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Air america radio station financed through fraud { September 28 2006 } Original Source Link: (May no longer be active)
http://www.nytimes.com/2006/09/28/nyregion/28air.html?_r=1&oref=sloginhttp://www.nytimes.com/2006/09/28/nyregion/28air.html?_r=1&oref=slogin
September 28, 2006
Bronx Charity to Repay the City $625,000 Given to Radio Network as a Loan
By SEWELL CHAN
A Bronx charity will pay the city back $625,000 that had been intended for children and the elderly but was improperly lent to Air America Radio, a network known for its liberal programming and hosts like Al Franken.
The settlement, announced yesterday by the city’s Department of Investigation, is the latest but probably not the final chapter in an investigation that began last year.
The state attorney general’s office is continuing to look into the misuse of the funds, and the case has been transferred from its charities bureau to the criminal prosecutions bureau, two people close to the investigation said yesterday.
City investigators found that the charity, based in Co-op City and formerly known as the Gloria Wise Boys and Girls Club, lent $875,000 to Air America Radio. At the city’s request, the network put the money into an escrow account while the investigation continued.
Now, $625,000 will be returned to the city and $250,000 will be turned over to the charity for its operations. The $625,000 recouped by the city includes $250,000 from the Department of Youth and Community Development and the Department for the Aging that the charity misused from 2001 to 2004 and $375,000 in overpayments from the Department of Education to a nursery and kindergarten run by the charity from 1997 to 2006.
“This is a somewhat shocking case,” said the commissioner of investigation, Rose Gill Hearn, who described the circumstances as “clearly unusual.” She said the recovery of the money was significant because “most of the time, people spend it and it’s dissipated.”
Ms. Gill Hearn said that the investigation into the charity involved “a copious analysis and forensic audit of their books and records.” In some instances, officials at the charity fabricated invoices for consulting services that never existed.
Until last year, Gloria Wise and an affiliated charity, Pathways for Youth, relied on the city for nearly 80 percent of their budgets. The city no longer has contracts with Gloria Wise.
Frederick A. Lewis, who in January became chief executive of the charity, now called the Gloria Wise Community Center, said, “Amen to it,” when asked about the settlement.
Mr. Lewis said he had been brought in to clean up the organization, named for Gloria E. Wise, a social work administrator and youth advocate who died in 1993. It has a new board of directors, but without city contracts, he said, “we’ve been scratching the bottom of the barrel” to stay afloat.
Jaime Horn, a spokeswoman for Piquant L.L.C., which has owned Air America Radio since May 2004, said, “Piquant L.L.C. and the current management of the network had no involvement in the transaction, but we’re pleased to have this issue resolved in a responsible manner.”
Evan McElroy, a spokesman for the Boys and Girls Clubs of America, based in Atlanta, said that the Bronx charity was an affiliate of the national network of youth recreation programs until last year, when it was dropped from membership for failing to manage its finances properly.
Copyright 2006 The New York Times Company
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