Attorney General Jerry Brown said that former officers and directors of the Seaside-based charity took some of the money for personal use and for-profit ventures, which was in violation of a state law and a May 2000 court order that specified $1.8 million be used for housing people with the HIV virus.
The complaint also alleges that another $1 million in grants and donations were also misspent.
"The duty of these officers and directors was to protect the charity's assets so the funds could be used for the support of very sick people," Brown said in a news release. "Instead, they violated their trust and spent the money any way they wanted."
Brown said some of the charity's money was spent on meals at expensive restaurants, personal credit card expenses, purchasing items for personal use at auctions, moving and storage expenses, a personal mortgage payment and the steam-cleaning of carpet at a private home.
Eleven years ago, MCAP received $1.8 million in cash and property from Douglas E. Madsen, a Monterey County resident. The money came with the restriction that the funds be used for the sole purpose of housing active AIDS patients.
But Brown said that more than $2.8 million in charitable assets, including Madsen's money, was "misappropriate, misapplied or wasted."
In 1999, MCAP listed assets of $2.1 million. By 2004, those funds were down to $1.4 million, and in 2007, MCAP's assets were listed as $205,000.
The lawsuit, filed in Monterey County Superior Court on Friday, seeks to dissolve MCAP, obtain a complete account of its finances, and recover any remaining assets that dissipated through the "mismanagement and neglect of former officers and members of its board of directors," Brown said.
MCAP was created in 1985 to provide support, resources and services -- including housing assistance -- to HIV/AIDS patients in the Seaside area.
This article originally appeared on KSBW.com.