INVESTIGATION: Nonprofit Misspent Federal Funds, Accused of Endangering Abused Women

Thursday, June 12, 2014

Stephen Beale, GoLocalProv News Contributor

 A local nonprofit that aids victims of domestic violence is being accused of repeatedly misspending and mismanaging federal money while potentially endangering the abused women it serves, according to a whistleblower lawsuit filed by a former employee.

The nonprofit, Sojourner House, and its former employees have been under investigation by at least three separate federal agencies—the FBI and the Office of Inspector General and the Office of Violence Against Women at the U.S. Department of Justice, according to documents provided in response to a Freedom of Information Act request.

 At the center of the investigations has been the purchase of a residence in Woonsocket that federal authorities say violated the terms of one of the federal grants awarded to Sojourner House. That apparently triggered a series of audits and other federal reports that identified more than $600,000 in misspent, mismanaged or questioned costs, along with more than a dozen other audit findings roughly between 2008 and 2010.

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Officials at Sojourner House say the issues identified in federal reports have been resolved—as shown by recent audits for the fiscal years 2011 through 2013—but now the nonprofit is facing new allegations of fraud and mismanagement.

In an amended lawsuit filed in state court earlier this month, a former employee at Sojourner House, Lisa Fisher, claims that she was asked to solicit bids for a sprinkler system that had already been installed using federal funds. Her refusal, she claims in court filings, led to her eventual firing, in December 2011.   

Home purchase from a questionable owner, financed by troubled bank

In her lawsuit, Fisher claims she was fired for acting as a whistleblower and describes her conflict with superiors as part of a pattern of mismanagement, potential fraud, and other questionable financial deals that stretch back to 2008, when Sojourner House purchased the home. (Because disclosure of the home’s location could undermine the safety of the women who reside there, GoLocalProv is declining to publish its street address.)

Federal and municipal records show that Sojourner House bought the Woonsocket home in 2008 from owner Harilaos “Harry” Apazidis, a Massachusetts-based real estate owner and investor. The lawsuit alleges—and a GoLocalProv review of federal court filings and municipal records in Woonsocket and Massachusetts confirms—that Apadizis was convicted in federal court in 2011 on three counts of making false statements to a New York bank and twenty counts of unlawful monetary transactions.

The federal case is connected with a restaurant in Weymouth, Massachusetts. But Apazidis also sought out a loan to finance the purchase, refurbishment, and resale of homes in Providence, Rhode Island, according to federal prosecutors.

 Documents obtained by GoLocalProv indicate that Sojourner House bought the house at price far greater than it was worth. Sojourner House paid Apazidis $295,000 for the house, according to a trustee’s deed. The property currently has an assessed value of $173,600, according to Woonsocket city records. In an March 30, 2010 internal memo, the former interim executive director told board members the nonprofit was struggling to pay “off a large mortgage on an apartment building that was worth far less than what was paid for it.”

Sojourner House bought the home using a mortgage obtained through the Rhode Island-based Freedom National Bank, which in March 2010 was deemed to be in “troubled condition” because of “unsafe and unsound banking practices” by the Office of the Comptroller of the Currency, an agency of the U.S. Department of the Treasury.

In her suit, Fisher claims that current Sojourner House board member Christine Curtis is a former employee at Freedom National Bank and helped arrange the loan. A vice president at the bank yesterday confirmed that the institution had a former employee named Christine Curtis, who had left by the start of 2012. (Curtis has been on the Sojourner House board since at least January 2012.) The bank official, Andrea White, was not aware of what her relationship was with Sojourner House but she said that Curtis had held a position in the commercial lending division.

White declined to comment on status of the bank’s agreement with the Comptroller and whether it was related to any individual loans the bank had serviced.

Fisher also alleges in recent court filings that a second board member, Barbara Scanlon, a broker associate at Re/MAX, also helped orchestrate the deal. In a brief interview, Sojourner House board president Neville Bedford said he could not comment on any matters related to the ongoing litigation. When a reporter asked about Scanlon’s work, Bedford responded: “I’m going to terminate this interview and wish you the very best.”

Mortgage led to federal investigations

In 2007, Sojourner House received a $255,000 grant to provide transitional housing for abused women. In 2008, the nonprofit bought the home in Woonsocket—an action that violated the terms of the grant and was done without permission from the federal agency that provided the grant, the Office of Violence Against Women. The mortgage put a “significant financial burden” on Sojourner House, according to a December 2009 report from the federal agency.

