I write not out of personal grievance or malice, but to urge the Board to acknowledge and address the following information, much of which is now publicly documented, with the seriousness and integrity the situation demands.
Allegations of willful filing of false or fraudulent tax returns;
Under 26 U.S. Code § 7206(1), it is a federal felony for any person to willfully sign and file a tax return they do not believe to be true and correct as to every material matter. If board members were aware of the false reporting and permitted returns to be submitted regardless, they could be liable for aiding, abetting or conspiring under 26 U.S.C. § 7206(2) or other applicable statutes. North Carolina law holds “responsible persons” personally liable for willful tax fraud committed under their supervision or with their knowledge.
DGI’s PPP Loan and ERC Credit;
According to DGI’s board minutes, DGI received a $66,271 Paycheck Protection Program (PPP) loan and a $66,740 Employee Retention Credit (ERC) refund. The similarity of these amounts raises serious concerns about potential "double-dipping", using the same payroll expenses to justify both PPP forgiveness and ERC claims, a violation of federal program rules.
IRS rules require nonprofits to disclose lobbying expenditures at all levels of government, including local and state;
DGI appears to have failed to disclose lobbying activity on its most recent IRS Form 990 despite reporting publicly funded “advocacy activities” aligned with its mission. The Form 990 covering July 1, 2023 to June 30, 2024, matching the timeframe of the financial ledger released, shows no lobbying reported as Schedule C was not filed.
IRS 501(c)(6) Private Benefit Rules Applied to Public Official Misconduct;
Under IRS rules governing 501(c)(6) organizations, any diversion of resources to benefit specific individuals, particularly public officials with influence over funding or policy, can violate the private benefit doctrine. Matheny directing public funds towards DGI creates a conflict that may trigger IRS scrutiny under both the private benefit and inurement doctrines.
The $250,000 contract between the City of Greensboro and DGI to administer the Downtown Greensboro Strong grant program;
According to DGI board minutes, "$143,000" of the grant funds remained in DGI’s cash balance, initially noted as remittable to the City but later described as available for investment in additional public purpose programming. The July 18, 2022 Internal Audit Report by the City indicates only $107,401.72 of the original $250,000 was disbursed, leaving $142,598.28 without known City approval to utilize.
Misuse of Public Funds (NCGS § 14-254) and 18 U.S.C. § 371: Pattern of gifts, votes, and inaction suggests conspiracy to defraud taxpayers;
Records indicate DGI has used taxpayer funds to provide gifts and entertainment to government officials, DGI board members, contractors and friends and family. If DGI received city funding used to buy tickets for personal use, this could be considered embezzlement or misappropriation of public funds.
Unreported gifts suggest willful concealment and potential violations of 18 U.S.C. § 201 (federal bribery) and N.C. Gen. Stat. § 14-217 (state bribery). DGI’s expenditures potentially constitute violations of N.C. Gen. Stat. § 14-90 (embezzlement of public funds), the IRS Private Benefit Doctrine for 501(c)(6) organizations and 18 U.S.C. § 371 (Conspiracy); The coordinated network of donations, gifts and votes indicates a potential criminal conspiracy, especially considering the City of Greensboro's failure to initiate an independent investigation under Resolution 2021-172.
Ineligible Expenditures and Prohibited Gifts Compliance Issues;
DGI’s contract with the City of Greensboro explicitly prohibits the use of public funds for ineligible activities such as entertainment, travel, meals, and personal development unless pre-approved and included in the program budget. This restriction is outlined in Attachment B: Table 2 of the agreement. Additionally, under North Carolina law (NCGS § 133-32), it is unlawful for contractors, including organizations like DGI, to give gifts or favors to public officials involved in awarding or administering public contracts. It's also illegal for public officials to receive said gifts.
Conflict of Interest Clause and CEO’s Dual Role;
DGI’s contract with the City of Greensboro contains a clear Conflict of Interest clause prohibiting any financial or personal benefit to elected officials, individuals exercising oversight over funded activities or those with decision making authority. As DGI’s current CEO simultaneously serves as an elected City Council member, this dual role appears to fall squarely within the contract’s prohibited conflict categories.
DGI’s October 27, 2021 Board Meeting Minutes confirm Zack Matheny actively lobbied in support of a Social District ordinance, a policy from which DGI later financially benefited through grants and leases. Despite this clear conflict, Matheny voted on February 20, 2024, as a sitting Greensboro City Councilmember, to approve Resolution 2024-168, which formally established the very same Social Districts he advocated for. This dual involvement constitutes a likely violation of NCGS § 14-234, which prohibits public officials from voting on matters in which they, or entities they lead, have a financial interest. His failure to disclose or recuse himself may also constitute a violation of NCGS § 14-230, which makes it illegal for public officials to willfully fail to perform duties such as disclosing known conflicts of interest. There are multiples of other examples.
NC General Statute §160A-536(d) – Transparency in Municipal Service Districts;
Under North Carolina General Statute §160A-536(d), contracts with private entities like DGI managing taxpayer funds must provide detailed accounting of expenditures, including disclosure of names, locations, purposes and amounts paid. The failure of both the City of Greensboro and DGI (including DGIF) to provide such transparency violates the statute.
Continued Public Funding Amid Allegations; N.C. Gen. Stat. § 159-181(a) by Greensboro City Council;
Greensboro's City Council continued to appropriate funds to DGI. On June 17, 2025, the Council, including Zack, voted to appropriate funds to DGI in the FY 2025-26 budget, despite awareness of alleged embezzlement etc... by DGI and Matheny. This violates N.C. Gen. Stat. § 159-181(a) by approving claims “knowing them to be fraudulent, erroneous, or otherwise invalid.”
North Carolina General Statutes (NCGS) § 120C;
DGI assists potential developers and investors through services that include "...project coordination with City, County, and State staff and officials." DGI’s coordination with state officials, which Matheny documented online, qualify as lobbying under NCGS § 120C, for which no one appears to be registered at the state for the organization.
Impaired Oversight and Media Collusion;
At least The Assembly Greensboro’s reporting appears to be compromised by undisclosed relationships with DGI stakeholders.
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I urge the Board to initiate a full independent review of these issues, conducted by a party with no ties to current leadership or the City.
I repeat; this is not personal. Failure to act will not only risk further damage but could also expose DGI and its board members to legal liability.
Sincerely,
g