NGOs targeted over accounting failures
Over a span of four years, Serenity 67 received $775,000 in state funding to tutor children and help senior citizens in one of Baton Rouge’s poorest neighborhoods.
The state helped build a building for the nonprofit on land donated by a state senator. Taxpayers supplied cash for operating expenses. Serenity wound up with a hefty tax lien, bank overdrafts exceeding $12,000 and 27 bucks in the bank.
The IRS filed a $112,193.67 tax lien in December. State officials are demanding details on how $150,000 in public dollars were spent.
Serenity shut its doors some time ago.
State Sen. Yvonne Dorsey-Colomb, D-Baton Rouge, whose legislative aide ran Serenity 67, said she had no idea the organization owed so much money in taxes.
“It’s bad. It’s absolutely bad. It shouldn’t have happened; but it’s happened to people with a lot more resources like Donald Trump,” the senator said.
Serenity 67 is one of scores of nonprofit organizations that have received state grants over the years, either from discretionary funds set aside for urban and rural legislators or as line items wedged into the budget for favored groups in a lawmaker’s district.
State Treasurer John Kennedy has been a longtime critic of grants to what the state budget refers to as “nongovernmental organizations” — nonprofits, essentially. In fact, in July 2006, he recommended that Gov. Kathleen Blanco trim most of those grants out of the budget.
When Bobby Jindal ran for governor the next year, he blasted the slush funds often tapped for the grants, and later established criteria that made it more difficult for the organizations to secure a spot in the state budget.
The year before Jindal took office, nonprofits, small towns and other entities received $29 million in the state budget for expenses ranging from community centers to reunions. The Jindal administration said the governor trimmed the amount of money for nonprofits and other community organizations to $9.4 million in the 2009-2010 state fiscal year. Last state budget year, the figure dropped to $250,000, although that does not include dollars that organizations receive through the state construction budget.
While the governor has been successful in reducing the amount of state operating budget dollars going to nonprofits, Kennedy wants state government to use its full muscle to reclaim what he estimates is $2 million in grant money for which there was no accounting.
He wants the state to use its new state debt-recovery unit, created this year, to track down the missing grant money. He also wants Legislative Auditor Daryl Purpera to demand explanations from nonprofits that ignored requests for details on how they spent state dollars.
“It clearly has gotten better,” Kennedy said. “But if you dig down deep, you will find that many of them are still getting (taxpayer funding).”
So far, getting the taxpayers’ money back has proven difficult.
The investigation trail often is littered with tax liens, disconnected phone numbers and bad addresses. In some cases, Kennedy says, the organizations don’t even respond to his letters.
The money doled out to nonprofits in the past often went to districts overseen by legislators who were on good terms with the presiding governor. The grants are a way of bringing money home to legislative districts and are especially popular in urban areas such as New Orleans and Baton Rouge.
In New Orleans, lawmakers’ grants came under more scrutiny when it emerged in 2006 that allies and relatives of then-U.S. Rep. William Jefferson had set up a string of nonprofits, steered state money to them and then helped themselves to much of it. In the end, the nonprofit scandal resulted in the convictions of 4th District Assessor Betty Jefferson; her daughter, Angela Coleman; Jefferson’s sister, Brenda Foster; and former state Rep. and City Councilwoman Renee Gill Pratt.
Gill Pratt was the longtime companion of Mose Jefferson, who was also charged in the scam. He died in prison, having been convicted in a separate case of paying bribes.
The recipient of Mose Jefferson’s bribes was Ellenese Brooks-Simms, the School Board member who helped set up the Algiers Enterprise Community Council, which has received state dollars. Brooks-Simms pleaded guilty to taking money from Jefferson, testified against him and was sentenced in 2010 to 18 months in federal prison.
Though the state eventually forced nonprofits taking taxpayer money to sign legal agreements with the state and open up their books for auditors, the government was not always very strict with the organizations. Legislators cut checks to organizations that owed money to the state, or were cluttered with tax liens. At least one group disbanded and then resurfaced, accepting money from the state without accounting for it because the legislative auditor thought the organization no longer existed. Other groups received an appropriation that was too small at the time for the auditor’s office to send in an accountant to see where the money went.
The treasurer’s push for receipts and other financial information ignited a political quarrel with Dorsey-Colomb and her husband, Sterling Colomb.
State dollars went years ago to a neighborhood group run by Dorsey-Colomb’s aide and to her now-husband’s foundation.
“They did good stuff for the public. They’re imperfect ... but they did good stuff,” Dorsey-Colomb said in Serenity’s defense.
Purpera said he looked at the NGOs that failed to turn over financial documents to Kennedy’s office.
He said some reported properly to the auditor’s office.
“For each that has not reported, we have already applied efforts to obtain their compliance to the law. Now it is a question of practicality and expense. Some ... have dissolved and others the time that has passed and amount in question do not warrant the spending of taxpayer dollars to seek action in the courts,” Purpera said.
Many of the organizations appear to no longer exist.
The phone number listed on old documents is disconnected. The mailing address changed hands. In one case, the address listed as an organization’s headquarters went into foreclosure. Yet many of the organizations left a paper trail because they neglected to pay taxes, failed to cut the grass or engaged in legal battles.
BASIC of Louisiana Inc. received $85,000 during the 2007 legislative session.