 An internal memo obtained by GoLocalProv reveals the full magnitude of the nonprofit’s financial troubles at the time. In August 2009, Sojourner House was running a budget deficit of more than $230,000 and it had overdrawn its federal grant by more than $100,000, according to the March 30, 2010 memo, which was submitted by the former interim executive director, Mary Bobrowski, to the board of directors. The memo cites a “total lack of financial oversight” at Sojourner House.

The grant violation appears to have led to a series of federal investigations.

The Inspector General at the U.S. Department of Justice launched an investigation into “suspected fraud” by the former executive director and found none. But authorities did conclude that there were “major financial concerns” at Sojourner House, turning the investigation over to the Office of Violence Against Women, according to a May 18, 2010 letter from the agency.

An audit for the previous fiscal year questioned $621,689 in spending from a dozen grants received by Sojourner House. Auditors also identified sixteen instances of noncompliance with federal grant rules and “twelve material weaknesses in internal control over major federal award programs.”

Ultimately, Sojourner House had to refund just a fraction of that amount—$35,122, according to the Office of Violence Against Women.

Safety of house for abused women questioned

Sojourner House was also allowed to keep the house in Woonsocket, using a separate grant from Rhode Island Housing to pay off the entire balance of the mortgage by September 2010, according to federal documents.

 When it had originally applied for the 2007 grant, Sojourner House told federal authorities it would use the money to provide transitional housing for abused women in scattered sites, instead of a single location.

In her suit, Fisher alleges that housing the women in a single location undermines their safety. “While purportedly a safe house, it is in fact located in the middle of several housing projects and is decidedly unsafe, and women are being housed in the basement,” asserts Fisher’s attorney, Nicholas Gelfuso, in an amended complained filed early this month in Providence County Superior Court.

The manager for a scattered site transitional housing program in Massachusetts told GoLocalProv that both scattered sites and a single location are acceptable models for helping abused women. “It all depends on how you set it up and the policies and procedures you put in place to ensure the safety of your participants and your staff,” said Kathy Facchini, the program manager at the South Shore Housing Development Corporation, which is headquartered in Kinston, Mass. near Plymouth.

In its December 2009 report, the Office of Violence Against Women did not identify a single location for transitional housing as a problem. The report did note that at the time Sojourner House had yet to install an alarm system in the building, but it also praised staff for being safety conscious.

Ex-employee says she was fired for questioning bid process

During her own tenure as an employee at Sojourner House, Fisher says her experience fit a pattern of mismanagement and questionable spending, according to court filings.

Fisher was hired in May 2009 to be the Residential Director at Sojourner House. Her responsibilities included oversight of the embattled transitional housing program. In a November 2012 complaint submitted to the state Human Rights Commission, Fisher says problems at her job began with the arrival of the new executive director, Vanessa Volz, early in 2011. 

 In mid-March, Fisher says Volz asked her to solicit bids for a sprinkler and fire alarm system. The problem: the system had already been installed. The first company Fisher called refused to provide a quote for work that was already done and for which it had no chance of getting the contract. She says her relationship deteriorated after she reported the difficulties to Volz, eventually ending in her firing at the end of the year.

In a Feb. 25, 2013 response to the complaint, an attorney for Sojourner House said Sojourner House received a Community Development Block Grant for the sprinkler system prior to Volz’s arrival. “However, the appropriate bid process had not been followed, and the funding entity directed Ms. Volz to solicit three comparable sprinkler bids even though the work had already been completed,” wrote the attorney, Lori Silveira, of Adler Pollock and Sheehan.

“Ms. Fisher challenged the need for the bids and complained about the task to Ms. Volz and other staff (including the bookkeeper who was on staff at the time), rather than simply completing the assignment she had been given,” Silveira added.

Fisher’s attorney says she was well within her legal rights to refuse to participate. “Naturally, Ms. Volz attempted to pass this possibly imaginary and likely illegal responsibility on to Ms. Fisher… namely, solicit fake bids for work that had already been done, otherwise known as fraud,” wrote her attorney, Gelfuso, in an April 25, 2013 memo to the Human Rights Commission.

Gelfuso wrote that Fisher was protected by the Rhode Island Whistleblowers’ Protection Act, which among other provisions, stipulates that employees cannot be fired or discriminated against for refusing to “violate or assist in violating federal, state or local law, rule or regulation.” Gelfuso reaffirmed that argument in a lawsuit filed in state court last October.

