Page 1

Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

IN THE COURT OF COMMON PLEAS FRANKLIN COUNTY, OHIO State of Ohio, ex rel. Mike DeWine Attorney General of Ohio Charitable Law Section 150 East Gay Street, 23rd Floor Columbus, Ohio 43215, Plaintiff, v. Summer Rays, Inc. c/o Charles Kirk, Executive Director and statutory agent 6790 Tanya Terrace Reynoldsburg, Ohio 43068, Reynoldsburg Revolve Church c/o Charles Kirk, President and statutory agent 6790 Tanya Terrace Reynoldsburg, Ohio 43068, Charles Kirk 6790 Tanya Terrace Reynoldsburg, Ohio 43068, Marsha L. Kirk 6790 Tanya Terrace Reynoldsburg, Ohio 43068, Jacquelyn G. Kirk 6770 Tanya Terrace Reynoldsburg, Ohio 43068, Jenna Kirk 2782 E. Livingston Ave. Columbus, Ohio 43209, Juliette Kirk 6790 Tanya Terrace Reynoldsburg, Ohio 43068,

: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :

Case No. Judge

MOTION FOR TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNCTION, AND EMERGENCY APPOINTMENT OF RECEIVER


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Tammy J. Gollihue 6338 Beaver Lake Dr. Grove City, Ohio 43123,

: : : : Deborah L. Garrison : 1022 Twilight Dr. : Reynoldsburg, Ohio 43068, : : Teresa Perry : : 1698 Cedar Creek Court Grove City, Ohio 43123 : : And : : Heartland Bank : c/o David A. Skrobot, statutory agent : 471 E. Broad St., Suite 1810 : Columbus, Ohio 43215 : : Defendants. : ______________________________________________________________________________ Pursuant to Civ.R. 65 and the authority contained in R.C. 109.24, 1716.16, 2735.01, and at common law, Plaintiff State of Ohio, ex rel. Mike DeWine, Ohio Attorney General (“Attorney General” or “Attorney General’s Office”) respectfully moves this Court to issue a temporary restraining order and appoint a receiver on an interim basis. The Attorney General seeks this relief both to maximize the opportunity to preserve charitable assets and to minimize any threat of harm or disruption to the residents of Defendant Summer Rays, Inc. (“Summer Rays”). At the earliest time amenable to this Court, the Attorney General also seeks a preliminary injunction and the appointment of a receiver on a non-interim basis until an ultimate ruling on the merits of this case. This Motion is based on the accompanying Memorandum in Support and evidentiary materials. A proposed Order has also been submitted.


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Respectfully submitted, MIKE DEWINE ATTORNEY GENERAL OF OHIO /s/ Matthew T. Green Matthew T. Green (0075408) Assistant Attorney General Tammy V. Chavez (0096714) Assistant Attorney General Ohio Attorney General’s Office Charitable Law Section 150 E. Gay St., 23rd Floor Columbus, Ohio 43215-3130 Voice: 614-466-3181 Fax: 877-647-2556 Matthew.Green@OhioAttorneyGeneral.gov Tammy.Chavez@OhioAttorneyGeneral.gov Counsel for Plaintiff Ohio Attorney General


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

TABLE OF CONTENTS MEMORANDUM IN SUPPORT………………………………………………..……………… 1 I. INTRODUCTION……………………………………………………………..………….. 1 II. FACTUAL BACKGROUND …………………………………………………………..... 2 A. Overview of Summer Rays and RRC ……………………………………………….... 2 B. The Summer Rays “Program” ……………………………………………………….... 6 C. Chuck Kirk’s Control over Residents’ Housing Situation …………………………..... 9 D. Verbal and Physical Intimidation …………………………………………………….. 12 E.

Health and Safety Concerns ………………………………………………………….. 14

F.

Social Environment at Summer Rays ………………………………………….…….. 19

G. Financial Exploitation …………………………………………………………….….. 23 1. Zoom Property Advisers and Summer Rays’ construction and maintenance workers ……………………………………………………………………………………...…. 23 2. Rev Café, Zoom Direct, Zoom Staffing, and the “payment” of Summer Rays residents ……………………………………………………………………………………...…. 25 3. Program fees, automobile transactions, and Zoom Tax Advisors ………………....... 28 H. Marsha Kirk’s Side Businesses and Prior Testimony ………………………….…..… 31 I.

Additional Examples of Misuse of Charitable Assets and/or Financial Exploitation... 32 1. 6790 Tanya Terrace, Reynoldsburg, Ohio 43068 …………………………..……..…. 32 2. 5649 Boyd Road, Grove City, Ohio 43123 …………………………..………………. 33 3. College housing for Jacquelyn Kirk and Jenna Kirk ………………..…………….…. 34 4. Renovation of Tammy Gollilue’s personal residence ………………..………………. 37 5. Use of Cash …………………………………………………………..………………. 37

J.

Common Scheme and Co-Mingling of Funds ……………………....…………….…. 39


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

III. RELIEF REQUESTED …………………………………………………..…………..…. 44 A. The Court Should Issue A Temporary Restraining Order and Preliminary Injunction.. 44 1. A temporary restraining order and preliminary injunction is warranted under the traditional legal standard. a. Legal standard ……………………….………………………..……………..…. 44 b. There is a substantial likelihood of success on the merits. ..……………......….. 45 c. There is a substantial threat of irreparable harm, no other parties will be harmed, and the public interest will be served by granting the requested relief. ….…..… 48 2. The Court should issue a temporary restraining order and preliminary injunction pursuant the authority in R.C. 1716.16(B). ………………………………………….. 49 B. The Court Should Appoint A Receiver ……………………………………….…….… 50 1. The appointment of a receiver is necessary and appropriate in this case. …………... 50 2. The Court should appoint the receiver proposed by the Attorney General. ……......... 52 IV. CONCLUSION …………………………..………………………………………….….. 52 CERTIFICATE OF COMPLIANCE WITH CIVIL RULE 65(A) …………………………….. 54 PLAINTIFF OHIO ATTORNEY GENERAL’S EXHIBIT INDEX ………………………….. 55


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

MEMORANDUM IN SUPPORT I.

INTRODUCTION Defendant Summer Rays is a Reynoldsburg-based charity that, for approximately the last

ten years, has operated a “sober living program.” Currently, Summer Rays owns at least twentyfive properties in Ohio, most of which are in Franklin County. At any given point in time, there are approximately 100 individuals living at one of the various Summer Rays “program houses.” Defendant Reynoldsburg Revolve Church (“RRC”) is an outgrowth of Summer Rays that was formed in July 2014. At all relevant times, Summer Rays and RRC have been under the complete control of Defendant Charles Kirk (“Chuck Kirk”) and his family. One key to understanding this case is that most Summer Rays residents are in an extremely vulnerable position when they arrive at Summer Rays. They are getting out of prison, have just completed a drug or alcohol rehabilitation program, were staying at a homeless shelter, do not have the financial ability to afford a deposit on an apartment, have burned bridges with friends and family members, and/or are in tremendous need of some type of structured living environment. As a charity seeking to provide services to these types of individuals, Summer Rays should have been operated in the best interest of these residents, keeping in mind their precarious emotional, psychological, and financial situations. In other words, the residents are the intended beneficiaries of Summer Rays’ charitable programming, and the board members and officers of Summer Rays owed fiduciary duties to the residents. Another key factor is that many Summer Rays residents are isolated to large a degree. Most of the functions of Summer Rays are performed either by Chuck Kirk or the residents themselves. Chuck Kirk is subject to no independent oversight and, critically, is the sole person

1


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

who decides whether residents may continue to live in a Summer Rays program house. Such a structure, while not per se unlawful, has a tremendous potential for abuse. The Attorney General’s multi-year investigation reveals that Chuck Kirk has utilized his near absolute control to engage in activity that, under any type of objective or reasonableness standard, is wildly inappropriate for the director of a sober living program. This activity extends to Chuck Kirk’s professional and personal interactions with Summer Rays residents, the condition of program houses, the health and safety of Summer Rays residents, the operations of Summer Rays’ and RRC’s various side-businesses, the misuse of charitable funds and assets, and the machinations used to conceal the true financial status of Summer Rays and RRC. The other individual defendants have actively participated in some aspects of this scheme, turned a blind eye to the activity of Chuck Kirk and others, and/or have benefitted from Chuck Kirk’s activities in some way. Summer Rays is and has been a slow-motion crisis on a large scale. A temporary restraining order should be issued, Chuck Kirk and his family should be immediately removed from their positions with RRC and Summer Rays, and a receiver should be appointed to take over operations on at least an interim basis. Such relief is warranted under both the traditional standard governing TROs and the Attorney General’s (and this Court’s) broad equitable authority over the organization and operation of charities. II.

FACTUAL BACKGROUND A.

Overview of Summer Rays and RRC

Summer Rays is an Ohio nonprofit corporation that was incorporated in 2000 and first received 501(c)(3) status from the IRS in 2002. (Affidavit of James Baugess, ¶ 7, attached hereto as Exhibit A). Chuck Kirk has been the statutory agent for Summer Rays since its 2


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

incorporation. (Id., ¶ 8). Summer Rays’ amended articles of incorporation filed with the Secretary of State on April 24, 2007 provide, in part, that the statutory purpose of Summer Rays is: “To provide sober living environments at will that provide an opportunity for a life-changing experience.” (Id., ¶ 9 and Ex. 1). Summer Rays’ amended articles of incorporation filed with the Secretary of State on September 7, 2012 further provide, in part: “Said organization is organized exclusively for charitable, religious, educational, and scientific purposes[.]” (Id., ¶ 10 and Ex. 2). Summer Rays has been registered with the Attorney General’s Office as a “charitable organization” under R.C. R.C. 1716.01(A) and as a “charitable trust” under R.C. 109.23 since 2013. (J. Baugess aff., ¶ 5). The Attorney General’s Office uses an online registration and reporting system, known as “Reggie.” Chuck Kirk is, and has been, the only “organization user” for Summer Rays on Reggie. (Id., ¶ 6). On behalf of Summer Rays, Chuck Kirk has filed annual reports for the years 2010 through 2017. (Id., ¶ 12 and Exs. 10-17). They indicate: 

Chuck Kirk served as the President of Summer Rays from 2010 through 2017. Chuck Kirk received $0 in compensation from Summer Rays in 2010 and 2011; $17,108 in 2012; $22,247 in 2013; $18,408 in 2014; $20,891 in 2015; $43,665 in 2016; and $54,557 in 2017. (Id., ¶ 13).

Defendant Marsha Kirk served as a Trustee of Summer Rays from 2010 through 2013 and as a Director from 2014 through 2017. Marsha Kirk received $0 in compensation from Summer Rays in 2010 and 2011; $4,512 in compensation in 2012; $2,838 in 2013; $2,974 in 2014; $3,042 in 2015; $2,900 in 2016; and $5,150 in 2017. (Id., ¶ 14). Marsha Kirk is Chuck Kirk’s wife.

3


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Defendant Deborah Garrison served as Treasurer of Summer Rays from 2010 through 2017. Deborah Garrison received $0 in compensation for all years. (Id., ¶ 15). Deborah Garrison is Chuck Kirk’s aunt.

Defendant Teresa Perry served as Secretary of Summer Rays from 2010 through 2017. Teresa Perry received $0 in compensation for all years. (Id., ¶ 16). Teresa Perry is Chuck Kirk’s cousin.

Defendant Tammy Gollihue served as a Trustee of Summer Rays in 2016 and 2017 and received $0 in compensation. (Id., ¶ 17). Tammy Gollihue is Chuck Kirk’s sister.

Defendant Jacquelyn Kirk served as a Director of Summer Rays from 2014 through 2017 and received $0 compensation during these years. (Id., ¶ 18). Jacquelyn Kirk is Chuck Kirk’s and Marsha Kirk’s daughter.

Defendant Jenna Kirk served as a Director of Summer Rays in 2016 and 2017 and received $0 in compensation. (Id., ¶ 19). Jenna Kirk is Chuck Kirk’s and Marsha Kirk’s daughter.

Public records indicate that Summer Rays owns at least twenty-five properties in Ohio. (J. Baugess aff., ¶ 20 and Exs. 22-46). Most of the properties are located in Reynoldsburg; three are in Columbus; one is in Kirkersville; one is in Buckeye Lake; and one is in Kent. (Id.). All of the properties could be described as either duplexes or single-family homes. (Id., ¶ 21). While the exact number varies, the Attorney General’s best estimate is that at least one hundred individuals are residing at various Summer Rays program houses at any given point in time. (J. Baugess aff., ¶ 22); (Affidavit of Jeffrey D. Hall, ¶ 5, attached hereto as Ex. B). Residents of Summer Rays are required to pay a weekly “program fee” ranging from $100 to 4


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

$150, depending upon the type of bed and number of people sharing a bedroom. (Affidavit of Brittany Craig, ¶ 14, attached hereto as Ex. C); (Affidavit of Brianna Snider, ¶¶ 7-8, attached hereto as Ex. L). Residents at Summer Rays typically are instructed that they are required to comply with the following: (a) abstain from using any type of illegal drugs or alcohol; (b) attend a weekly meeting on Tuesday evenings, known as the “Get Mad” meetings; and (c) attend a church service each week. (B. Craig aff., ¶¶ 11-12); (J. Hall aff., ¶ 10); (Affidavit of Daniel L. Gross, ¶ 10, attached hereto as Ex. D). RRC is an Ohio nonprofit corporation that was formed on or about July 11, 2014. (J. Baugess aff., ¶ 11 and Ex. 3). Chuck Kirk, Jenna Kirk, and Jacquelyn Kirk are the incorporators of RRC. (Id.). Chuck Kirk is the statutory agent for RRC. (Id.). As a self-proclaimed church, RRC has presumed 501(c)(3) status from the IRS and is exempt from registering with the Attorney General’s Office.

