oversight from the city’s Human Relations and Community Services Advisory Board. 

The amendment would also enable other departments that perform community services to spend that cash and allow the internal auditor to be included in the review and auditing of the grant application process. Schor’s goal: Ensure an “effective and fair process” for city spending. It’s up for City Council approval next month. 

Council President Peter Spadafore called the proposed ordinance changes “long overdue” and expects his colleagues to make quick work of the changes to “ensure a system of checks and balances for accountability.”