Earlier this month, he filed an amended complaint in state court, also alleging defamation, violation of Fisher’s right to privacy, breach of contract, and civil conspiracy in connection with her firing and the subsequent court proceedings. On Wednesday, Superior Court Judge Joseph Montalbano denied Silveira’s motion for final judgment, allowing the case to go forward.

Silveira and Volz both did not respond to requests for comment. Gelfuso declined to make Fisher available for an interview and he also declined to comment for this report.

 Congressional delegation says it was unaware of allegations

Last September, all four members of Rhode Island’s Congressional delegation issued a joint news release announcing that $300,000 in new federal funds had been awarded to Sojourner House for its transitional housing program.

When asked why they had supported a grant for an organization that has been under federal investigation and was facing new allegations from a former employee, officials for two members of the delegation said they had been unaware of the issues at Sojourner House until the initial filing of the lawsuit last October.

“The problems at Sojourner House didn’t come to light until nearly two months after this grant was announced,” said Seth Larson, the communications director for U.S. Senator Sheldon Whitehouse.

“The story to which you are referring broke in late October of last year. As you can see from the date of the original release, the delegation’s grant announcement came nearly two months prior. The Congressman was unaware of the allegations detailed in the lawsuit at that time,” said Meg Fraser, spokeswoman for Congressman Jim Langevin.

Two other Congressional spokesmen emphasized the good work that Sojourner House does in spite of the allegations. “The complaint against Sojourner House was filed after the organization secured this grant to aid its transitional housing program. Sojourner House and its staff provide a lot of important support services to assist victims of domestic violence in Rhode Island,” said Andrew Gernt, spokesman for Congressman David Cicilline.

“Sojourner House has a lot of very dedicated people who work hard helping victims of domestic violence,” added Chip Unruh, spokesman for U.S. Senator Jack Reed. “Also, as I understand it, this was a competitive grant which was awarded by the U.S. Department of Justice’s Office on Violence Against Women.”

 In Woonsocket, city councilman Garrett Mancieri told GoLocalProv that the Community Development Block Grant would have been awarded through the city. He said he could not comment on the specifics in the lawsuit filed against Sojourner House—with which he said he was unfamiliar—but he said members of the council would be concerned about any inappropriate spending in a city that has had a close brush with bankruptcy.

“I want to make sure that we spend the Community Development Block Grant money to the best of its ability,” Mancieri said.

If the allegations made by Fisher are proven in court, Mancieri said the council would close “scrutinize” any future funding requests Sojourner House makes to the city.

In separate interviews, both Bedford, the president of the Sojourner House board, and Deborah DeBare, the executive director of the Rhode Island Coalition Against Domestic Violence, expressed confidence that the financial and administrative issues that arose at Sojourner House between 2008 and 2010 have been resolved.

DeBare said she was not familiar with the allegations in the lawsuit, but she said if any new issues had emerged they would have been identified in audits for subsequent years, which her agency reviews because Sojourner House is one of about half a dozen organizations that receives a total of $2.5 million in funding from the coalition. “So I can certainly vouch for those contracts,” DeBare said.

 Status of FBI investigation remains unclear

It also remains unclear what became of an FBI investigation that was launched in conjunction with the probes by the two other federal agencies.

In a May 5, 2010 letter, apparently addressed to the Office of Violence Against Women, the former president of the board notes that it fired its executive director in July 2009 after it discovered “grossly inaccurate data in the reports filed with our grantors.”

“Without disclosing more than we can at this point, there is an open investigation into allegations of criminal activity by a former employee,” added the former board president, Patricia Hessler. “Staff and directors are cooperating fully with authorities including investigators from the FBI and the Office of Inspector General. Sojourner House Board of Directors is not a subject of this investigation.”

A spokesman for the regional office of the FBI in Boston did not respond to a GoLocalProv request seeking comment.

In her letter, Hessler, who is still a board member, expressed hope that Sojourner’s financial and legal troubles were behind it. “We have much work to do, but the hard part is behind us. We are optimistic that we have the leadership and resources to move beyond this unfortunate time,” she wrote. 

Stephen Beale can be reached at [email protected]. Follow him on Twitter @bealenews

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Related Slideshow: Sojourner House: Safety and Financial Issues

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