However, RRC has completed (and presumably filed) an IRS

form 990 for both 2015 and 2016. (Id., ¶¶ 23-24 and Exs. 4-5). Chuck Kirk is identified as the preparer of both returns. (Id.). RRC’s 2015 form 990 identifies Chuck Kirk as the Founder/CEO and Jacquelyn Kirk as the Treasurer. (Id., ¶ 23 and Ex. 4). RRC’s 2016 form 990 fails to identify any individual board members or officers, but does indicate that RRC’s governing body was comprised of four, independent voting members. (Id., ¶ 24 and Ex. 5). In a pre-suit examination under oath conducted by the Attorney General’s Office, Jacquelyn Kirk was unable to identify who these voting members were.

(Jacquelyn Kirk Examination Under Oath,

conducted Aug. 31, 2017, at 32, attached hereto as Ex. E (hereinafter “J. Kirk EUO”)). Public records indicate that RRC owns the real property located at 7679 E. Main St., Reynoldsburg, Ohio 43068. (J. Baugess aff., ¶ 25 and Ex. 50). The restaurant known as “Rev Café” operates out of 7679 E. Main St. (Id.). When asked at her examination, Jacquelyn Kirk 5


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

was unable to identify who owned Rev Café. (J. Kirk EUO, at 73). Since the summer of 2014, Summer Rays’ weekly Get Mad meetings and RRC’s weekly church services have been held in the event space in the basement of Rev Café. (B. Craig aff., ¶ 11); (J. Hall aff., ¶ 10). RRC’s church services are typically presided over by a rotating cast of guest ministers. (B. Craig aff., ¶ 11); (J. Hall aff., ¶ 10); (Affidavit of James Aaron DeLong, ¶ 4, attached hereto as Ex. F). B.

The Summer Rays “Program”

The isolation of Summer Rays residents starts with the structure of the program itself. It is likely impossible to convey the varied circumstances under which individuals find themselves at Summer Rays. Without exception, however, these individuals are dealing with significant problems—be it spiritual, emotional, psychological, financial, familial, criminal justice, and/or substance abuse related—and are in an extremely vulnerable position. (B. Craig aff., ¶¶ 24-25); (J. Hall aff., ¶ 13); (D. Gross aff., ¶ 5); (J. Baugess aff. ¶ 26 and Ex. 6); (Affidavit of Dustin Holder, ¶ 4, attached hereto as Ex. K). In some instances, people show up at Summer Rays unannounced and have nowhere else to go if they are turned away by Chuck Kirk. (D. Gross aff., ¶¶ 6-7); (J. Hall aff., ¶¶ 13-14). As indicated above, the only official programming offered by Summer Rays is the weekly Get Mad meeting. Other than Chuck Kirk, Summer Rays has never had any outside (i.e., non-resident) employees to provide counseling or training to assist Summer Rays residents in any way with: (1) remaining sober; (2) developing life skills; (3) reestablishing their sense of self-worth; or (4) developing a plan for leaving Summer Rays and moving on with their lives. (B. Craig aff., ¶¶ 5, 7); (J. Hall aff., ¶¶ 6-7); (D. Gross aff., ¶ 11); (B. Snider aff., ¶¶ 10, 17); (D. Holder aff., ¶¶ 7, 18); (Affidavit of Aaron Holder, ¶¶ 8, 10, attached hereto as Ex. J). While Summer Rays has a board of directors on paper, Chuck Kirk is the only board member or officer 6


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

who has any role in the day-to-day operations of Summer Rays including, critically, whether a Summer Rays resident is to be kicked-out of a program house. (B. Craig aff., ¶¶ 5, 23); (J. Hall aff., ¶¶ 6, 62); (D. Gross aff., ¶ 8); (B. Snider aff., ¶¶ 10, 17); (D. Holder aff., ¶¶ 7, 18); (A. Holder aff., ¶ 8); (Marsha Kirk Examination Under Oath, conducted Aug. 15, 2017, at 174, attached hereto as Ex. G (hereinafter “M. Kirk EUO.”)). In order to operate Summer Rays, Chuck Kirk has enlisted the residents themselves to perform most functions. (A. Holder aff., ¶ 8); (J. Hall aff., ¶¶ 6, 118); (B. Craig aff., ¶¶ 5, 62); (B. Snider aff., ¶ 10); (D. Holder aff., ¶ 7). As just one example, Chuck Kirk previously used a Summer Rays resident—not an outside employee—to greet new residents and make sure they got settled into the program. (D. Gross aff., ¶ 15). The same individual was also the sole person who provided assistance to Summer Rays residents in regards to such matters as: (1) completing and submitting financial aid applications; (b) completing and submitting college and/or tradeschool applications; (c) tutoring individuals; and (d) assisting with resumes. (Id., ¶ 14). In exchange for these services, the individual in question did not have to pay program fees, received access to a free cell phone, and was paid $100 a week in cash, under the table. (Id., ¶¶ 14, 16). Similarly, the house directors at the Summer Rays program houses are all residents themselves and do not receive any compensation for serving as a house director. (J. Hall aff., ¶¶ 105-06); (D. Gross aff., ¶ 11); (A. Holder aff., ¶ 5). The weekly Get Mad meetings are the exclusive province of Chuck Kirk and a chance for him to indoctrinate Summer Rays residents. The meetings typically last at least an hour and consist of some type of presentation by Chuck Kirk. With the exception of those individuals who have been in the program for at least two years, all Summer Rays residents are required to attend every week, no exception, and wear different colored tee-shirts that correspond to their 7


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

days of sobriety. Individuals that show up late or fail to wear their tee-shirts are subject to being screamed at in front of their peers by Chuck Kirk. (J. Hall aff., ¶ 8); (B. Craig aff., ¶ 10). Further, the Get Mad meetings are not a place where practical life lessons are imparted. Rather, consistent themes included Chuck Kirk breaking down current Summer Rays residents and elevating himself up as a personal model of sobriety and success; Chuck Kirk discussing topics that were vulgar or sexual in nature; and Chuck Kirk making claims about prior Summer Rays residents, including often saying that residents who had left the program were doing bad or had relapsed. (J. Hall aff., ¶ 9); (B. Craig aff., ¶¶ 9-10, 39); (A. Holder aff., ¶ 11); (B. Snider aff., ¶ 19); (D. Holder aff., ¶ 19). Chuck Kirk has been enrolled in a Ph.D. program in psychology at Northcentral University. Chuck Kirk has used his enrollment in this Ph.D. program as a selling point to potential residents and their parents, and in conversations with residents as a basis for why he is qualified to give advice on a variety of topics. However, Chuck Kirk has enlisted multiple Summer Rays residents to complete required coursework for him. (D. Gross aff., ¶¶ 17-18). Review of Northcentral University’s website further indicates that the program is technically a doctor of philosophy in psychology, and the website discloses: “NCU’s psychology programs are not licensure programs and do not prepare an individual to become a licensed psychology or counseling professional.” (https://www.ncu.edu/programs-degrees/doctoral/doctor-philosophypsychology, last visited July 3, 2018). As indicated above, Summer Rays has no formal programming geared toward getting residents ready to live independently. Chuck Kirk has often advised Summer Rays residents that they need to stay in the program for at least two years. (J. Hall aff., ¶ 11); (B Craig aff., ¶ 6). On at least one occasion, Chuck Kirk advised two Summer Rays residents—a couple—that they 8


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

would need to make $7,000 a month to live outside of Summer Rays. (B. Craig aff., ¶ 6). To the extent Summer Rays residents receive help in leaving the program, it is usually by someone other than Chuck Kirk. (A. DeLong aff., ¶ 13). There are numerous individuals who have been in the Summer Rays program, and lived at a Summer Rays program house, for more than two years. (J. Hall aff., ¶ 11). C.

Chuck Kirk’s Control over Residents’ Housing Situation

The Attorney General’s investigation indicates that one of the primary ways in which Chuck Kirk exerts undue influence over Summer Rays residents has been through constantly kicking or threatening to kick Summer Rays residents out of their home. As indicated above, Chuck Kirk has absolute and sole authority over whether a resident is allowed to live in a Summer Rays program house. While such control is not per se unlawful, Chuck Kirk has acted unreasonably and abused his authority in various ways. Chuck Kirk has engaged in a consistent pattern and practice of either kicking-out or threatening to kick-out Summer Rays residents for any or no apparent reason, as a spur of the moment decision without any process or notice whatsoever, and/or simply because he was in a bad mood. (A. DeLong aff., ¶ 9); (D. Gross aff., ¶ 9); (B. Craig aff., ¶¶ 31, 35); (J. Hall aff., ¶¶ 34-35, 68); (B. Snider aff., ¶¶ 10, 16); (D. Holder aff., ¶ 17); (A. Holder aff., ¶ 9). Individuals that are kicked-out of Summer Rays typically are required to leave immediately; on numerous occasions, Chuck Kirk has threatened to call the police if residents do not immediately pack up their things and leave. (B. Craig aff., ¶ 32); (J. Hall aff., ¶¶ 35, 66); (D. Gross aff., ¶ 28). On numerous occasions, Chuck Kirk has kicked-out residents if he suspected they were using illegal drugs or alcohol. While drug or alcohol use would certainly be a legitimate reason to remove an individual from a sober living program, Chuck Kirk often failed to administer a 9


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

drug test or give individuals a reasonable amount of time to leave. On other occasions, however, Chuck Kirk has refused to discipline, or even administer drug tests to, Summer Rays residents who very clearly were under the influence of illegal drugs or alcohol. Chuck Kirk often was more lenient towards individuals he either liked or with whom he had a personal relationship. (B. Craig aff., ¶¶ 32-33); (D. Gross aff., ¶ 25); (J. Hall aff., ¶ 82); (D. Holder aff., ¶ 31); (A. Holder aff., ¶ 27). The Attorney General’s investigation further reveals that Chuck Kirk has used his authority to kick people out of Summer Rays as a way to either deal with conflict or retaliate against residents in some way. On numerous occasions, Chuck Kirk has responded to residents’ complaints either by kicking them out or by threatening to kick them out. On numerous other occasions, Chuck Kirk has threatened to kick out Summer Rays residents or kicked them out for an extremely short time—a few hours or days—and then either allowed the resident to stay or asked the resident to return. (J. Hall aff., ¶¶ 63, 65, 67); (B. Craig aff., ¶¶ 31, 34); (A. Holder aff., ¶¶ 24, 26). While it is likely impossible to convey the full breadth and depth of Chuck Kirk’s actions in this regard, two examples give some indication. On one occasion, Chuck Kirk caught a Summer Rays resident who admitted being intoxicated. Chuck Kirk immediately kicked the individual out of Summer Rays. Chuck Kirk then gave another Summer Rays resident $20 in cash and instructed him to drive the individual to a particular street corner in downtown Columbus where an unnamed “homeless shelter” supposedly was located. The resident in question dropped this individual off at the street corner in question. After pulling away, the resident realized that there was no homeless shelter in the immediate vicinity. (D. Holder aff., ¶ 30); (B. Snider aff., ¶ 22). 10


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Another example involved the Summer Rays resident who assisted individuals with college applications, job resumes, and similar tasks. In the spring of 2016—or after having already been in the program approximately 21 months—this resident decided he wanted to go back to school in the fall at the Ohio State University. Because the individual wanted to provide as much lead-time as possible to find and train a replacement to continue providing services to Summer Rays residents, he told Chuck Kirk of his plans months in advance. Upon hearing this news, Chuck Kirk became upset and yelled at the individual that he would relapse and eventually come “crawling back” to Summer Rays. When the individual responded, in part, by saying he never intended to return to Summer Rays, Chuck Kirk replied that he hoped “God throws your words back in your face” and kicked the resident out. The resident in question left Summer Rays that day, and for the next four months lived with his pastor and the pastor’s family. (D. Gross aff., ¶¶ 4, 27-29); (A. DeLong aff., ¶ 14). Because of their precarious situations to begin with, and in light of how Chuck Kirk utilized his authority, many Summer Rays residents lived in constant fear of getting kicked out for no good reason and went to unreasonable lengths to keep Chuck Kirk happy. (D. Gross aff., ¶ 22); (A. DeLong aff., ¶ 10); (B. Snider aff., ¶ 21); (A. Holder aff., ¶¶ 16-18). In addition to those discussed below, examples include: (1) residents not taking jobs because of Chuck Kirk (B. Craig aff., ¶ 30); (2) acting as a type of free/discounted taxi service to drive other residents around (D. Holder aff., ¶ 29); (B. Snider aff., ¶ 21); and (3) failing to speak up in response to Chuck Kirk’s many, many instances of intimidation or abuse (A. Holder aff., ¶¶ 16-18). Finally, even when residents voluntarily leave the Summer Rays program, many residents have kept their plans and intentions secret from Chuck Kirk and left without providing any advance notice. The reason is because—like the resident above who was functionally made 11


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

homeless—they were afraid Chuck Kirk would kick them out immediately, in retaliation for wanting to leave. (A. DeLong aff., ¶ 13); (B. Craig aff., ¶ 36); (B. Snider aff., ¶ 17); (D. Holder aff., ¶ 18). D.

