Is DPI Group Inc. Hiding Something?
Transparency is essential to ensure that “social enterprises” such as DePaul Industries are truly serving the public good. Omissions and errors in the financial reports filed by DPI Group prevent the public from doing the math to confirm where their money comes from—and where it all goes.
A growing number of non-profit organizations call themselves social enterprises, claiming to use business-oriented strategies to serve the public interest. In the case of DPI Group Inc., best known for its affiliate DePaul Industries, its stated mission is to create job opportunities for people with disabilities and other barriers to employment.
But DPI plays multiple roles that are in tension with each other. While it is recognized by the IRS as a charitable non-profit organization, exempting it from having to pay income tax, like many for-profit companies, it makes money from the labor of its front line employees.
DePaul Industries reported to the IRS only $172,696 in “Government Contracts,” but in the same period reported nearly $5 million in “Public Contracts.”
It is difficult to determine whether DePaul Industries and other DPI Group, Inc. affiliates are living up to their charitable mission, due to the problems in their mandatory reports to state and federal regulators. Some parts of reports are missing. Others contain errors, omissions, and a significant discrepancy, reporting different numbers to state and federal offices. Of serious concern, DPI Group Inc. temporarily lost its tax-exempt status with the IRS.
Messy IRS disclosures
All charitable non-profit organizations must submit annual reports to the Internal Revenue Service on form 990. On its 2018 report, DePaul Industries erroneously reported a net gain of $187,005 as a net loss. The difference between what DPI reported and what appears to be the correct figure is more than $374,000.
In 2017, DePaul Services Inc.’s simply left blank its Revenue Less Expenses, an essential piece of information.
Reporting different figures to federal and state entities
For FY 2019, DePaul Industries reported to the IRS only $172,696 in “Government Contracts,” but in the same period reported nearly $5 million in “Public Contracts” to Oregon Dept. of Administration Services (DAS). What accounts for such a major discrepancy?
DePaul Industries reports only $172,696 in “Government Contracts,” and in the same period reports nearly $5 million in “Public Contracts.”
No disclosure of potential conflicts of interest
Between June 2019 and December 2022, multiple family and business relationships in one of DPI’s for-profit companies, Cascadia Nutrition, LLC, a manufacturer of infant formula and nutritional supplements. Until it was acquired by another company around January of 2023, Cascadia was a joint venture between DPI Group and Balogh Family Enterprises, LLC. Three out of four managers listed on Cascadia’s “Meet Our Family” webpage are Baloghs: brothers Ashley and Dustin, and their father Marc.
What is not disclosed in DPI Group’s IRS 990 forms is that Ashley Balogh (Cascadia Nutrition’s president) was also DPI’s President of Consumer Products. Also not disclosed is that DPI’s CEO, Travis Pearson, was one of the owners of Cascadia Nutrition, LLC in 2020. Observers may ask a valid question: is it appropriate for a non-profit organization to do business with a for-profit company where two of the non-profit’s executives have a personal stake and/or family ties? DPI and Cascadia even have had a lending relationship, for which the terms are not disclosed.
DPI Group Inc. failed to make timely financial disclosures for FY 2020 and 2021, and faced fines from Oregon Department of Justice (DOJ). According to the Oregon DOJ’s Charitable Activities section—the state’s watchdog for non-profit organizations—DPI Group Inc. was delinquent with two annual reports as of July 2022, resulting in mounting delinquency fees. These reports are one requirement that all non-profit organizations must meet to maintain their special tax-exempt status. DPI has since been granted extensions for their 2021 filings, with the exception of one of their entities, which remains delinquent. When advocates visited DPI Group offices in 2022 to request copies of financial records, including the delinquent records, DPI Group refused. Their refusal was despite Internal Revenue Code requirements that charitable organizations provide financial records immediately upon request.
DPI Group Inc.’s tax exempt status expired
According to the IRS, in November 2021, DPI Group’s “federal tax-exempt status was automatically revoked for not filing a Form 990-series return or notice for three consecutive years.” DPI Group’s status was later reinstated.
Potential problems for DPI clients–and the public
DePaul Industries and other DPI Group organizations do business with many public entities, including federal, state, and local government agencies.
DePaul Industries and DePaul Services Inc. declared bankruptcy in 2016. Only six years later, their financial records contain substantial errors and omissions. Reporting errors and incomplete records may suggest continuing financial woes. Public contracting authorities may ask how those weaknesses might put at risk the federal, state, and local government agencies that contract with DPI Security, DPI Staffing, Northwest Success Inc., Cascadia Nutrition LLC, and Fort Rock Tactical, LLC.
We are hundreds of janitors, security workers, and community members, united in the belief that all workers—regardless of disability, race, gender, immigration status, age—deserve respect at work. As DPI workers, we are organizing a union with SEIU 49, Oregon’s union of property service workers, to ensure that we have dignity in our jobs at DPI. As community members, fellow janitors and security officers, and supporters, we will stand side by side DPI workers in their fight. If you have a tip about DPI Group Inc. or its affiliates we want to hear from you.
