Sacramento library launches fraud lawsuit against foundation that raises funds for it

A growing feud between the Sacramento Public Library administration and a nonprofit foundation that raises money for it and literacy programs has spilled into the open, with the library suing the group over claims that it has defrauded donors and misrepresented itself in fundraising.

The Sacramento Public Library Authority filed suit in federal court Tuesday afternoon against the Sacramento Public Library Foundation alleging trademark infringement and fraud and seeking the appointment of a receiver to take over the foundation, which has roughly $4 million in assets and another $4 million of artwork on display in the libraries.

“The Sacramento Public Library has served the community since 1857,” library Director Rivkah Sass said in a press release announcing the suit. “Unfortunately, there exists in Sacramento a separate entity, not affiliated with the Library, which has tried to appropriate our name and use our hard-earned reputation for its own aggrandizement.

“It has deceived donors and sought to control millions of dollars in endowments meant for the Library.”

Foundation President James Deeringer, who is named in the suit as a defendant, said he had not yet read the complaint, “Although they’ve threatened it for so long I have a good idea what’s in it.”

“Her goal is to quite clearly take control of the private fundraising process for the library’s benefit,” Deeringer said of Sass. “We’re an inconvenient obstacle to that ...

“She’d just like to get rid of us so the field is free for her. I think it’s really reprehensible, I really do.”

Dispute is years in the making

The dispute has been brewing for at least seven years and involves a beloved institution – the library and its 28 branches – and a foundation supported by some of the most prominent donors in the region, including Golden 1 Credit Union, the University of the Pacific, the Bank of America Charitable Foundation and The Sacramento Bee.

The lawsuit says that when the foundation was formed in 1984 it agreed to allow limited use of the library trademark so the foundation could raise money for the library.

In 2004, the library agreed to a memorandum of understanding “that expressly stated the purpose of the Foundation – to support and fund the Library,” the suit says.

“But in or around 2013, the Foundation began to fund activities and programs outside of the Library without the Library’s knowledge or permission,” the suit says. “The Library objected to this change and the parties began to have other disagreements.”

The lawsuit also contends the foundation continued to use the library’s trademark without permission and that it sought to trademark its own name last year over the library’s objections.

The foundation terminated its agreement with the library in April 2015, the suit says, without advising its supporters, “thus deceiving donors into believing it was business as usual and the Foundation was associated with the Library when it was not.”

The suit also claims that the foundation began dedicating support to groups not affiliated with the library, including the Walk4Literacy and the Children’s Literacy Endowment.

“The establishment of the Children’s Literacy Endowment has caused significant harm to the Library,” the lawsuit alleges. “Despite the fact that the Foundation holds a number of other endowments for the benefit of the Library, the Foundation has effectively ceased raising funds for those endowments and raises funds solely for the Children’s Literacy Endowment instead.

“Most recently, the end of the year fundraising letter sent out by the President of the Foundation’s Board failed to mention either of the Library’s other endowments but sought donations solely for the benefit of the Children’s Literacy Endowment instead.”

Deeringer called such claims “ridiculous,” saying the walk is part of a joint enterprise with another group and that agrees to award net proceeds to a local literacy group with amounts that are “absolutely inconsequential, like $37,300 in the entire history of the event.”

Even with the legal fight, Deeringer praised Sass’ leadership of the library, which she took over in 2009 as the system was in the midst of a kickback scandal that sent three people to jail.

“I think in most respects she’s doing an excellent job, but this is a blind spot,” he said, adding that he believes the fight could imperil the $200,000 to $250,000 the foundation provides to the library annually.

Deeringer, an estate planning attorney who has previously served on boards for the Sacramento Symphony, KVIE-TV and the Crocker Art Museum. said he believes the dispute stems from Sass wanting complete control of fundraising.

“The problem for Rivkah with us is when we get money from donors, we don’t simply hand it to her,” Deeringer said. “That’s the bottom of it.”