Verbal and Physical Intimidation

Another way Chuck Kirk has exerted undue influence over Summer Rays residents is through what appears to be near constant verbal and physical intimidation. For some Summer Rays residents, the verbal intimidation began as prospective residents. In one instance, Chuck Kirk told a future resident that if she was interested in her “fucking sobriety” then she would find a way to make it to Summer Rays that day, even though it involved her mother taking off work and driving a long distance. (B. Craig aff., ¶¶ 25-27). In another instance, Chuck Kirk yelled at a Summer Rays resident for showing up at the address listed on a Summer Rays brochure and calling the number listed. (D. Gross aff., ¶¶ 6-7). The Attorney General’s investigation further indicates that Chuck Kirk routinely yelled and screamed at Summer Rays residents using profane language, that he frequently degraded or demeaned residents in public settings or in front of other residents, and that he often addressed problems or complaints raised Summer Rays residents by yelling at them. (A. DeLong aff., ¶ 11); (B. Craig aff., ¶¶ 38-39); (D. Gross aff., ¶ 19); (J. Hall aff., ¶ 69); (A. Holder aff. ¶¶ 1516); (B. Snider aff., ¶ 12); (D. Holder aff., ¶¶ 12-13). Chuck Kirk has often yelled at Summer Rays residents over personal matters or topics that had very little to do with the operation of Summer Rays. (D. Gross aff., ¶ 21); (B. Craig aff., ¶ 40). On occasion, Chuck Kirk has yelled at other residents for as long as 15 or 20 minutes. (J. Hall aff., ¶ 69). Again, while it is likely impossible to convey the full breadth and depth of Chuck Kirk’s actions, several examples give some indication. On one occasion, a Summer Rays resident 12


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

observed Chuck Kirk calling another Summer Rays resident a “piece of shit” and not having a “back bone” because the resident was taking medication for chronic back pain. (D. Gross aff., ¶ 20). On another occasion, Chuck Kirk told a Summer Rays resident that he (Chuck Kirk) could smack the shit out of the resident’s mother and that the resident couldn’t or wouldn’t do anything about it. (A. Holder aff., ¶17). On another occasion, Chuck Kirk called a Summer Rays resident a “hillbilly whore” in a public restaurant, loud enough for the entire restaurant to hear, and then proceeded to tell the resident that she was “a nobody” and was “banging up” her boyfriend and taking his money. (B. Craig aff., ¶ 45). On another occasion, Chuck Kirk verbally berated a pregnant Summer Rays resident for telling Chuck Kirk that she did not want to raise her baby in a Summer Rays program house; Chuck Kirk eventually made a comment to the effect that the resident’s dead mother would not be proud of her. (B. Craig aff., ¶ 46). On another occasion, Chuck Kirk yelled in a resident’s face that he was a “piece of shit” and “bad for everyone” in his life. (D. Gross aff., ¶ 26). For some residents, Chuck Kirk’s verbal rants had a consistent theme. Chuck Kirk told one resident on numerous occasions that he and his family were trailer trash and that he should go back to doing drugs. (A. Holder aff., ¶ 17). For another resident, it was Chuck Kirk saying that the resident’s mother was worthless or a terrible mother, or that the individual would end up just like her mother; this individual’s mother was also a resident of Summer Rays for a short period of time, and Chuck Kirk routinely made this woman cry. (B. Snider aff., ¶ 11). In many instances, Chuck Kirk’s verbal rants had a physical component to them. When yelling, often Chuck Kirk’s face turned bright red, he would get up and yell right in a resident’s face, and he became so animated that spittle would fly out of his mouth and land on the resident. (D. Gross aff., ¶ 26); (J. Hall aff., ¶ 70); (B. Snider aff., ¶ 13); (D. Holder aff., ¶ 14); (A. Holder 13


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

aff., ¶ 16). On some occasions Chuck Kirk has, without ever technically touching a resident, restricted the resident’s freedom of movement in some way so that he could continue yelling at them; on other occasions, Chuck Kirk has used verbal threats of violence. (J. Hall aff., ¶¶ 35, 71); (D. Holder aff., ¶14). While not occurring as often, Chuck Kirk on multiple occasions has thrown objects either at or near Summer Rays residents. Examples include throwing chairs, papers, cans, water bottles, and drinks. (B. Craig aff., ¶ 41); (J. Hall aff., ¶ 72). On one occasion, Chuck Kirk shoved the Rev Café cash register off the counter at a Summer Rays resident; on another occasion, Chuck Kirk threw a plastic cup filled with urine, from a drug test, at a Summer Rays resident. (J. Hall aff., ¶ 72). On another occasion, Chuck Kirk kicked-out a Summer Rays for apparently failing to make his bed; Chuck Kirk was so upset that then he proceeded to throw the individual’s belongings out a window. (J. Hall aff., ¶ 66). E.

Health and Safety Concerns

The Attorney General’s investigation has uncovered numerous issues that implicate the health and safety of Summer Rays residents. These issues fall into two, general categories: (1) the condition of the program houses, and (2) direct actions by Chuck Kirk. Most of the Summer Rays program houses are unlocked at all times. (B. Craig aff., ¶ 22); (J. Hall aff., ¶ 61). Many of the Summer Rays program houses are often overcrowded and have more residents than can be reasonably accommodated. (A. DeLong aff., ¶ 12). As an example, the program house at 1118 Tiffany Drive was used as an overflow house for Summer Rays residents to stay when a bedroom was not immediately available elsewhere. At one point in time, two residents were living/sleeping in the family room of 1118 Tiffany Drive, and three were living/sleeping in a dining room/converted office area. These individuals were apparently 14


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

paying program fees. (B. Craig aff., ¶ 20); (J. Hall aff., ¶¶ 59-60). In another instance, a couple was charged $100 a week each to live in the common area of a basement; they hung up a curtain for privacy and the carpet was often wet because the bathroom upstairs leaked. (B. Snider aff., ¶ 7); (D. Holder aff., ¶ 6). In three of the Summer Rays program houses, residents live and sleep in quasi-renovated garages. Chuck Kirk calls these garages “couples suites.” Program residents have lived in these spaces both prior to and after the renovations. None of the renovations have been done pursuant to code. The renovation work on these properties was completed by Summer Rays residents who worked for Chuck Kirk. In one instance, the Summer Rays resident worked in the very early morning until only 9:00 am because Chuck Kirk instructed him to work in secret. Even after the renovations, the condition of the garages was of questionable habitability. For example, the floors are all painted concrete and the spaces are not properly insulated or ventilated. (A. DeLong aff., ¶ 12); (B. Craig aff., ¶ 19); (J. Hall aff., ¶¶ 55-58); (A. Holder aff., ¶ 4). One of the most egregious examples of housing conditions is the duplex located at 1273/1275 Lancaster Avenue. Numerous Summer Rays residents lived at 1273/1275 Lancaster Ave. for extended periods of time. While certain Summer Rays residents were living there, the duplex never had heat, air conditioning, or running water. Both the electric meter and water meter had been removed from the house. In the winter, residents often used gas powered generators and extension cords to power space heaters. To shower, residents had to go to the public gym down the street.

At various points in time, the duplex lacked electricity, a

refrigerator, and/or a stove. The interior of the duplex was essentially unfinished. One of the bathrooms had a hole in the exterior wall where a window should have been. For several months, a Summer Rays resident slept in the unfinished basement of the duplex, on a box spring 15


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

and mattress on the floor.

There was mold growing in the basement, and the resident was

getting sick often. (B. Craig aff., ¶ 21); (J. Hall aff., ¶¶ 48-50). In late 2016, 1273/1275 Lancaster Avenue was renovated. At the time, the Breaking Point Recovery Center was planning to open a branch in Columbus and wanted a place where individuals receiving treatment could stay. The then-executive director of Breaking Point gave Chuck Kirk a check to pay for renovations to the duplex. A small portion of that payment was used to purchase materials, and Summer Rays residents oversaw the renovation. Between January and May 2017, there were approximately ten males living in one half of the duplex and ten females living in the other. (J. Hall aff., ¶¶ 52-53).1 In November 2017, a Summer Rays resident died of suspected overdose in a program house. (J. Baugess aff., ¶ 27 and Ex. 7). The individual in question had been a Summer Rays resident off and on since 2013 and lived in the program house with his girlfriend and child. (Summer Rays, Inc. v. Joseph W. Testa, Tax Commissioner, Bd. of Tax Appeals Case No. 2015951/1108, Sept. 14, 2016 hearing transcript, at 51, attached hereto as Ex. H (hereinafter “BTA Transcript”)); (J. Baugess aff., ¶ 27 and Ex. 7). According to the police report, a search of the residence revealed numerous Naloxone injectors. The report noted the following regarding the general condition of the house: The condition inside the residence was deplorable and not conducive to the well being of two small children. The restrooms, bedrooms, and common living areas were filthy. … I opened the fridge in the kitchen and the odor was so foul, I had to quickly close it. There were small items that could be choking hazards that were not secure in every room of the house. Electrical outlets were exposed and coming loose from the walls. A fly trap was hanging above the kitchen sink covered in insects. Det. Gammell and I had conducted an interview inside the 1

Media reports indicate that federal and state agencies conducted a raid at Breaking Point’s various facilities in October 2017. See, e.g., http://www.dispatch.com/news/20171018/agentsraid-braking-point-recovery-centers-owners-home (last visited July 3, 2018). 16


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

same home approximately 3 months ago. At that time, there were flying insects congregated in a tornado formation from the ceiling to the floor in the center of the living room. A copy of this report will be forward to Franklin County Children’s Services. (J. Baugess aff., ¶ 27 and Ex. 7). Turning to the direct actions of Chuck Kirk, the Attorney General’s investigation indicates that Chuck Kirk has extremely strong opinions regarding certain medications that are often prescribed for psychiatric and/or addiction issues. When asked by prospective residents, Chuck Kirk routinely represents that Summer Rays will monitor and ensure that all medications are properly taken.

On numerous occasions, however, Chuck Kirk has subsequently told

Summer Rays residents that they would either need to dispose of their medication or leave the program. In at least some instances, Summer Rays residents have involuntarily disposed of or relinquished their prescription medications. (B. Craig aff., ¶¶ 28-29); (J. Hall aff., ¶¶ 85-87); (A. Holder aff., ¶ 26). In addition to interfering with prescription medications, Chuck Kirk has made it known that Summer Rays residents are not to call 911 unless he is contacted first. (A. Holder aff., ¶ 6); (D. Holder aff., ¶ 20).

On numerous occasions, Chuck Kirk directly instructed the house

directors not to call 911 without contacting him first, and that this specifically applied to when residents overdosed. (J. Hall aff., ¶ 107). On one occasion, the house director at 1118 Tiffany Drive found a female resident who had apparently overdosed and was unresponsive; at Chuck Kirk’s direction, the house director carried the woman down to his truck, drove the individual to the emergency room at Mount Carmel East, and then left without providing the hospital any information. (Id., ¶ 108).

17


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Finally, while Chuck Kirk has an aversion to certain prescription medications, there appears to be a distinct drug subculture involving other Summer Rays residents. Specifically, through at least 2017 there was a small group of Summer Rays residents who worked-out together. These residents frequently and openly spoke about the fact that they allegedly were using steroids and that Chuck Kirk also allegedly used steroids.

(A. Holder aff., ¶ 28); (D.

Holder aff., ¶ 33). Additionally, a number of Summer Rays residents were injecting a substance that they indicated was “GHB.” (J. Hall aff., ¶ 83). GHB is a street name of gamma hydroxybutyric acid. Public research indicates that GHB has a long history of use in the body building community. https://thinksteroids.com/articles/ghb-usefulness-for-bodybuilders/ (last visited July 3, 2018). In the United States, GHB is Schedule I controlled substance. According to the Drug Enforcement Administration’s 2017 Resource Guide: GHB and its analogues are abused for their euphoric and calming effects and because some people believe they build muscles and cause weight loss. GHB and its analogues are also misused for their ability to increase libido, suggestibility, passivity, and to cause amnesia (no memory of events while under the influence of the substance) — traits that make users vulnerable to sexual assault and other criminal acts. GHB abuse became popular among teens and young adults at dance clubs and “raves” in the 1990s and gained notoriety as a date rape drug. https://www.dea.gov/pr/multimedia-library/publications/drug_of_abuse.pdf#page=60

(last

visited July 3, 2018). The primary person who used this substance was a Summer Rays resident who lived at 1118 Tiffany Drive. This individual had a mini-refrigerator in which he kept vials of the substance. On multiple occasions, this individual left empty vials and used syringes out for other residents to see. (J. Hall aff., ¶ 83); (B. Craig aff., ¶ 54). This Summer Rays resident died of a 18


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

suspected drug overdose in September 2017. (J. Baugess aff., ¶ 28 and Ex. 8). Both this individual and Chuck Kirk have indicated that Chuck Kirk was the person who paid for the substance. On multiple occasions, a Summer Rays resident observed what appeared to be the illicit delivery of the substance to Rev Café. (J. Hall aff., ¶ 84). F.

