LOS ANGELES – A lawsuit filed by the National Asian American Coalition (NAAC) against its founder and former CEO, Faith Bautista, details how a once-celebrated community champion led a fraudulent conspiracy to enrich herself at the expense of the State of California.
In a statement, NACC stated that the lawsuit charges Bautista with fraud, receiving stolen property, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, deceit, constructive fraud, negligent misrepresentation and conversion.
In addition to Faith Bautista, the lawsuit, according to the statement, also named Josefina Bautista (NAAC’s former CFO), Bing Crosby Bautista (who is married to Josefina Bautista and is Faith Bautista’s brother), Nora Penaflor (NAAC’s former Director of Housing), Marissa Samaco (a former independent contractor to NAAC), and Floradema, LLC, which is a company owned by Faith Bautista.
As the complaint alleged, the fraudulent conspiracy stems from NAAC’s participation in the National Mortgage Settlement (NMS) program. The NMS program provides nonprofit Housing Counseling Agencies $750 for every counseling session they provide.
Faith Bautista, according to the statement, allegedly caused NAAC to submit approximately 15,672 counseling sessions to the State of California’s NMS program plus submitted other related expenses for reimbursement, resulting in payments to NAAC totaling $12,356,288.
According to the complaint, however, the number of counseling sessions Bautista and her team submitted were “absurdly impossible.” For example, despite the fact that a counseling session generally took at least one hour, defendants’ records claim that one counselor conducted 35 counseling sessions in a day, the complaint noted. Another counselor is credited with 45 counseling sessions in a day, it alleged.
To make the scheme work, the complaint alleged that the defendants used the names of California residents from unrelated caller and voting lists to submit fraudulent claims for reimbursement, including a “Filipino Under 50” list where defendants used nearly 200 names to support false submissions.
To make sure nobody actually contacted these people, the listed addresses and telephone numbers were changed, it was alleged. The complaint also alleged that defendants tricked more than 100 Marines into signing intake forms as part of their effort to falsify and fraudulently document compensable counseling sessions to obtain counseling fees.
According to the lawsuit, “The defendants’ actions grossly violated their strict fiduciary duties owed to NAAC, and at a more basic level, violated the trust of the Asian American and other marginalized communities they were supposed to be serving. These communities needed and expected the long-delayed funds from the National Mortgage Settlement program to directly benefit their communities. Instead, substantial portions of the funds were spent to fuel defendants’ egos and quench their thirst for money.”
The lawsuit continues: “In embarking on this shameless conspiracy to defraud NAAC and the State of California, defendants profited handsomely at the expense of NAAC and ultimately at the expense of California’s taxpayers. To protect the charity from further harm, NAAC now takes the unfortunate but necessary step of suing its own founder and her co-conspirators to force them to return every penny they selfishly siphoned from this charitable organization and to help NAAC resolve its repayment obligation to the State of California.”
The NAAC Board was compelled to file the lawsuit by the findings of a more than eight-month investigation conducted by one of the nation’s leading global law firms, Sheppard, Mullin, Richter & Hampton LLP. The investigation uncovered substantial evidence of fraud and other wrongdoing, according to the statement.
The investigation was launched after NAAC’s independent outside auditor notified the Board of numerous red flags relating to Faith Bautista’s conduct.
The Board has a fiduciary duty to protect the integrity of NAAC and ensure the funds it received from the State of California were spent appropriately. Accordingly, the Board also announced it has reported the fraud to the California Attorney General’s Office, which regulates charities and nonprofit organizations.
The NAAC provides comprehensive affordable homeownership counseling to over 25,000 minority families in California.