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The Real Deal Los Angeles

Free Speech Coalition hits out at AHF’s Michael Weinstein over “out of control” political spending, including for NII

Nonprofit's spending on anti-development measure is not in line with its mandate: FSC

November 11, 2016 03:30PM
By Gabrielle Paluch

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From Left: Michael Weinstein and Eric Paul Leue (Getty)

From Left: Michael Weinstein and Eric Paul Leue (Getty)

It has been a bruising week for Michael Weinstein, president of the AIDS Healthcare Foundation, who saw several ballot measures he’d backed, including one that would have forced porn stars to wear condoms, shot down.

But it’s not over yet.

Now, the Free Speech Coalition, a trade association for the adult entertainment industry, is taking aim at Weinstein and his nonprofit over what it alleges is improper political spending. FSC filed a formal complaint this week with the Treasurer Inspector General for Tax Administration, charging that Weinstein’s spending push related to promoting measures such as the Neighborhood Integrity Initiative, an anti-development initiative designed to curb building in Los Angeles, has been dubious.

The spending, FSC alleged, constitutes a breach of the Internal Revenue Service’s requirements for an organization to maintain non-profit status, since much of the spending is not directly related to AHF’s own AIDS-related mandate, according to the complaint, which was reviewed by TRD. FSC director Eric Paul Leue described the organization as “out of control.”

Weinstein penned the Neighborhood Integrity Initiative himself and the AHF has become one of its most significant donors, putting forth at least $1.5 million this year. Over a four-year period ending in 2015, the nonprofit spent in excess of $10 million on local ballot measures and lobbying, according to the complaint. To date for the year of 2016, it has spent almost $20 million on statewide ballot measures alone while continuing to receive government grants and not paying taxes on pharmacy sales, financial statements show.

“Michael Weinstein is using millions of dollars intended for people living with and affected by HIV on dubious political campaigns that benefit his bottom line,” he said.

AHF generates over $800 million annually in pharmacy sales, and receives millions in government grants and reimbursements, according to TRD’s review of financial statements. As a registered nonprofit organization, it does not pay taxes on those sales and is eligible for these grants only because of its non-profit status.

“AHF has spent millions of their tax exempt dollars on political and lobbying purposes in excess of the typical limit,” Leue said. “It would not surprise us if they manipulate their filing status to further avoid paying taxes and avoid detection for their excess political spending. As a longstanding HIV/LGBT activist and advocate, I cannot sit by and continue to watch this ongoing disrespect of my community and tax laws.”

At the time of publication, there was no conclusion about the wrongdoing alleged in the complaint. Weinstein did not respond to numerous requests for comment, but previously told LA Weekly: “We’re a corporate citizen. This is our international headquarters. Why not? Why are we being asked the question and not all the business groups and the people who want to build anything they want? Why is it somehow less valid for us to be concerned about what happens in a community that we’ve invested in?”

Leue, known as Mr L.A. Leather in some circles, has a history with Weinstein. He’s also taken the AHF mogul to task in the past over his stance against the HIV prevention drug known as PrEP, as well as his support of the condom initiative, saying the former could save lives and the latter wasn’t the most effective way to prevent sexually transmitted diseases in the making of adult films. In 2014, he started a petition to have Weinstein removed as the head of AHF.

As for the NII, a spokesperson for the Southern California Association of Nonprofit Housing said the implementation of NII would be “catastrophic” for affordable housing.

But regardless of its merits and disadvantages, the issue lies beyond the AHF’s stated mission, according to Leue. “What does battling real estate developers have to do with providing healthcare to HIV patients?” he said.

Should the FSC’s complaint prove successful, Weinstein’s ability to financially support ballot measures like NII, and possibly even his organization’s nonprofit status, could be in danger, Leue said.

[Editor’s note: The Real Deal is hard at work on a series about the implications of the NII and other development-curbing measures. Stay tuned.]

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