Social Environment at Summer Rays

Residents have jokingly described Summer Rays as having a cult-like environment in the sense that everyone lived by Chuck Kirk’s rules and he had to know everything about everyone. (B. Craig aff., ¶ 37). Chuck Kirk’s main office is located at Rev Café, and he is surrounded by Summer Rays residents most days. (D. Holder aff., ¶ 15); (A. Holder aff., ¶ 15); (B. Craig aff., ¶ 62); (J. Hall aff., ¶ 109). In addition, Chuck Kirk routinely socialized with certain subgroup Summer Rays residents in a variety of different settings and contexts—such as taking them out to dinner. At least some of the Summer Rays residents did not view Chuck Kirk’s invitations as voluntarily and feared retaliation if they refused. (B. Craig aff., ¶ 44); (J. Hall aff., ¶¶ 89, 92-93). To give an example of why residents feared retaliation, on one occasion a Summer Rays resident rejected Chuck Kirk’s invitation to attend a bonfire behind one of Summer Rays’ properties in Reynoldsburg. The next night, Chuck Kirk went to the restaurant where this individual worked as a server and falsely told her manager that he had witnessed the server smoking crack in the parking lot. Chuck Kirk then kicked this resident out of Summer Rays. (J. Hall aff., ¶ 94). On multiple occasions in 2016, Chuck Kirk took Summer Rays residents to a well-known nightclub in Columbus. Chuck Kirk often invited newly-arrived residents. (B. Craig aff., ¶ 42); (J. Hall aff., ¶ 91). In one instance, Chuck Kirk told a female resident that she was going because she needed to get looser; Chuck Kirk also critiqued her outfit for the evening by 19


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

indicating it was not sexy enough. (B. Craig aff., ¶ 42). During these excursions, Chuck Kirk typically would drive everyone and pay for everything. (A. Holder aff., ¶ 7). On one occasion, Chuck Kirk gave residents cash to tip the performers at the club. (J. Hall aff., ¶ 90). On at least some occasions, Chuck Kirk has gotten residents to the club under false pretenses. (J. Hall aff., ¶¶ 90-91). In one instance, a newly-arrived Summer Rays resident refused to enter the club once he got there, and another Summer Rays resident had to drive in from Reynoldsburg to pick him up; the first resident left the Summer Rays program that night. (J. Hall aff., ¶ 91). In addition to directly socializing with Summer Rays residents, Chuck Kirk involved himself in the sexual and romantic lives of many Summer Rays residents. (B. Snider aff., ¶ 14). On numerous occasions, Chuck Kirk encouraged or promoted romantic and sexual relationships among Summer Rays residents. (B. Craig aff., ¶ 56); (J. Hall aff., ¶ 75). In at least one instance, Chuck Kirk granted special privileges to a Summer Rays resident when she was spending time with the resident Chuck Kirk was trying to set her up with. (B. Crag aff., ¶ 43). In another instance, Chuck Kirk set a male Summer Rays resident up with another resident whom Chuck Kirk knew primarily identified as a lesbian. (D. Holder aff., ¶ 10). Chuck Kirk also encouraged female Summer Rays residents to get pregnant. (J. Hall aff., ¶ 76); (B. Craig aff., ¶ 56). On other occasions, however, Chuck Kirk actively worked to undermine relationships he did not approve of for whatever reason. (D. Holder aff., ¶ 8); (B. Craig aff., ¶ 45). In public or semi-public settings (e.g., Rev Café or the program houses), Chuck Kirk routinely slapped male and female residents’ behinds, touched (or attempted to touch) male and female residents’ chests or breasts, hugged residents, or initiated physical contact in various ways. (D. Gross aff., ¶ 23); (B. Craig aff., ¶ 50); (D. Holder aff., ¶ 16); (B. Snider aff., ¶ 15).

20


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

These acts were often unwelcome, but many residents feared retaliation if they objected. (J. Hall aff., ¶ 73); (B. Craig aff., ¶¶ 49, 51). Chuck Kirk also routinely flirted with Summer Rays residents or made comments that were sexual in nature. (D. Gross aff., ¶ 23); (A. Holder aff., ¶ 20). Chuck Kirk flirted with one male resident by saying he had pretty blue eyes and that Chuck Kirk liked tall, bald guys. (J. Hall aff., ¶ 73). The same Summer Rays resident witnessed Chuck Kirk grab another resident’s behind and say that he’d “like to get in that.” (J. Hall aff., ¶ 77). In private conversations with at least two different male residents, Chuck Kirk said he thought the residents were gay. (A. Holder aff., ¶ 19); (D. Holder aff., ¶ 9). On one occasion, during a trip to Cedar Point by numerous residents, Chuck Kirk told one of those individuals that he should be sleeping in Chuck Kirk’s bed and not with his girlfriend. (D. Holder aff., ¶ 9). With female Summer Rays residents, Chuck Kirk often made comments about their breasts. (B. Craig aff., ¶ 47). On occasion, Chuck Kirk has said things such as “push your boobs together” or “smile at me with your chest.” (Id., ¶ 51). On one occasion, Chuck Kirk told a female resident that she looked like a person who he knew and would have sex with. (Id., ¶ 48). On another occasion, a Summer Rays resident witnessed Chuck Kirk ask another couple, both of whom were Summer Rays residents, if they wanted to have a threesome with him. (J. Hall aff., ¶ 77). Chuck Kirk pushed some residents to share details about their sexual relationships. On one occasion, Chuck Kirk asked a female Summer Rays resident if her boyfriend was “soft or rough” in bed. (B. Craig aff., ¶ 48).

On a separate occasion, Chuck Kirk asked the resident’s

boyfriend what she was like in bed. (Id.). For this couple, these comments were not an isolated occurrence. (J. Hall aff., ¶ 74).

21


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Chuck Kirk also shared with numerous Summer Rays residents the details of his alleged sexual encounters, many of which involved current or former Summer Rays residents. On one occasion, Chuck Kirk shared the details of a one-time sexual encounter he had with two individuals, both of whom were Summer Rays residents. (D. Gross aff., ¶ 24). On two or three separate occasions, Chuck Kirk bragged to a group of Summer Rays residents that he had engaged in sexual activity with newly-arrived, female Summer Rays residents.

In these

instances, Chuck Kirk called the female residents into his office at Rev Café so that they could confirm what happened. (J. Hall aff., ¶ 78). Chuck Kirk also had a habit of bragging to another Summer Rays resident regarding his (Chuck Kirk’s) sexual experiences, including multiple experiences with other Summer Rays residents. (D. Holder aff., ¶ 15). On one occasion, this resident accompanied Chuck Kirk to a house in Hilliard; both he and Chuck Kirk had separate, one-night sexual encounters with two female housemates who were former Summer Rays residents. (Id., ¶ 11). Finally, it was common knowledge among many Summer Rays residents that Chuck Kirk was involved in a long-term romantic and sexual relationship with another Summer Rays resident. (D. Gross aff., ¶ 25); (J. Hall aff., ¶¶ 79-80); (B. Craig aff., ¶ 52); (D. Holder aff., ¶ 31); (A. Holder aff., ¶ 27). Both Chuck Kirk and the Summer Rays resident in question discussed their relationship with other residents. (B. Craig aff., ¶ 52); (J. Hall aff., ¶ 79); (B. Snider aff., ¶¶ 23-24). For a period of time, the Summer Rays resident technically resided at 1118 Tiffany Drive. Most nights, however, he did not stay at Tiffany Drive; it was generally understood that he was stayed with Chuck Kirk at one of Chuck Kirk’s personal properties. (B. Craig aff., ¶ 53); (J. Hall aff., ¶ 81); (B. Snider aff., ¶ 24); (D. Holder aff., ¶ 32).

22


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Over the years, this Summer Rays resident was in and out of the program numerous times and often received special treatment from Chuck Kirk. (D. Gross aff., ¶ 25); (J. Hall aff., ¶ 80); (D. Holder aff., ¶31); (A. Holder aff., ¶ 27). In 2017, this individual was driving a Mercedes that he said Chuck Kirk gave him.

(B. Craig aff., ¶ 55); (A. Holder aff., ¶27).

Chuck Kirk

financially supported this individual in various other ways, including taking him on vacation. (J. Hall aff., ¶ 80); (B. Snider aff., ¶ 25). This was also the individual who died of a drug overdose in September 2017. See p. 19, supra. G.

Financial Exploitation

The Attorney General’s investigation reveals that Summer Rays residents have been financially exploited in various ways. 1. Zoom Property Advisers and Summer Rays’ construction and maintenance workers Summer Rays, under the d/b/a “Zoom Property Advisers,” was previously awarded a contract and did a significant amount of maintenance and facility work for Reynoldsburg City Schools. (J. Hall aff., ¶ 17); (J. Baugess aff., ¶ 29 and Ex. 9); (Affidavit of Courtney Beckett, ¶ 5, attached hereto as Ex. I).

Between June 2013 and January 2015, Summer Rays earned

$526,729.55 from this contract. (J. Baugess aff., ¶ 29); (C. Beckett aff., ¶ 6). All of the work under the contract with Reynoldsburg City Schools was performed by a group of five or six Summer Rays residents. (J. Hall aff., ¶ 17). On several occasions, Chuck Kirk told these Summer Rays residents that they would start receiving regular paychecks, but this never occurred. (J. Hall aff., ¶ 18). The Summer Rays residents that were working on the Reynoldsburg City Schools project were also many of the same individuals that lived at the duplex at 1273/1275 Lancaster Avenue—the abandoned house described above. 23

See p. 15,


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

supra. One of the individuals that worked on the Reynoldsburg City Schools project and lived at 1273/1275 Lancaster Avenue was also the individual referenced above who died of a suspected overdose in November 2017. See p. 16, supra. One of the individuals who worked on the Reynoldsburg City School project was not paid anything. When this person arrived at Summer Rays he had no money, no friends or family members to turn to for help, and was one step from being homeless. Chuck Kirk immediately put this person to work doing maintenance at the Summer Rays properties. (J. Hall aff., ¶¶ 1415). After a few months, this individual started working on the Reynoldsburg City Schools project and regularly worked seven days and/or 70-plus hours a week for several months. (J. Hall aff., ¶ 17). During all of this period, the individual received no monetary compensation of any type; he had a free place to stay and did not have to pay program fees. (J. Hall aff., ¶ 19). The way the resident typically managed to eat was that Chuck Kirk would give Speedway gift cards to the “foreman” on the project twice a week—$100 on Monday and $200 on Wednesday. (J. Hall aff., ¶ 20); (C. Beckett aff., ¶ 7). The foreman used these gift cards, in part, to buy food for the Summer Rays residents working for him. The resident in question lost 45 pounds during this initial six-month period. (J. Hall aff., ¶ 20). After around six months, the same resident moved on to other responsibilities within Summer Rays. As will be discussed in more detail below, one of this individual’s primary responsibilities was to serve as a type personal contractor/laborer for Chuck Kirk and his family. This resident also handled a variety of maintenance and renovation projects for Summer Rays. (J. Hall aff., ¶¶ 21, 32, 37, 38). For most of this period of time, Chuck Kirk paid this individual either $50 or $100 a week under the table in cash. (Id., ¶¶ 21, 43). Other times, the resident was not paid anything and was able to eat because he had a food assistance card from Job and Family 24


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Services. (Id., ¶ 32). Chuck Kirk also made this individual’s child support payments for a few months and acquired vehicles for this individual, as it was necessary for the work he did. (Id., ¶¶ 43, 102-03). This individual never completed a timesheet and never received a 1099 or W-2. (Id., ¶¶ 33, 44). This Summer Rays resident was also victimized in numerous, other ways. During his time at Summer Rays, this resident was forced to move approximately fifteen to sixteen times. Because he did not pay program fees out-of-pocket, Chuck Kirk told him he was less valuable than those who could, and the resident was often forced to move out of nicer program homes when a new resident entered the program. This typically resulted in him moving back to the duplex at 1273/1275 Lancaster Avenue. (J. Hall aff., ¶ 51). The resident also routinely worked more than 60 hours a week, was not entitled to any set days off, and was essentially on call all the time. (Id., ¶¶ 24, 28, 34, 45). On the few occasions this resident either expressed a desire to get an outside job or tried to improve his working conditions, Chuck Kirk always responded hostilely; on one occasion, the resident was told to go fuck himself and that he could leave; on another occasion, the resident was told that if he could not handle the work he should go back to the Salvation Army. (Id., ¶¶ 46, 64). 2. Rev Café, Zoom Direct, Zoom Staffing, and the “payment” of Summer Rays residents As indicated above, RRC owns and operates Rev Café as a restaurant and catering service. The individuals that run and work at Rev Café on a daily basis are all Summer Rays residents. (A. Holder aff., ¶ 13); (J. Hall aff., ¶ 115); (B. Craig aff., ¶ 62). Some of the residents that worked at Rev Café were paid between $50 and $100 a week in cash, typically for a 36-hour work week. (D. Holder aff., ¶ 21). At least one Summer Rays resident, however, routinely 25


