State and local housing councils act as prosecutor, judge and jury against perceived discrimination

A few little words could cost Dan Bader a fortune. In 2006, Bader advertised an apartment for rent on Craigslist. He wanted $1,950 a month for the adjoining 480-square foot unit in back of his Newport Beach home. As an afterthought, he added, "Well suited for professional adults" and "Perfect for 1 or 2 professionals."

Bad move. That fall, the state notified Bader that the Fair Housing Council of Orange County had filed a complaint against him for "possible discrimination" against people with children. That was a surprise because he says previous tenants had children. Bader eventually agreed to a meeting. But when Bader arrived at the state Department of Fair Employment and Housing office in Los Angeles, he says he found a surprise: The council wasn't represented. Only bureaucrats were there.

Bader says two state employees told him the state had determined he does not discriminate, but the ads were still a problem. He says they told him the complaint would be dropped if he paid the council $4,000 for expenses and agreed to take five years of the council's landlord classes at an additional cost. Bader thought that sounded like extortion, so he refused to settle. In November, the state slapped him with a housing discrimination lawsuit seeking "unlimited" damages on behalf of the council. The case is still pending. "I'm so upset, I can't believe it," said Bader, 56.

Welcome to the weird world of fair housing enforcement. While the above proceedings might appear unfair, my research indicates they actually illustrate how the process is supposed to work. The law provides special rights for groups like the fair housing council. The Fair Housing Council of Orange County and others insist they act ethically. Critics disagree. "There's an imbalance of power," said Los Angeles attorney Stephen C. Johnson, who's been involved in several cases similar to Bader's.

Fair housing groups are charged with enforcing the law, but they can also seek money from the people they bust. Johnson said there's nothing to stop them from abusing their power. Time after time, he said, he's seen these groups use their legal privileges to squeeze landlords. "They're not regulated," he said, adding that government isn't likely to pull their funding.

You read that right: Fair housing councils are funded primarily by your tax dollars. So, in Bader's case, his money not only pays for the state's lawsuit against him, it also funds for the agency accusing him. Nice, huh?

For more information on this bizarre world, I turned to Shanna Smith, president and CEO of the Washington, D.C.-based National Fair Housing Alliance, the umbrella organization for nonprofit enforcement groups. Smith told me the first of these organizations were founded in the 1960s during the civil rights movement, but many more were added in the 1980s when the federal government began offering grants for fair housing enforcement. Today, she said, there are roughly 75 such nonprofits nationwide.

On my own, I found that the federal Department of Housing and Urban Development gave $6.5 million to eight California organizations from 2004 to 2007. Orange County's group received three grants for a total of $443,800. "Most of the fair housing groups are in California, Chicago and Ohio," Smith said.

As you'd expect, Smith said these organizations are vital to a healthy society. The national alliance estimates nearly 4 million cases of housing discrimination occur in the United States each year. Government doesn't have the time or the training to fight it, but nonprofits do, Smith said. Besides filing complaints and monitoring Craigslist, one their biggest activities is undercover testing. That's where nonprofits will send, say, a white person and a black person to a landlord to see if they're treated differently. "Most fair housing centers don't wait for consumers to walk through the door because most consumers don't recognize discrimination because it's very, very subtle," Smith said. The only way to find it is through research.

For this trouble, the courts have granted nonprofits a special perk, Smith said. Courts allow them to seek money from accused landlords to cover the cost of their investigations and to re-educate people about the law. That explains why Bader was asked for $4,000. But Smith actually seemed to understand Bader's frustration. She indicated the state made a mistake by not having the council represented at the meeting in Los Angeles. "I don't think it's a good process," Smith said. "I think people need to have a face to face."

I tried asking the state Fair Employment and Housing department about Bader's case, but spokesman Bill Branch told me he couldn't talk because the matter was pending in court. Apparently, however, it's standard practice for the department to keep parties separate during negotiations in order to cool things down and find middle ground.

Bader, for his part, appears madder at the council and said recent legal actions suggest the nonprofit was trying to shake him down. The council's board is suing its CEO, D. Elizabeth Pierson, for allegedly interfering with a misuse of funds probe. And that probe, among other things, is looking into allegations that grant money was directed to fill other financial gaps in the agency. "My conjecture is they needed money, so let's just start filing complaints," Bader said.

I asked Pierson to comment on Bader's case, but she said she couldn't go into specifics because the case was pending. In an e-mail, however, she wrote that Bader's accusations "lack any basis in fact. Certainly DFEH would not participate in that sort of unethical conduct and I would never condone it." Strong words – but even weak ones can cost you.

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