By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
Yet to some extent the D.A. has woken up to fraud in the nonprofit sector. The office seized $2.5 million accumulated by one refugee-service provider and brought criminal charges last year against the program’s director, Angelita Gonzales, for submitting fraudulent invoices. A trial ended in an 11-1 hung jury on March 23; Gonzales’ retrial began Tuesday. The D.A.’s Office also has charged 16 refugee workers at another program with conspiracy and grand larceny, alleging they gained illegal access to the county welfare-payment database and issued checks to family members and friends.
Still, prosecutors stress the difference between actionable criminal offenses and inefficient or objectionable behavior. So the buck gets passed back to the funding agencies. And refugee-service providers play a numbers game where incentives to cheat outweigh the government’s capacity to monitor them, according to deputy district attorney Jennifer Snyder. “The funding system is easily exploited,” says Snyder, the prosecutor in the Gonzales case. “The county mentality is to give, give, give. But assuring that services were provided becomes more difficult. The question is how much is the public willing to tolerate so that a few people actually get some help?”
Casey McFall sits in her office on Wilshire Boulevard one day in March, surrounded by bags of donated clothing. A veteran grant-development consultant who testified for the state as an expert witness in the Gonzales case, McFall is frustrated. In 2003, ACRC was awarded a literacy contract from the Department of Education, and McFall served as a consultant on the program, she says. Her voice quivers as she describes going to CSS last July, thinking she had spotted mistakes in Tesfai’s books. After trying to correct billings for the last two years, in September McFall went to CSS with concerns about what she had found: forged bills for excess rent; bills for clients who never received services or were ineligible; bills for employees who performed no function at ACRC. By August, she had contacted the D.A. and turned over a stack of documents. (The Los Angeles District Attorney’s Office neither confirms nor denies there is a criminal investigation of Tesfai and ACRC.)
CSS officials say McFall had no approval to re-do ACRC’s bills. McFall describes CSS as “a dangerous mix of incompetence and arrogance” — a perfect environment for Tesfai to exploit, she says. Political supporters such as County Supervisor Yvonne Brathwaite Burke, whose name is displayed above the door at ACRC, have only emboldened Tesfai, adds McFall. “Nikki could be a movie of the week,” she says. “But people like Yvonne Burke and Mervyn Dymally are doing the public a greater disservice by backing her.”
When contacted, CSS officials had just met with representatives from Burke’s office to discuss Tesfai’s debt, which the county appears ready to write off. According to Clinton Tatum, a Burke deputy, Tesfai complained to Burke about being charged with disallowed costs, but after several meetings with county auditors and CSS, it was determined that ACRC still owes $40,000, Tatum says. “Nikki said she couldn’t pay,” he says. “Not much more we can do.” (U.S. Senator Dianne Feinstein’s office has called county officials at the request of ACRC as well, Tatum says. Feinstein’s office says it was just looking into the matter. “We didn’t have the details,” says press deputy Howard Gantman.)
Huebel, an ACRC board member, describes Burke as someone who “clears the way, points Nikki in the right direction, and introduces her to people she should be talking to.” The Los Angeles Times reported in 2002 that Tesfai opened ACRC “with help from Burke.” McFall says Burke has helped preserve ACRC’s $500-per-month lease of its county-owned office when other agencies had their eyes on it. When visited, Burke denies that is the case. “I’ve never even been to ACRC or any of its facilities,” she says.
Perceptions of coziness between Burke and Tesfai were enhanced in the late 1990s when Burke’s husband, L.A. Marathon founder Bill Burke, reportedly was knighted by a German prince in a ceremony in Los Angeles — arranged by Dr. Arthur Bogaerts. “Nikki plays to ambassadors in Washington, D.C., philanthropists in New York, politicians in Los Angeles and royalty in Europe,” says a former employee who attended. “None of it makes any sense, and the story is always changing.” Bill Burke denies being knighted.
Tesfai’s clout — whether real or perceived — creates a dilemma for refugee workers. Employees with unresolved immigration issues in particular are terrified of challenging her. Yet some see her as pathetic. “The fear is in our heads,” says one former employee, an immigrant from East Africa. Meantime, Tesfai’s patrons get prickly when confronted with questions about her — as if their own sensibilities are under attack. “I have nothing to say until I talk with Nikki,” says one gruff former adviser when reached for comment. “It is irresponsible to expect social-services agencies who cater to minorities who lack the same language and cultural skills to adhere to the same rigid guidelines as mainstream agencies,” Huebel says.
A look at Tesfai’s aborted group-home endeavors and property transactions further elevates concerns of mismanagement and demonstrates the razor-thin line between her personal and professional life.