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

worked 36-hours per week for a pack of cigarettes a day and free food. The same resident was also on-call during his days off and feared he would be kicked-out of Summer Rays if he refused to work when requested. (A. Holder aff., ¶¶ 13-14). Summer Rays also operates (or for a period of time, operated) a d/b/a known as “Zoom Direct.” (C. Beckett aff., ¶¶ 5, 8). The primary activity of Zoom Direct consists of delivering computer parts that were warehoused in a United Parcel Service’s facility in Westerville; the delivery drivers for Zoom Direct are Summer Rays residents, and they are paid $10 per-run (J. Hall aff., ¶ 110); (BTA Transcript at 72-75 (testimony of C. Kirk)). Between January 1, 2013 and December 31, 2015, $233,956.30 was deposited into the Zoom Direct bank account. Of that amount, $197,534.85 came from UPS. (C. Beckett aff., ¶ 8). Another d/b/a operated by Summer Rays is “Zoom Staffing.” (C. Beckett aff., ¶¶ 5, 9). Based solely on the financial records obtained and reviewed by the Attorney General during the pre-suit investigation, there was not as much financial activity in the Zoom Staffing account as some of the other Summer Rays d/b/a accounts. The Attorney General believes, however, that Zoom Staffing has grown in importance since early 2017. Zoom Staffing is presented to the public as a type of staffing agency. Over the years, Summer Rays has developed relationships with local businesses—fast food franchisees, amusement operators, businesses needing temporary laborers, etc. Residents needing a job can get placed with an outside employer by going through Zoom Staffing. The director of Zoom Staffing—similar to the director or manager of Rev Café—is another Summer Rays resident. (J. Hall aff., ¶ 111); (A. Holder aff., ¶¶ 21-22). Residents that get a job through Zoom Staffing are told by Summer Rays that they will be making $8.00 per hour. Summer Rays does not disclose to residents how much the job actually pays per hour. Summer Rays residents are not allowed to 26


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

accept paychecks directly from their employer. Instead, the employer either sends the paycheck directly to Summer Rays, or the resident is given a check in a sealed envelope and is required to turn the envelope in to Summer Rays. Whatever amount the employers pays above $8.00 per hour, Summer Rays keeps. (J. Hall aff., ¶ 112); (A. Holder aff., ¶ 25). Chuck Kirk has pressured some Summer Rays residents to work for him either at Rev Café or through Zoom Staffing. Residents that have gotten outside jobs through other means have kept that information secret for fear of being kicked-out of Summer Rays by Chuck Kirk. (D. Holder aff., ¶ 27); (B. Snider aff., ¶ 18). Residents that have gotten outside jobs through other means and told Chuck Kirk have, in fact, been subject to retaliation. (A. Holder aff., ¶ 24). Residents that work for Summer Rays in some way—either directly, at Rev Café, through Zoom Staffing, etc.—are always paid on Friday. Individuals typically line up outside Chuck Kirk’s office at Rev Café in the afternoon or early evening. Before a resident is paid, any past due program fees, plus the resident’s program fees for the next week, are deducted. The resident is then paid any remaining wages, in cash. (J. Hall aff., ¶¶ 112-13); (B. Craig aff., ¶ 17); (A. Holder aff., ¶ 23); (D. Holder aff., ¶¶ 22, 24). Even in this process, some individuals were discriminated against. Because they were not affirmatively bringing money into the Summer Rays program, individuals that worked directly for Chuck Kirk and/or Summer Rays doing maintenance and construction typically were the last to be paid. Chuck Kirk often would run out of cash on Fridays, and these residents would not be paid until several days later. (J. Hall aff., ¶ 113); (B. Craig aff., ¶ 17). The Attorney General does not believe that any official time or pay records have ever been kept or that W-2 or 1099 forms were issued to the vast majority of these individuals. (A. Holder aff., ¶ 25); (J. Hall aff., ¶¶ 33, 44). At least one Summer Rays resident has indicated that, 27


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

while he never received a copy of his 1099 or W-2 form, one may exist. On one occasion, he and another resident attempted to locate their tax forms. In a storage area in Rev Café, they found financial records, including what appeared to be their 1099 forms. The residents did not take these forms and did not confront Chuck Kirk about what they had found for fear of retaliation. (D. Holder aff., ¶ 25). 3. Program fees, automobile transactions, and Zoom Tax Advisors Most Summer Rays residents are required to prepay two weeks of program fees before they are allowed into the “program.” (B. Craig aff., ¶ 28); (J. Hall aff., ¶ 15). In light of the preceding discussion, it is perhaps no surprise that numerous residents have voluntarily left Summer Rays after only a few hours or few days. When this has occurred, individuals or their family members have often requested a refund of program fees. Chuck Kirk has routinely denied these requests and has given the excuse that these payments were “donations” to Summer Rays. (J. Hall aff., ¶ 88). In addition to paying program fees, numerous Summer Rays residents have used Chuck Kirk as a financial intermediary in purchasing automobiles. (J. Hall aff., ¶ 95); (B. Craig aff., ¶ 57). The way the process often worked was that, if a resident expressed an interest in buying a car, he or she would be directed to pick out of car, preferably for around $3,000 or less, at Remak Auto Sales in Pataskala, Ohio; Chuck Kirk then paid for the vehicle either using cash or a check. (J. Hall aff., ¶¶ 96; 103); (D. Holder aff., ¶ 28); (C. Beckett aff., ¶ 10).2 Residents were then required to make payments, in cash, directly to Chuck Kirk. (J. Hall aff., ¶ 98); (B. Craig aff., ¶ 61); (D. Holder aff., ¶ 28). These transactions were not governed by any type of written 2

It appears that Remak was under investigation as of 2017 and is now closed. See http://abc6onyourside.com/on-your-side/car-dealer-under-investigation-after-customers-carswere-repossessed (last visited July 3, 2018). 28


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

contract. While it appears that Chuck Kirk kept some type of documentation to track payments made and owed, Summer Rays residents were never given any type of documentation that would explain or identify the transaction. (B. Craig aff., ¶ 61). These vehicles were always titled in the residents’ name. (J. Hall aff., ¶¶ 97, 102); (B. Craig aff., ¶ 58). In order to ensure that residents made their required payments, Chuck Kirk often kept the certificate of title and a separate set of car keys; Chuck Kirk would relinquish both when the vehicle was paid off. (J. Hall aff., ¶¶ 97-98, 104); (B. Craig aff., ¶¶ 58-59). On at least one occasion, Chuck Kirk kicked-out a Summer Rays resident who refused to relinquish physical possession of the certificate of title. (J. Hall aff., ¶ 99). On another occasion, Chuck Kirk threatened to kick-out a Summer Rays resident to prevent him from gifting his own vehicle to a friend and fellow resident. (J. Hall aff., ¶ 104). On numerous occasions, residents have simply abandoned vehicles they technically owned when they left Summer Rays. (J. Hall aff., ¶¶ 99, 104); (B. Craig aff., ¶ 58).

On numerous other occasions, Chuck Kirk has functionally

repossessed vehicles. (J. Hall aff., ¶ 99). In most instances, Chuck Kirk sent other Summer Rays residents to take possession and control of the vehicle for him. (J. Hall aff., ¶ 100); (B. Craig aff., ¶ 57). Chuck Kirk’s sister and co-Defendant, Tammy Gollihue, is a notary public. At least one Summer Rays resident has witnessed numerous instances of Chuck Kirk transferring title of a vehicle from one Summer Rays resident to another by signing the old owner’s name, signing Tammy Gollihue’s name, and then notarizing the transaction using Tammy Gollihue’s notary stamp. (J. Hall aff., ¶ 101). On numerous occasions, Chuck Kirk has functionally sold the same vehicle more than once, or sold a vehicle at a mark-up of more than 200%. (J. Hall aff., ¶¶ 98, 101, 104); (B. Craig aff., ¶¶ 58, 60). Other Summer Rays residents witnessed Chuck Kirk 29


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

notarize documents under Tammy Gollihue’s name and using her notary stamp. (B. Snider aff., ¶ 26); (D. Holder aff., ¶ 34). Finally, Summer Rays has operated a d/b/a known as “Zoom Tax Advisers” for a number of years. Zoom Tax Advisers is the name Chuck Kirk has given to his side business of preparing income taxes. According to his sworn testimony in a prior proceeding, the goal of Zoom Tax Advisers is two-fold. First, Chuck Kirk prepares income tax returns for Summer Rays residents free of charge. Second, Chuck Kirk has a number of private, paying clients, and his goal is to raise $50,000 per year which is then used to fund Summer Rays’ operations. (BTA Transcript, at 65-71). The pre-suit investigation by the Attorney General, however, reveals activity that is highly questionable.

Between January 1, 2013 and December 31, 2015, $143,467.11 was

deposited into the Zoom Tax Advisers bank account. (C. Beckett aff., ¶ 11). The financial analysis performed by the Attorney General’s Office shows that the amount of deposits corresponding to fees earned by Chuck Kirk for tax preparation services was less than $7,500. (Id.). Rather, the vast majority of deposits into the Zoom Tax Advisers bank account during this period of time—or $132,100.05—were direct deposits of what appear to be federal income tax refunds. (Id.). On multiple occasions, Chuck Kirk failed to give Summer Rays residents a copy of their own tax returns. (J. Hall aff., ¶ 114); (D. Holder aff., ¶ 26). On one occasion, and at Chuck Kirk’s insistence, a Summer Rays resident listed a laptop that she had received as a gift in a prior year as an education expense on her tax return. When she expressed concern over this, Chuck Kirk told her that, if it ever became necessary, he could procure a fake receipt for the laptop. (B. Snider aff., ¶ 20).

30


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

H.

Marsha Kirk’s Side Businesses and Prior Testimony

Marsha Kirk has operated a cleaning service that specializes in cleaning single-family homes. From 2013 through 2015, Marsha Kirk had at least eighteen separate clients. The individuals that actually cleaned the homes were female Summer Rays residents. (M. Kirk EUO Tr., at 62-117). Marsha Kirk has claimed that her cleaning business was somehow connected to Summer Rays. (M. Kirk EUO Tr., at 62-117). The Attorney General’s investigation, however, indicates that almost no money from any type of cleaning service ever made it to Summer Rays. (J. Baugess aff., ¶ 30 and Ex. 18-19); (C. Beckett aff., ¶ 12). Rather, the checks from the eighteen cleaning clients that the Attorney General has been able to identify were all made payable to Marsha Kirk personally and deposited into Marsha Kirk’s personal account. (M. Kirk EUO Tr., at 62-117); (C. Beckett aff., ¶ 13). Between December 5, 2012 and January 5, 2016, these eighteen clients paid Marsha Kirk a total of $57,816.56 for cleaning services. (C. Beckett aff., ¶ 13). When initially asked about the cleaning business during her pre-suit examination under oath, Marsha Kirk testified that the business lasted “[m]aybe 10 months at the most” and that it “just didn’t work out the way we thought.” (M. Kirk EUO, at 13, 60). Unlike the residents working for Chuck Kirk, it appears that at least some of the residents who cleaned houses for Marsha Kirk received a 1099 form. However, the Attorney General does not believe that any records exist that would indicate how much these residents worked or how they were paid. Marsha Kirk’s typically represents that her primary occupation the last several years has been as a personal trainer. (M. Kirk. EUO Tr., at 9, 12). Summer Rays operates a fitness studio out of 7480 East Main Street, Reynoldsburg, under the d/b/a “Rev Studio.” See Summer Rays, 31


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Inc. v. Testa, Tenth Dist. No. 17AP-32,-34, 2017-Ohio-7901, ¶ 2 (Sept. 28, 2017). At the Board of Tax Appeals hearing, Marsha Kirk testified that she essentially runs Rev Studio by herself and that she has two types of clients: (1) Summer Rays residents that are not required to pay anything out-of-pocket; and (2) private clients that pay Summer Rays for her services (or allegedly make a suggested “donation”). (BTA Tr., at 34-35, 41-43). Marsha Kirk has testified on two separate occasions that any money generated through her personal training clients is paid directly to Summer Rays, which then pays her. (BTA Tr., at 48); (M. Kirk EUO Tr., at 29-30, 39-45). Summer Rays reported to the IRS that Rev Studio generated $14,159 in income in 2015 and $9,787 in income in 2016. (J. Baugess aff., ¶¶ 30-31 and Exs. 19-20). Again, the Attorney General’s pre-suit review of bank records reveals something different. Between December 10, 2012 and December 31, 2015, $88,334.04 was debited or disbursed from the Revolve Studio bank account. Of that amount, all but $745 went somewhere other than Summer Rays’ main operating account.

