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Such patterns are not new. In January 2000, the California Department of Health Services found that ACRC did not provide services required under a $700,000 grant for community education on the dangers of smoking. The department discontinued the grant and claimed ACRC owed the state $31,756. (From 1998 to 2000, ACRC also received more than $350,000 from the Los Angeles County Department of Healths Tobacco Control Program. County officials denied further funding in 2001 for not meeting the score on an annual audit, according to Linda Aragon, acting director of Tobacco Control.)
Realization that ACRC is no model of efficiency comes as county officials are targeting refugee services as a sinkhole of federal dollars. Yet monitoring failures also has officials pointing fingers at one another. A dawning era of nonprofit scrutiny appears mired in cronyism and bureaucracy. At a county Board of Supervisors meeting on January 6, former CSS employee Lilana Chavez-Alcasio described witnessing county officials repeatedly acquiesce to fraud involving other nonprofits. One time, when she found an agency that had billed for services despite having no clients, a supervisor instructed her to talk to the agency and tell them to come up with the clients, Chavez-Alcasio said at the meeting. I want to recommend that CSS go under investigation, she said.
It took an October 2003 report by accounting firm Simpson & Simpson to wake up the county when it uncovered $3 million in undocumented costs by local service providers. Now officials are transferring monitoring authority for certain education programs to the Department of Public and Social Services, which received $10 million from the U.S. Department of Health and Human Services' Office of Refugee Resettlement in 2003 to pass along to local providers through CSS, which has an annual budget of $200 million. On February 4, former CSS director Robert Ryans retired after 35 years of public service, less than a month after being lambasted by County Supervisor Gloria Molina at the January 6 meeting. I want my money back, Molina declared.
According to a chief aide to one county supervisor, however, the County Counsels Office is slow to recover funds from recalcitrant service providers. And the Counsels Office defers to the District Attorneys Office, the aide says. But the D.A.s Office neither confirms nor denies its investigations, which in any event can take a long time depending on priorities or caseloads.
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 programs 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 governments 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 Tesfais 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 Attorneys Office neither confirms nor denies there is a criminal investigation of Tesfai and ACRC.)