AHF Asks CA Attorney General to Investigate Transfer of Porn Clinic

AHF letter to California AG Kamala Harris asserts the non-profit Adult Industry Medical (AIM) HealthCare Foundation, which reopened its Sherman Oaks clinic last week after it was sold and became AIM Medical Associates P.C., a private, for-profit doctor’s office, may have broken several California laws in the process of converting from a nonprofit to a for-profit entity and in the transfer of its assets

 

By: AIDS Healthcare Foundation

Los Angeles, CA – February 14, 2011

The AIDS Healthcare Foundation (AHF) is asking California Attorney General Kamala D. Harris to open an investigation into possible unlawful conduct by a California nonprofit, The Adult Industry Medical Healthcare Foundation (“AIM”), which runs a Sherman Oaks clinic funded by and serving the adult film industry, following news reports earlier this week that the troubled clinic, also known as AIM, was sold and reopened as AIM Medical Associates P.C., part of a private, for-profit doctor’s office regulated by the state medical board, according to state officials. The clinic was closed by the Los Angeles County Department of Public Health on December 9th after state officials denied the clinic a license to operate as a community clinic. It appears AIM had been operating without a proper state license since it first opened in 1998. In recent years, AIM and the entire adult film industry in California have come under fire after several adult film performers tested HIV-positive at the clinic during several different outbreaks in the industry since 2004.

“Since 1998, AIM’s testing clinic has largely served a ploy to deflect needed public scrutiny and responsible government regulation, something Sharon Mitchell, its executive director, as much as admitted in remarks published in the Los Angeles Times last week proclaiming that AIM has been, ‘…relieved from pointless harassment that came with oversight from the county health department’,” said Michael Weinstein, President of AIDS Healthcare Foundation. “As a private clinic, AIM will still be under the jurisdiction of, and responsible for reporting any positive HIV and STD results to county public health officials. We have serious doubts that the principals involved in AIM, who seem to have operated in defiance of California law all along, have properly followed California law in converting AIM from a troubled nonprofit clinic to a private, for profit medical facility, and we are asking California’s Attorney General to immediately open an investigation into this matter.”

In a letter dated February 9, 2010 and sent via FedEx and facsimile, AHF President Michael Weinstein wrote:

“Recent events indicate that AIM is diverting its assets to a for-profit entity, abusing its nonprofit status for the private financial gain of its principals, and attempting to shield itself from liability AIM may have to its clients.

In a deliberate, admitted effort to avoid regulatory scrutiny by public health officials, AIM’s principals have publicly announced that they have created a new, for-profit entity known as “AIM Medical Associates, P.C.” (“AIM P.C.”), entity number C3337308 (See, www.aim-med.org/news/2011/02/04/1296834738/, a copy of which is attached).

AIM admits that it is transferring assets from the nonprofit entity to AIM P.C. in order to avoid scrutiny by public health officials, who ordered AIM to cease operating its clinic in December due to its failure to obtain proper licensure. AIM and AIM P.C.’s attorney Jeffrey J. Douglas is quoted in the Los Angeles Times saying “clinic officials elected to sell to a for-profit medical group rather than litigate the closure.” Mr. Douglas admitted that the transfer of assets is a legal maneuver intended to render AIM “no longer under the oversight of the Los Angeles County Public Health Department of Public Health.”

AIM’s actions in transferring its assets to a for-profit corporation implicate a host of California public benefit corporation laws, such as sales of assets, cessation of operations, self-dealing transactions (the CEO of AIM P.C. and the Executive Director of AIM is the same person), etc. (See, e.g., Corp. Code §§ 5233, 5813.5, 5913, 6615, 6716.)”

AHF’s actions challenging the legality of the conversion of AIM to a private, for profit entity are part of a broad based campaign to improve worker safety in the adult film industry by requiring performers to use condoms. The effort has been prompted by an ongoing epidemic of sexually transmitted diseases (STDs) in California’s adult film industry. According to the Los Angeles County Department of Public Health (LADPH), workers in the adult film industry are ten times more likely to be infected with a sexually transmitted disease than members of the population at large. LADPH documented 2,013 individual cases of chlamydia and 965 cases of gonorrhea among workers between the years 2003 and 2007. LADPH has observed that many workers suffer multiple infections, with some performers having four or more separate infections over the course of a year. In addition, LADPH has stated that as many as 25 industry-related cases of HIV have been reported since 2004.

Weinstein’s letter to Attorney General Harris concluded:

“In short, the principals of AIM seem to be operating in a manner that serves their financial interests, rather than any public benefit mission.

I ask that your office open an investigation into the foregoing to ensure that the public is protected, and take whatever steps may be necessary to end any unlawful conduct by AIM.”

For full text of the Weinstein’s letter to the California Attorney General, please cick here.

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