(C. Beckett aff., ¶ 14).

Between

January 2015 and August 2017, personal training clients issued 74 checks, totaling $8,551, to Marsh Kirk personally, which were deposited into Marsha Kirk’s personal bank account. (C. Beckett aff., ¶ 15). I.

Additional Examples of Misuse of Charitable Assets and/or Financial Exploitation 1. 6790 Tanya Terrace, Reynoldsburg, Ohio 43068

In August 2005, Chuck Kirk and Marsha Kirk purchased the single-family home located at 6790 Tanya Terrace, Reynoldsburg, Ohio 43068. On or about January 29, 2010, the property was transferred to Summer Rays. On or about June 24, 2014, Summer Rays “sold” the property to Jacquelyn Kirk, Jenna Kirk, and Juliette Kirk for $15,081. According to the Franklin County 32


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Auditor’s website, the 2014 “current market value” of the property was $189,800, and the 2017 “current market value” of the property was $271,400. (J. Baugess aff., ¶ 32 and Ex. 21). Marsha Kirk has continuously lived at 6790 Tanya Terrace with her children, and for certain periods of time with Chuck Kirk, since the property was first purchased. (M. Kirk EUO Tr., at 10, 163). Defendant Heartland Bank has issued two separate loans to Chuck Kirk that are, or at least were, secured by mortgages on 6790 Tanya Terrace. The first loan, Heartland Bank account x76100, has an origination date of August 19, 2005, and the original, principal amount of the loan was $138,000. (C. Beckett aff., ¶ 16). The second loan, Heartland Bank account x1130, has an origination date of May 5, 2016, and the original, principal amount of the loan was $58,000. (Id.). Both before and after the putative sale of the property in 2014, the charitable funds of Summer Rays were used to make the mortgage payments on 6790 Tanya Terrace. Between January 2013 and December 2015, the following payments were made out of the Zoom Direct bank account: 34 payments, totaling $37,717.92, towards loan x76100; and one payment of $711.71 towards loan x1130. (C. Beckett aff., ¶ 17). Between January 2013 and December 2015, the following payments were made out of the Revolve Studio bank account: one payment of $1,109.35 towards loan x76100; and 35 payments, totaling $24,909.85, towards loan x1130. (C. Beckett aff., ¶ 18). 2. 5649 Boyd Road, Grove City, Ohio 43123 Marlene Brown, also known as Marlene Kirk, purchased the single-family home located at 5649 Boyd Road, Grove City, Ohio 43123 in August, 2010. Marlene Kirk was Chuck Kirk’s mother. (J. Baugess aff., ¶ 33 and Ex. 47). In December 2012, Marlene Kirk transferred the property to Summer Rays. (Id.). The Attorney General believes that Marlene Kirk resided at 33


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

5469 Boyd Road through at least September 2012. Marlene Kirk purchased 5649 Boyd Road pursuant to a loan that was issued to her by Heartland Bank and secured by a mortgage. (C. Beckett aff., ¶ 19). Between December 2011 and December 2012—or while Marlene Kirk still owned the property—eleven payments, totaling $11,230.12, were made from Summer Rays main operating account on this loan. (C. Beckett aff., ¶ 20). Between January 2013 and December 2015, thirty-two payments, totaling $32,669.44, were made from Summer Rays main operating account on this loan. (C. Beckett aff., ¶ 20). At some point in time, 5649 Boyd Road became a Summer Rays program house. (J. Baugess aff., ¶ 34). In May 2016, Summer Rays sold 5649 Boyd Road to a Summer Rays resident; the identified sales price was $145,000. (J. Baugess aff., ¶ 34 and Ex. 48). However, at least some of the “program fees” and/or sale proceeds from 5649 Boyd Road were diverted to Defendant Tammy Gollihue’s personal bank account. Specifically, ten payments relating to 5649 Boyd Road—three from Summer Rays, seven from the individual resident, totaling $30,140—were deposited into Tammy Gollihue’s personal bank account between June 2015 and May 2016. (C. Beckett aff., ¶¶ 21-23 and Exs. 25-28). 3. College housing for Jacquelyn Kirk and Jenna Kirk Jacquelyn Kirk graduated from high school in June 2013. She was continuously enrolled at Kent State University from the fall of 2013 through the spring of 2017 when she graduated. (J. Kirk EUO, at 7-9). On or about April 25, 2014, Summer Rays purchased the single-family home located 408 Park Ave., Kent, Ohio 44240. (J. Baugess aff., ¶ 35 and Ex. 49). The charitable funds of Summer Rays were used to make a $44,000 down payment on 408 Park Ave. (C. Beckett aff., ¶ 24). In 2015, Summer Rays made eleven separate payments, each in the amount of $1,000, towards the purchase of 408 Park Ave. (J. Baugess aff., ¶ 35 and Ex. 49); 34


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

(C. Beckett aff., ¶ 25). Jacquelyn Kirk resided at 408 Park Ave. during her sophomore, junior, and senior years at Kent State—or the fall of 2014 through May 2017. (J. Kirk EUO, at 79). Before Jacquelyn Kirk moved in, 408 Park Ave. was renovated by Summer Rays residents. (J. Kirk EUO, at 81-82). Prior to beginning any renovations, a group of Summer Rays residents traveled to Kent with Chuck Kirk. The purpose of this trip was for Jacquelyn Kirk to specify the renovations and work she wanted done to the house. During this weekend, Jacquelyn Kirk went through the house room by room and specified exactly what she wanted done—paint colors, types of countertops, redoing the bathroom, etc. The Summer Rays residents were given the impression that Jacquelyn Kirk was the client and their ultimate job was to make her happy. (J. Hall aff., ¶ 27). Throughout the late summer of 2014, the same crew of Summer Rays residents returned to Kent numerous times to complete the renovation work. Typically, the residents would drive from Reynoldsburg to Kent on Friday night, work all day Saturday and Sunday, and return to Summer Rays on Monday morning. (J. Hall aff., ¶ 28); (C. Beckett aff., ¶ 26). During these trips, Chuck Kirk paid for the hotel rooms and food for everyone. However, most residents were not paid for doing this extra work over the weekends and basically were obligated to go and work. (J. Hall aff., ¶ 30). Some of the renovations that were done at 408 Park Avenue included: (a) gutting and remodeling the master bathroom; (b) repainting the interior walls; (c) raising the height of the interior door frames; (d) installing new hardwood, ceramic tile, and carpet throughout the entire house; (e) installing new trim; (f) redoing the deck outside; (g) gutting and redoing the kitchen; (h) removing portions of walls to create an open concept between the living room and kitchen; and (i) converting the open basement into three bedrooms and a bathroom. (J. Hall aff., ¶ 29). It 35


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

does not appear as if these renovations—specifically, the renovation of the basement—was done pursuant to code. (J. Hall aff., ¶ 29); (J. Baugess aff., ¶ 35 and Ex. 49). At least one Summer Rays resident returned to 408 Park Ave. on multiple occasions to take care of more minor projects. (J. Hall aff., ¶ 31). Defendants have claimed that 408 Park Ave. was a Summer Rays program house and/or was somehow affiliated with the Kent State “Young Life” program.3 (See C. Beckett aff., ¶ 27). Jacquelyn Kirk was not required to pay rent or program fees when she lived at 408 Park Ave; the other individuals who lived at 408 Park Ave. paid $550 a month. (J. Baugess aff., ¶ 36). In actuality, 408 Park Ave. was not a program house and the individuals that lived there were not Summer Rays residents or program participants. All of the individuals who lived at 408 Park Ave. were personal friends of Jacquelyn Kirk; three out of the four roommates were in the same sorority as Jacquelyn Kirk. (J. Kirk EUO, at 82-83). The Attorney General believes that Jacquelyn Kirk was involved in the Kent State Young Life program during her freshman year. However, Jacquelyn Kirk never held a leadership position with Young Life and had no involvement with the program in calendar years 2015, 2016, or 2017—i.e., most of the time she was living at 408 Park Ave. (J. Kirk EUO, at 86); (J. Baugess aff., ¶ 37). Further, 408 Park Ave. was not a sober living or recovery house, and none the residents were dealing with substance abuse issues. (J. Kirk EUO, at 86). In June 2016, Summer Rays purchased the single-family home located at 2782 E. Livingston Ave., Columbus, Ohio 43209, which is approximately 1.2 miles from Capital University. (J. Baugess aff., ¶¶ 20, 38 and Ex. 37). Jenna Kirk began attending Capital 3

Young Life is a nationwide, nonprofit Christian organization based in Colorado Springs, Colorado, that offers youth programming in a variety of contexts. See https://www.younglife.org/ (last visited July 3, 2018). 36


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

University in the fall of 2016. (J. Baugess aff., ¶ 39).

Similar to 408 Park Avenue, 2782 E.

Livingston Avenue also underwent an extensive renovation. Jenna Kirk was the person who decided which items in the house stayed and which items were to be renovated or replaced. All of the design choices were made to Jenna Kirk’s specification and took over a month to complete. (J. Hall aff., ¶ 41). Through 2016 and at least a portion of 2017, Jenna Kirk resided at 2782 E. Livingston Ave. with her boyfriend. (J. Hall aff., ¶ 42). In her examination under oath, Marsha Kirk was unable to identify any instance of 2782 E. Livingston Ave. actually being used in support of Summer Rays’ charitable programming. (M. Kirk EUO Tr., at 155-56). 4. Renovation of Tammy Gollilue’s personal residence Tammy Gollihue owns the single-family home located at 6338 Beaver Lake Drive, Grove City, Ohio 43123. (J. Baugess aff., ¶ 40). In 2014, 6338 Beaver Lake Drive underwent an extensive renovation. (J. Baugess aff., ¶ 40); (J. Hall aff., ¶ 22). Most of the interior renovation work was done by Summer Rays residents and took approximately five months to complete. (J. Hall aff., ¶ 22). It also appears as if over $7,800 in Summer Rays’ charitable funds were used to partially pay for the renovation. (C. Beckett aff., ¶ 28) 5. Use of Cash The Attorney General’s pre-suit investigation indicates that most Summer Rays residents pay their weekly program fees in cash. (J. Hall aff., ¶ 12); (B. Craig aff., ¶¶ 15-16); (D. Holder aff., ¶ 23). The pre-suit investigation further reveals unusual and excessive cash deposits into the personal bank accounts of various defendants: Cash Deposits into Chuck Kirk’s Personal Bank Account, x7016 Year Number of Deposits Total 2015 41 $9,705.00 2016 72 $10,765.00 2017 (through July 25) 64 $7,671.00 37


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Cash Deposits into Marsha Kirk’s Personal Bank Account, x3440 Year Number of Deposits Total 2013 90 $10,504 2014 90 $8,261 2015 65 $4,650.15 2016 76 $5,452.00 2017 (through August 5) 34 $2,517.00 Cash Deposits into Jacquelyn Kirk’s Personal Bank Account, x6021 Year Number of Deposits Total 2014 33 $5,528.00 2015 40 $5,631.00 2016 33 $3,839.00 2017 (through August 7) 23 $3,267.00

Year 2012 2013 2014 2015

Cash Deposits into Deborah Garrison’s Personal Bank Account, x2711 Number of Deposits Total 15 $8,930.00 17 $8,000.00 25 $8,716.00 79 $25,035.00

(C. Beckett aff., ¶ 29 ). In addition to this activity, between January 1, 2012 and January 31, 2016, $8,678 in cash was deposited into a second bank account owned by Deborah Garrison. (C. Beckett aff., ¶ 30). Between January 1, 2013 and December 15, 2015, $10,720 in cash was deposited into a third bank account owned by Deborah Garrison. (C. Beckett aff., ¶ 31). Between July 10, 2015 and May 15, 2017, $2,550 in cash was deposited into one of Jenna Kirk’s personal bank accounts. (C. Beckett aff., ¶ 32). In addition to cash deposits, on February 6, 2017 and on August 14, 2017, cash payments of $2,966 and $1,763, respectively, were made to Capital University on Jenna Kirk’s behalf. (J. Baugess aff., ¶ 41). In 2015 alone, twenty separate cash deposits,

38


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

totaling $4,584, were made into one of Tammy Gollihue’s personal bank accounts. (C. Beckett aff., ¶¶ 5, 33). J.