At one time, BASIC Inc. — or Black Alcohol/Drug Service Information Center — had branches in Louisiana and Missouri aimed at reducing addiction issues in the black community.
Hurricane Katrina heavily damaged BASIC’s Louisiana offices at 1111 S. Jefferson Davis Parkway, New Orleans, but the organization rebounded enough to secure money in the state operating budget two years later.
Not long after the state wrote the organization a check for $85,000, a fire destroyed the New Orleans building and triggered a legal battle with a contractor that finally ended earlier this year.
BASIC settled the dispute out of court. Xavier University bought the fire-damaged building for $350,000. BASIC’s website still lists its razed office building as its address. BASIC never filed an audit report on the $85,000 it received from the state in 2007.
The Legislative Auditor’s Office was unsuccessful in trying to contact the organization.
“The letters were returned to us. We weren’t able to find them,” said Joy Irwin, assistant legislative auditor.
Calls and emails to BASIC’s office in Missouri were not returned.
Young Emerging Leaders, of Baton Rouge, got a check for $55,000 in 2007, even though it supposedly dissolved four years earlier according to the legislative auditor’s records.
The money came with strings. Prior to 2010, any organization that received more than $25,000 from the state was supposed to file a detailed audit report with the Legislative Auditor’s Office.
The audits are scanned and posted online. The reporting requirements got more stringent after 2010.
Irwin said Young Emerging Leaders never filed the state’s required financial report after receiving public funds.
“We should have a report for them for 2007, but we don’t because our CPA told us they had closed. It’s not a perfect science,” she said.
Serenity 67, which was run by Dorsey-Colomb’s aide, Patsy Parker, did file reports with the auditor’s office.
The organization also has a fat file of records at the East Baton Rouge Parish Clerk of Court’s Office.
Nine liens eventually were filed against Serenity.
The Legislature gave Serenity $150,000 in 2007. At the time, Serenity owed $316.49 in payroll taxes to the Louisiana Department of Labor.
Serenity’s legal problems include the tax lien filed by the federal government because the organization allegedly failed to withhold taxes from employees’ paychecks.
Serenity also owes $16,940.22 in payroll taxes to the state and $165 to Baton Rouge, which cut weeds on a vacant lot reportedly owned by the organization.
Dorsey-Colomb said Serenity owns a building on Eddie Robinson Drive that churches use in exchange for paying the light bill. She said the group does not own a vacant lot.
Serenity told the Legislative Auditor’s Office sometime in 2010 or 2011 that it only had $27 in the bank. Liabilities at the time included more than $12,000 in bank overdrafts and $134,176 in owed taxes.
Dorsey-Colomb invested her own money into the group, which helped senior citizens and youths in one of the poorest neighborhoods in Baton Rouge.
Serenity 67 built a compact office on land that Dorsey-Colomb purchased for the organization on Eddie Robinson Drive.
The senator said she wanted to help the neighborhood after rising out of poverty herself.
Her mother died when she was a young girl. She never knew her father.
It was left to a grandmother with a third-grade education to raise Dorsey-Colomb.
Serenity’s purpose was to take senior citizens to doctors’ appointments and give children a place to go after school.
Dorsey-Colomb said the organization embraced children who were turned away by other nonprofits because they cursed or showed a violent streak.
Where the organization struggled was in its bookkeeping.
The state also wants information on the Colomb Foundation, a Lafayette organization started by Dorsey-Colomb’s husband, Sterling Colomb.
Kennedy said the Colomb Foundation dumped a bunch of documents on his office when he asked for details on how $300,000 in state funding was spent.
He said Sterling Colomb called him a racist. Kennedy said he asked Purpera’s office to look at the documents because the issue got personal. “I want another pair of eyes,” Kennedy said.
Dorsey-Colomb said her husband was hurt by the media attention that arose after Kennedy publicized efforts to look at the NGOs’ finances.
She said her husband is a kind and mild-mannered person who started working in the fields at age 6 to help his sharecropper father, fought in the Vietnam War, lost a daughter to a convicted serial killer and put his own money into a foundation created to make something positive out of his losses.
“The treasurer and my husband need to have a handshake and a glass of orange juice. Maybe when this is all over with, I’ll take Sterling Colomb up to meet John Kennedy. I think both men have good in them,” she said.
In the meantime, Dorsey-Colomb said, she will try to resolve Serenity’s problems now that she knows about them.
She said she will negotiate with the IRS to lower the tax bill and raise money from Serenity’s graduates to clear the debt.
“I won’t turn my back on a kid or a senior citizen ... and I will not turn my back on something that did so much good,” she said.
Another organization that Kennedy chased is the Algiers Enterprise Community Council.
The organization’s leaders told state officials in 2004 that they planned to discontinue operations because of continued financial losses, tax problems and liabilities.
Two years later, legislators gave the organization $25,000 in the state operating budget.
How the money was spent is unclear.
The group, whose leaders at one time included former Orleans Parish School Board President Brooks-Simms, told state officials that the money would be used to run a charter school. But the school never opened. Victoria Dahmes, who briefly served as the council’s president and signed paperwork with the state, said she has no idea what happened to the state’s money or if the council even received it.
“The AECC did not receive final approval to open a charter school, so I can’t imagine why the State would send 25K for a school that never existed,” Dahmes said by email.