USAID contractor accused of misusing its nonprofit affiliate

Leaders of nonprofit organization DT Institute have allegedly violated nonprofit law in a scheme designed to benefit DT Global, its for-profit "sister" company, and enrich themselves, according to legal complaints filed by a former board member who was removed and the Office of the Attorney General for the District of Columbia.

DT Institute, in a court filing, has denied the allegations, and a spokesperson for DT Global told Devex that the organization “meets and exceeds” all applicable standards.

DT Global was created in 2019 from private company Development Transformations and what was formerly an international development division of the for-profit corporation AECOM. DT Institute, or DTI, was launched the same year. Both DT Global and DTI are based in Washington and share the same address.

The nonprofit’s chairman is John DeBlasio, who also serves as the for-profit’s general partner. DeBlasio is a former security contractor and founder of the Global Peace and Development Charitable Trust, which controls the “DT Global family” of organizations and is in turn controlled by JPD Private Trust Company, an entity registered in Bermuda.

In recent weeks, DT Global announced the acquisition of IMC Worldwide and plans to acquire Cardno International Development. The Cardno deal is set to be finalized by the end of June. The two acquisitions would roughly triple DT Global’s number of staffers to well over 2,000 — which would make it one of the larger implementers of global development projects worldwide. Since its 2019 launch, DT Global has received around $30 million in contracts per year from the U.S. Agency for International Development, according to USASpending.gov.

James Prince, who filed the initial lawsuit, was formerly president of the Democracy Council, which entered into an agreement with DTI to transfer assets, including charitable donations, to DTI based on “what appeared to be a mutuality of missions and charitable goals,” according to a legal petition Prince filed in November. Under the agreement, Prince became DTI’s executive director in March 2020 and also joined its board.

However, as the deal moved forward, Prince “soon learned that JPD Trust … [GPD] Trust, DT Global, DTI, Mr. DeBlasio, and a host of other entities in which Mr. Deblasio is intertwined form a web of paper entities that shuffle money and operations without regard to applicable federal or local laws and regulations,” according to the petition.

The central allegations outlined in Prince’s petition are that there is no meaningful difference in governance between DT Global and DTI, creating a conflict of interest and lack of oversight that put the nonprofit’s resources in service of the for-profit’s business interests. Prince alleges that DeBlasio exerts control over both organizations, which have “essentially been collapsed into one entity, each used to drive business and profit.”

“Based on Petitioner’s participation in and observations of the affairs of both DTI and DT Global, DTI is largely ‘a front’ for DT Global without meaningful or effective non-profit, corporate governance. DTI is a vehicle for profit and marketing for GPD Trust, DT Global, Mr. DeBlasio and Mr. Doyle,” the filing reads, referring to Hugh Doyle, DTI’s CEO.

In Prince’s petition, he alleges that Doyle undertakes activities on behalf of the for-profit DT Global while being a full-time compensated employee of the nonprofit DTI. Prince also alleges that DTI’s executive vice president receives compensation from the nonprofit for work undertaken for the for-profit. Prince says that DT Global uses DTI as “a marketing tool for its for-profit enterprise.”

Prince also states that the organizations’ joint leaders have explicitly described a relationship between the organizations in which the nonprofit DTI would undertake research and implement grants “to develop experience that DT Global could exploit to obtain new for profit contracts.”

Prince was terminated as DTI’s executive director in March 2021, one year after he was appointed, but retained his seat on the nonprofit’s board of directors until his removal on Jan. 24, 2022, after he filed his petition against the organization.

In a Feb. 28 motion to dismiss Prince’s petition, DTI’s lawyers assert that the board’s decision to remove Prince was “in no way precipitated” by his legal action. The lawyers argue that Prince lacks standing to bring charges against DTI since he is no longer a board member, and they dispute that the allegations in his petition amount to fraud.

“In response to the complaint in question, we reaffirm that—in our work with DT Institute and otherwise—DT Global follows well-established rules and best practices for governance. We are confident that our approach meets and exceeds all applicable standards for ethics and compliance,” Alexandra Frank, DT Global’s director of communications, wrote to Devex.

In their motion to dismiss the petition, DTI’s lawyers argue that Prince put forward “nothing more than vague, conclusory allegations which are not sufficient to allege a plausible claim sounding in fraud.”

“Simply labeling an action as fraudulent does not make it so,” they write.

DTI’s motion also notes that the organization “has commenced an internal inquiry into the allegations raised” by Prince and that a stay of the legal proceedings would allow this inquiry to move forward.

After Prince filed his petition, the District of Columbia’s Office of the Attorney General filed its own motion to intervene in the case, citing the public’s interest in “ensuring nonprofit resources are used for their intended public purposes.” The attorney general outlined similar concerns about governance, oversight, and a lack of independence between the for-profit and nonprofit organizations.

“In reality, DTI has no functional Board of Directors; the Board exists in name only. Chairman DeBlasio and CEO Doyle exercise unfettered control over DTI’s activities and affairs,” the attorney general’s suit alleges, noting that DeBlasio has claimed his position as DTI’s board chair “in perpetuity.”

The attorney general also charges that “DTI staff are directed to assist DT Global with developing and submitting proposals to US grantmaking agencies, like the United States Agency for International Development … all the while receiving their sole compensation from DTI.”

The attorney general’s office has asked for corrective actions that include placing a constructive trust “over DTI nonprofit funds improperly spent on DT Global matters,” modifying the organizations’ governance policies to ensure independence, appointing an independent monitor, requiring leadership to undertake nonprofit governance training, or, in the alternative, dissolving DTI.

In his legal petition, Prince alleges that his efforts to push for compliance through internal channels were met with obstruction and retaliation.

“This is because compliance by DTI would unravel the scheme of self-enrichment undertaken by the Chairman and CEO and carried out by their commission of waste, fraud and abuse by using the entity for profit and self-dealing,” the petition reads.

When Devex first contacted DT Global on Monday, Frank, the company’s director of communications, wrote in an email: “It is our understanding DT Global has not been served with process and as to our entity, the complaint is not operative at the moment. As such, we have no comment at this time.”

Frank emphasized that DT Global and DTI are separate entities and referred Devex to DTI, whose representatives declined to comment.

A phone number listed on DTI’s website directed Devex to leave a voice message for DT Global.

To contact the reporter on this story, email michael.igoe@devex.com.