Common Scheme and Co-Mingling of Funds

In addition to the examples noted above, the Attorney General’s pre-suit investigation has uncovered further evidence of a common scheme and co-mingling of funds. The following is only a partial recitation of the Attorney General’s findings. Neither Chuck Kirk nor Marsha Kirk are authorized users or signatories for any of the various bank accounts owned by Summer Rays or RRC; Deborah Garrison is the sole authorized signer for all Summer Rays accounts and Jacquelyn Kirk is the sole authorized signer for all RRC accounts (C. Beckett aff., ¶ 5). In their examinations under oath, however, Marsha Kirk and Jacquelyn Kirk each testified that Marsha Kirk and Chuck Kirk both have (or, in the case of Marsha Kirk, had) access to these accounts and that Chuck Kirk functionally controls them. (Marsha Kirk EUO Tr., at 174-76); (J. Kirk EUO Tr., at 35-38, 48-54). At least one Summer Rays resident witnessed Chuck Kirk signing Deborah Garrison’s or Jacquelyn Kirk’s name on checks on almost a daily basis. (D. Holder aff. ¶ 35). During her examination under oath, Jacquelyn Kirk also initially testified that she had personally signed checks issued by RRC in September, October, November, and December of 2015. Jacquelyn Kirk, however, was out of the country studying abroad during these months; when confronted with this information, Jacquelyn Kirk revised her testimony to indicate that she did not sign all of the checks in question and may not have signed any of them. (J. Kirk EUO Tr., at 40-44). Later in the examination under oath, Jacquelyn Kirk testified that Marsha Kirk, Chuck Kirk, and Deborah Garrison would all sign her name on checks, and that it was difficult to tell when she had personally signed a check versus when someone had signed for her. (Id., at 39


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

68-70). Chuck Kirk and Marsha Kirk also deposited money into Jacquelyn Kirk’s personal bank account. (Id., at 88). The Attorney General’s pre-suit investigation further shows that RRC, Summer Rays, and various other defendants kept extremely low account balances relatively to the level of activity. Examples include: 

Between December 10, 2012 and December 31, 2015, $1,715,278.11 was deposited or credited into Summer Rays’ main operating account. However, the highest ending balance on any monthly account statement was $5,733.65. On twenty-six occasions, the monthly account statement reflected a balance of less than $1,000. (C. Beckett aff., ¶ 34 and Ex. 10).

Between December 10, 2012 and December 31, 2015, $88,332.11 was deposited or credited into the Revolve Studio bank account. The highest ending balance on any monthly account statement was $622.27.

On thirty-four occasions, the monthly

account statement reflected a balance of less than $100. (C. Beckett aff., ¶ 35 and Ex. 11). 

Between July 17, 2014 and October 31, 2016, $282,662.44 was deposited or credited into the Rev Café account. On one occasion, the ending balance on a monthly account statement was $7,040.34. Every other account statement reflected an ending balance of $500 or less. (C. Beckett aff., ¶ 36 and Ex. 12).

Between December 5, 2012 and August 4, 2017, $76,787.10 was deposited or credited into Marsha Kirk’s personal account. The highest ending balance on any monthly account statement was $457.05.

40

On forty-one occasions, the monthly


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

account statement reflected a balance of less than $100. (C. Beckett aff., ¶ 37 and Ex. 13). 

Between June 5, 2014 and July 25, 2017, $43,238.17 was deposited or credited into Chuck Kirk’s personal account. (It does not appear as if Chuck Kirk had a personal account in the several years prior to 2014.) The highest ending balance on any monthly account statement was $665.08.

On thirty-four occasions, the monthly

account statement reflected a balance of less than $100. (C. Beckett aff., ¶ 38 and Ex. 14). The Attorney General’s pre-suit investigation reveals particularly unusual activity as it relates to the bank accounts of Deborah Garrison. In the four-year span from January 11, 2012 through January 12, 2016, $833,268.93 was deposited into Huntington National Bank account x2711, which is a personal account shared by Deborah Garrison and her husband. (C. Beckett aff., ¶¶ 5, 39). Of this total amount, $144,296.50 was checks written from Summer Rays’ main operating account; $55,747.68 was checks written from the Rev Café account; and $28,411.78 was direct deposits from “Huntington BP Merch Pmt.” (C. Beckett aff., ¶ 39). As to the latter, it appears that Huntington Merchant Services is a program that is designed to give merchants the ability to accept point of sale payments in the form of credit card, debit card, and check. See https://www.huntingtonmerchants.com/in-store/payment-types/ (last visited July 3, 2018). During this same period of time, a total of $144,738.00 in checks was written from account x2711 back to Summer Rays and $30,942.08 in checks was written back to Rev Café. (C. Beckett aff., ¶ 40). Account x2711 also demonstrated extreme variance in terms of inflows and outflows for what is supposed to be a personal bank account. For example, for the account

41


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

statement period ending December 14, 2015, there were credits into the account of $105,194.10 and debits out of the account of $105,102.97. (C. Beckett aff., ¶ 41 and Ex. 15). Between January 1, 2013 and December 15, 2015, $68,579.91 was deposited into Cooper State Bank account x0273, which is owned by Deborah Garrison.4 Of this total, at least $9,806 was checks written from Summer Rays’ main operating account, and $3,655.91 was checks written from the Rev Café account. (C. Beckett aff., ¶ 42). During this same period of time, a total of $21,305.00 in checks was written from account x0273 back to Summer Rays and $9,648.00 in checks was written back to Rev Café. (C. Beckett aff., ¶ 43). For all of 2013, account x0273 had no activity and maintained an ending account statement balance of less than $50. Yet for the 3-day period ending November 30, 2015, there were credits of $25,839.00 into account x0273 and debits of $27,396.63 out of account x0273. (C. Beckett aff., ¶ 44 and Ex. 16). Finally, the Attorney General’s pre-suit investigation has uncovered numerous examples of checks written either to or from Summer Rays residents being deposited into the personal bank accounts of various individual defendants, including: 

Deposits into Jacquelyn Kirk’s personal bank account, x6021: (a) check from Wallstone, LLC (one of the employers used by Zoom Staffing) to Jeremy Wells for $388, memo line states “week of 12/1 bonus $70”; (b) check from the Sandusky County Child Support Enforcement Agency to Zachery Messenburg for $1.94, address identified as 7448 E. Main Street, Reynoldsburg, Ohio (a Summer

4

The name on account x0273 is “Deborah L. Garrison dba Cones.” (C. Beckett aff., ¶ 5). For a period of time, Deborah Garrison operated a restaurant at 15000 E. Broad St., Reynoldsburg, Ohio, under the name of “Cones and Concoctions.” Pre-suit investigation indicates that this establishment has been operated under several different management groups over the years. The Attorney General believes that Deborah Garrison ceased having any involvement with any restaurant at this location in 2012 at the latest. 42


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Rays program house); (c) check from Shannon M. Jones to Chuck Kirk for $65, memo line states “Last half of Cedar point” (a trip Chuck Kirk took residents on); (d) check from Wilson Empire LLC (which operates a Tim Hortons in Reynoldsburg) to Angela Emmers for $112.71, address identified as 6982 Bartlett Road, Reynoldsburg, Ohio (a Summer Rays program house). (C. Beckett aff., ¶ 46 and Ex. 18). 

Deposits into Marsha Kirk’s personal bank account, x3440: (a) check from West Central Community Correctional Facility to Chuck Kirk for $200, memo line states “Housing – D. Moffatt”; (b) two checks from Holy Smoke BBQ to Jon Pleasant for $54.48 and $107.46, respectively; (c) check from Five Seasons Landscape Management to Peter Johns for $874.00. (C. Beckett aff., ¶ 47 and Ex. 19).

Deposits into Jenna Kirk personal bank account, x6114: check from Judy Sprunger to Chuck Kirk for $125, memo line states “Cedar Point.” (C. Beckett aff., ¶ 49 and Ex. 20).

Deposits into Deborah Garrison personal bank account, x2711: (a) check from Connor Sheehan to Chuck Kirk for $200, memo line states “Program Fees”; (b) three separate checks from CRISE Cash Benefit Allowance, Ohio Department of Job and Family Services, to Brian K. Foster, each in the amount of $62.00, address listed as 7448 E. Main St., Reynoldsburg, Ohio; (c) two separate checks from CRISE Cash Benefit Allowance, Ohio Department of Job and Family Services, to Christopher Funk, each in the amount of $62.00, address listed as 7704 E. Main St., Reynoldsburg, Ohio; (d) check from Franklin County Sheriff’s 43


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Office to Austin G. Clemons for $21.00; and (e) three separate checks from Protective Payee Program, Freestore Foodbank, Inc. to Antonio Melton, each in the amount of $60.00, address listed as 7470 E. Main St., Reynoldsburg, Ohio (C. Beckett aff., ¶ 49 and Exs. 21-24). III.

RELIEF REQUESTED A. The Court Should Issue A Temporary Restraining Order and Preliminary Injunction The Attorney General asserts two, independent grounds upon which the Court should

grant a temporary restraining order and/or preliminary injunction. First, the Court should issue a temporary restraining order because the traditional standard is satisfied.

Second, and

independently, a temporary restraining order is warranted under the unique authority in R.C. 1716.16(B). 1. A temporary restraining order and preliminary injunction is warranted under the traditional legal standard. a. Legal standard Under Ohio law, Injunctions are separated into three categories (1) the temporary restraining order, which is issued ex parte without notice in an emergency situation to last only until a hearing can be set, (2) the preliminary injunction issued with notice and after a hearing to maintain the status quo until there can be a full trial on the merits, and. (3) the permanent injunction issued after a full trial on the merits. Ohio Service Group. Inc v. Integrated & Open Systems, LLC, 10th Dist. Franklin No. 06-AP433, 2006-Ohio-6738, ¶13, n. 2. Whether reviewing a motion for a temporary restraining order or a preliminary injunction, the standard used by the Court is the same. The Court must consider “whether the movant has a strong or substantial likelihood of success on the merits of his underlying claim, 44


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

whether the movant will be irreparably harmed if the order is not granted, what injury to others will be caused by the granting of the motion, and whether the public interest will be served by the granting of the motion.” Coleman v Wilkinson, 147 Ohio App.3d 357, 2002-Ohio-2021, 770 N.E.2d 637, ¶2 (10th Dist.) citing Corbett v. Ohio Bldg. Auth., 86 Ohio App.3d 44, 49, 619 N.E.2d 1145 (10th Dist. 1993). “Further, the party seeking the preliminary injunction must establish a right to the preliminary injunction by showing clear and convincing evidence of each element of the claim.” Vanguard Transportation Systems, Inc. v. Edwards Transfer & Storage Company, 109 Ohio App.3d 786, 790, 673 N.E.2d 182 (10th Dist. 1996) referencing Mead Corp., Diconix, Inc., Successor v. Lane, 54 Ohio App.3d 59, 560 N.E.2d 1319 (4th Dist. 1988). b. There is a substantial likelihood of success on the merits. There is a substantial likelihood that the Attorney General will succeed on most, if not all, of the causes of action in the Complaint. The present discussion will touch on only a few of those causes of action. Summer Rays is a 501(c)(3) nonprofit corporation and RRC is a self-professed church with presumed 501(c)(3) status. Accordingly, both organizations are “charitable trusts” under Ohio law. See R.C. 109.23(A)-(B); In re Parkview Hosp. v. St. Vincent Med. Ctr, 211 B.R. 619, 629-630 (N.D. Ohio 1997); State ex rel. Atty. Gen. v. Vela, 987 N.E.2d 722, 727, 2013-Ohio1049, ¶¶ 27-30; Brown v. R.E. Holloway, Montgomery App. No. C. A 6689, 1981 Ohio App. LEXIS 13615, *16-21 (July 15, 1981). In Ohio, the Attorney General has exclusive standing to represent the unascertainable beneficiaries of charitable trusts. See Brown v. Battelle Memorial Inst., 1973 Ohio App. LEXIS 1923 (10th Dist. 1973); Plant v. Upper Valley Med. Ctr., 1996 Ohio App. LEXIS 1529 (2nd Dist. 1996). Pursuant to R.C. Chapters 109 and 1716, the Attorney

45


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

General has been given additional statutory authority to protect charitable interests, but the statutory provisions do not limit common law powers. See R.C. 109.24. Two of the causes of action asserted by the Attorney General include conversion and unjust enrichment. “Conversion is the wrongful exercise of dominion over property to the exclusion of the rights of the owner, or withholding it from his possession under a claim inconsistent with his rights." State ex rel. Toma v. Corrigan, 92 Ohio St. 3d 589, 592 (2001). The elements of conversion are: “(1) plaintiff's ownership or right to possession of the property at the time of conversion; (2) defendant's conversion by a wrongful act or disposition of plaintiff's property rights; and (3) damages.” Kavalec v. Ohio Express, Inc., 71 N.E.3d 660, 2016-Ohio5925, ¶ 20 (8th Dist.) (citations omitted). Unjust enrichment occurs when a person receives benefits which he or she is not justly entitled to retain, and the elements include: (1) conveyance of a benefit; (2) knowledge by the defendant of the benefit; and (3) retention of the benefit under circumstances where it would be unjust to do so without compensation. See, e.g., Hambleton v. R.G. Barry Corp., 12 Ohio St. 3d 179, 183 (1984). With regard to these causes of action, it is first critical to note that nonprofit corporations are organized in a fundamentally different way than for-profit corporations. It is axiomatic that for-profit corporations have shareholders, who are the owners of a corporation and have a claim to the corporation’s net proceeds. See R.C. 1701.09-10; R.C. 1701.39; see also, e.g., Bradley v. Bauder, 36 Ohio St. 28, 35, 1880 Ohio LEXIS 106, *15 (1880).

By contrast, nonprofit

corporations do not have shareholders, and R.C. Chapter 1702 instead provides that the control of a nonprofit corporation resides with its the “members” or “directors.” See R.C. R.C. 1702.14, .16, .39. However, members or directors are not the owners in the sense of having a claim to the

46


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

net proceeds or net assets of a nonprofit corporation.

See R.C. 1702.35; see also

R.C. 1702.39(B)(1), .49(D). As set forth above, the Attorney General’s pre-suit investigation has already uncovered numerous examples of individual Defendants converting the charitable assets of either Summer Rays or RRC.

Similarly, there are numerous examples of individual Defendants unjustly

receiving benefits at the expense of either Summer Rays or individual residents of Summer Rays. See generally, supra, at pp. 23-46. Two additional causes of action asserted by the Attorney General include breach of fiduciary duty and abuse of charitable trust. It is black letter law that corporate officers and directors, and the trustees of a charitable trust, are subject to fiduciary duties. See, e.g., Heaton v. Rohl, 193 Ohio App.3d 770, 2011-Ohio-2090, ¶ 47 (11th Dist.); Koos v. Cent. Ohio Cellular, Inc., 94 Ohio App.3d 579, 589, 641 N.E.2d 265 (8th Dist. 1994); see also Morris v. Mull, 110 Ohio St. 623, 628 (1924) (“Due diligence, honesty, and integrity are at all times required of a trustee in his relations to his trust and the cestui que trust.”); R.C. 109.23(A). Fiduciary duty requires that the interest of the charity be placed above any personal interest and that a trustee must act with the highest standard of integrity, scrupulous fairness, and honesty. In re Binder’s Estate, 137 Ohio St. 26, 37–38, 27 N.E.2d 939, 947 (1940). In addition, R.C. 109.24 provides that the Attorney General has the authority to file suit “to enforce the performance of any charitable trust, and to restrain the abuse of it whenever he considers such action advisable.” The statute further provides it is “intended to allow the attorney general full discretion concerning the manner in which the action is to be prosecuted.” Id.; see also WorkAmerica, Inc., 1998 Ohio App. LEXIS 5513, at *6-12 (discussing R.C. 109.24). This authority is in addition to the Attorney General’s broad equitable authority under 47


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

common law. See generally Brown v. Concerned Citizens for Sickle Cell Anemia, Inc., 56 Ohio St. 2d 85, 90, 382 N.E.2d 1155 (1978) (authorizing constructive trusts); Plant v. Upper Valley Med. Ctr., 1996 Ohio App. LEXIS 1529, 1996 WL 185341 (Ohio 2d Dist. Apr. 19, 1996). As discussed above, the Attorney General’s pre-suit investigation has uncovered, in addition to the examples of misappropriation of charitable assets, numerous example of the mistreatment and/or exploitation of Summer Rays residents. See generally, supra, at p. 23-46 . Such mistreatment and exploitation constitute a breach of the individual Defendants’ fiduciary duties to the residents of Summer Rays and an abuse of the Summer Rays’ and RRC’s charitable trusts. c. There is a substantial threat of irreparable harm, no other parties will be harmed, and the public interest will be served by granting the requested relief. The charitable assets of Summer Rays and RRC were intended to benefit valid 501(c)(3) organizations, whose missions are to provide support and services to one most vulnerable segments of society—i.e., those dealing with severe drug and alcohol problems and the host of ancillary issues that often accompany addiction. As demonstrated by the discussion above, however, these obligations have not been fulfilled, and the assets of Summer Rays and RRC have been squandered and misappropriated in various ways.

The only way to serve the

charitable purpose for which these assets were intended is to assure that they are preserved during the pendency of this litigation. Further, while this case certainly involves the distinct threat of dissipation of charitable assets, it involves much more. The Attorney General’s pre-suit investigation raises immediate concerns regarding the ongoing well-being of Summer Rays residents and their treatment by Chuck Kirk.

His continued involvement with Summer Rays is simply not tenable. 48


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Unfortunately, the operation of so-called “sober living” or “transitional housing” programs is largely unregulated—there is no license or permit required to start such a program, and Summer Rays does not employ any licensed service provides. Accordingly, it falls to the Attorney General’s more generalized authority over charitable organizations to put an end to these abuses. In many ways, the present case is the first of its kind in Ohio. It may not be the last. Prior to filing the present lawsuit, the Attorney General’s Office engaged in extensive discussions with the stakeholders in the recovery housing and mental health and addiction fields. The Office also has held extensive discussions with the proposed receiver, Reg Martin. See infra, at p. 52. Through those discussions, the Office has put into place the parameters of a plan to provide meaningful support and transition services to current Summer Rays residents, including: (1) allowing all Summer Rays residents to live in their current home, free of charge, for at least three weeks; (2) bringing licensed and/or trained professionals on-site to provide, free of charge, consultation to residents regarding treatment and housing options and available types of public assistance; and (3) giving those residents that want to stay at a “program house” on a longer-term basis the ability to execute a legitimate lease with the receiver. For all the foregoing reasons, the Attorney General asserts there is clear and convincing evidence of irreparable harm, that no other parties will be harmed, and that the public interest will be served by granting the relief request through the current Motion. 2. The Court should issue a temporary restraining order and preliminary injunction pursuant the authority in R.C. 1716.16(B). In addition to satisfying the traditional legal standard, a temporary restraining order and preliminary injunction should be awarded pursuant to R.C. 1716.16(B), which provides: (B) Upon a finding that any person has engaged or is engaging in any act or practice in violation of this chapter or any rule adopted under this chapter, a court 49


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

may make any necessary order or enter a judgment including, but not limited to, an injunction, restitution, or an award of reasonable attorney’s fees and costs of investigation and litigation, and may award to the state a civil penalty of not more than ten thousand dollars for each violation of this chapter or rule. In seeking injunctive relief, the attorney general shall not be required to establish irreparable harm but only shall establish a violation of a provision of this chapter or a rule adopted under this chapter or that the requested order promotes the public interest. (Emphasis added.) R.C. Chapter 1716 primarily governs charitable solicitations. See, e.g., R.C. 1716.02, .04, .11, .14. The Attorney General’s pre-suit investigation indicates that most of Summer Rays’ funds were generated through its operations, rather than charitable donations. However, Summer Rays’ IRS tax filings indicate that the organization received charitable donations in 2009 through 2012 and in 2016. (J. Baugess aff., ¶¶ 42-43 and Exs. 10-11). RRC’s IRS tax filings indicate that the organization received charitable donations in both 2015 and 2016. (J. Baugess aff., ¶¶ 23-24 and Exs. 4-5). Thus, Summer Rays and RRC are both subject to R.C. Chapter 1716. R.C. 1716.17 provides that every person who “solicits, collects, or expends contributions on behalf of a charitable organization or for a charitable purpose … shall be considered a fiduciary and as acting in a fiduciary capacity.” As discussed above, numerous individual Defendants have breached their fiduciary duties, and for the same reasons also discussed above, a TRO and preliminary injunction would promote the public interest under R.C. 1716.16(B). B. The Court Should Appoint A Receiver 1. The appointment of a receiver is necessary and appropriate in this case. Receiverships are appropriate when “necessary for the preservation of the complainant’s rights.” Equity Ctrs Dev. v. S. Coast Ctrs., 83 Ohio App. 3d 643, 649-50, 615 N.E.2d 662 (1992) (citing Hoiles v. Watkins, 117 Ohio St. 165, 174, 157 N.E. 557 (1927)); see also Malloy v. Malloy Color Lab, 63 Ohio App. 3d 434, 437, 579 N.E.2d 249 (10th Dist. 1989). Receiverships 50


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

are also appropriate when “the failure to [appoint a Receiver] would place the petitioning party in danger of suffering an irreparable loss or injury.” Equity Ctrs. Dev., 83 Ohio App. 3d at 649. When considering whether to appoint a receiver, a Court must take into account all the circumstances and facts of the case, the presence of conditions and grounds justifying relief, the ends of justice, the rights of all parties interested in the controversy and subject matter, and the adequacy and effectiveness of other remedies. State ex rel. Celebrezze v. Gibbs, 60 Ohio St.3d 69, 73 and n.3, 573 N.E.2d 62 (1991). R.C. 2735.01(A) authorizes the appointment of a receiver in several different circumstances, including: (6) When a corporation, limited liability company, partnership, limited partnership, or other entity has been dissolved, is insolvent, is in imminent danger of insolvency, or has forfeited its corporate, limited liability company, partnership, limited partnership, or other entity rights; (7) In all other cases in which receivers have been appointed by the usages of equity. (Emphasis added.) See also Granada Invs., Inc. v. DWG Corp., 823 F. Supp. 448, 460 (N.D. Ohio 1993) (“Under Ohio law, equitable receivers have been appointed upon a demonstration of gross mismanagement or mismanagement of the assets of a corporation to the detriment of the shareholders, as well as to preserve the assets of a corporation pending litigation.”). The party seeking the appointment of a receiver must establish the need for a receiver by clear and convincing evidence. Malloy, 63 Ohio App. 3d at 436. Ultimately, the appointment of a receiver is committed to the sound discretion of the trial court. State ex rel. Celebrezze v. Gibbs, 60 Ohio St.3d 69 (1991). As discussed above, the Attorney General’s pre-suit investigation reveals that Chuck Kirk is functionally in control of all aspects of the operations of Summer Rays and RRC, that Chuck 51


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

Kirk's continued involvement with Summer Rays and RRC not only creates a substantial risk of dissipation of charitable assets but also threatens the health and well-being of Summer Rays residents, and that there is no functional board of directors or leadership structure available to take responsibility for the core service offered by Summer Rays—i.e., providing housing to approximately 100 to 120 individuals. In this context, the appointment of a receiver to take immediate control of Summer Rays’ and RRC’s assets, including the program houses, is both warranted and necessary under the unique facts of this case. 2. The Court should appoint the receiver proposed by the Attorney General. The Attorney General proposes the appointment of Reg Martin, General Manager of Martin Management Services Inc., as the Receiver in this action. Throughout the course of his career, Mr. Martin has been appointed as a receiver on over a hundred different occasions by numerous courts throughout Ohio, including this Court.

In addition to having extensive

experience managing and liquidating real estate, Mr. Martin has had the opportunity to manage an eclectic range of businesses. (See Resume of Reg Martin and Listing of Receiverships, attached as Ex. M).

Finally, the Attorney General’s Office has had numerous pre-suit

conversations with Mr. Martin and his counsel to apprise them of the sui generis nature of the present case, the need to quickly take control of the real property owned by Summer Rays and RRC, and the plans already in place for providing transition services to Summer Rays residents. In sum, Mr. Martin is uniquely suited to immediately step into the role of Receiver. IV.

CONCLUSION For all the reasons set forth above, the Attorney General requests that the Court issue a

temporary restraining order and an appoint Reg Martin as the Receiver in the present case on at

52


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

least an interim basis. The exact relief being sought is set forth in more detail in the proposed Order accompanying the current Motion. Respectfully submitted, MIKE DEWINE ATTORNEY GENERAL OF OHIO /s/ Matthew T. Green Matthew T. Green (0075408) Assistant Attorney General Tammy V. Chavez (0096714) Assistant Attorney General Ohio Attorney General’s Office Charitable Law Section 150 E. Gay St., 23rd Floor Columbus, Ohio 43215-3130 Voice: 614-466-3181 Fax: 877-647-2556 Matthew.Green@OhioAttorneyGeneral.gov Tammy.Chavez@OhioAttorneyGeneral.gov Counsel for Plaintiff Ohio Attorney General

53


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

CERTIFICATE OF COMPLIANCE WITH CIVIL RULE 65(A) Undersigned counsel hereby certifies that, contemporaneously with the filing of the present Motion, a copy of the Motion, all supporting exhibits, and the Complaint were served via email on the following individuals: Ronald B. Noga Attorney at Law 1010 Old Henderson Road, Suite 1 Columbus, OH 43220-3776 rnoga@nogalaw.net Counsel for Summer Rays, Inc. and Reynoldsburg Revolve Church Robert Simon Fisher, Skrobot & Sheraw, LLC 471 East Broad Street, Suite 1810 Columbus, Ohio 43215 rsimon@fisherskrobot.com Counsel for Heartland Bank /s/ Tammy V. Chavez Assistant Attorney General

54


Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Jul 09 8:04 AM-18CV005717

PLAINTIFF OHIO ATTORNEY GENERAL’S EXHIBIT INDEX Exhibit

Description

A

Affidavit of James Baugess

B

Affidavit of Jeffrey D. Hall

C

Affidavit of Brittany Craig

D

Affidavit of Daniel L. Gross

E

Jacquelyn Kirk Examination Under Oath, conducted Aug. 31, 2017 (transcript only)

F

Affidavit of James Aaron DeLong

G

Marsha Kirk Examination Under Oath, conducted Aug. 15, 2017 (transcript only)

H

Summer Rays, Inc. v. Joseph W. Testa, Tax Commissioner, Bd. of Tax Appeals Case No. 2015-951/1108, Sept. 14, 2016 hearing transcript

I

Affidavit of Courtney Beckett

J

Affidavit of Aaron Holder

K

Affidavit of Dustin Holder

L

Affidavit of Brianna Snider

M

Reg Martin, Resume and List of Receiverships

55

Motion for TRO and Emergency Appointment of Receiver (3)  
Motion for TRO and Emergency Appointment of Receiver (3)  
Advertisement