City's 'Mother Teresa' fails on finances

May 29, 1994|By Laura Lippman | Laura Lippman,Sun Staff Writer

In Baltimore, when someone has something to give -- a Thanksgiving turkey, money from a school bake sale, a truckload of shoes -- Bea Gaddy is the likely recipient.

This 61-year-old woman, known as the "Mother Teresa of Baltimore," has made her name the stamp of approval for local fund-raisers. She also made herself famous, showing up everywhere from the "CBS Morning News" to the "Jenny Jones" talk show. Billboards with her likeness are expected to go up around town soon.

Just last month, Ms. Gaddy was inducted into the African-American Hall of Fame in Atlanta. The Bea Gaddy story is even being peddled in Hollywood: One-time welfare recipient goes from feeding her neighbors to feeding thousands at a Thanksgiving meal billed as the world's largest sit-down dinner.

But for all of Ms. Gaddy's popularity, her organization, the Patterson Park Emergency Food Center, appears chaotic and loosely run to those who know it best.

An examination of state and federal records required for charities finds a pattern of missed deadlines, missing paperwork and little documentation for the thousands of dollars her organization has received over the past decade.

The organization has lurched from crisis to crisis without developing a budget to carry it through lean times. Despite receiving an estimated $300,000 last year, Patterson Park was broke at the start of this year -- in part, according to Ms. Gaddy, because "I spend every cent as soon as I get it."

The organization's unstable financial situation underscores more serious problems including:

* Poor and incomplete financial records. Until last November, Ms. Gaddy had violated state and federal laws for nonprofits, failing to file disclosure statements required for charities that raise more than $25,000 a year, according to the Internal Revenue Service and the Maryland secretary of state's office.

In January, she filed partial disclosure statements for 1991 and 1992. But the charity failed to comply with a state law requiring audits for charities that collect $200,000 or more annually, which would have applied to 1992. She has never been audited.

The secretary of state's office waived the requirement but said she must meet it next year, assuming she again takes in more than $200,000.

Ms. Gaddy blamed a volunteer accountant, no longer with the organization, for not filing the paperwork with the IRS and the state. She has a new accountant, who now deposits all checks sent to Ms. Gaddy's post office box, while Ms. Gaddy continues to write checks.

* Sloppy and unorthodox operating procedures. Those familiar with nonprofits say they use traditional accounting methods, which include a separation of powers: One person deposits the contributions, for example, and another one writes the checks.

Ms. Gaddy says Patterson Park has such a system now. Until recently, however, she herself controlled all the money: Ms. Gaddy was cashing checks at a local check-cashing store, and using a receipt book to document the hundreds of dollars in cash she pays to workers each week.

"She has a receipt for everything," board member and adviser Dave Adams said. But when Ms. Gaddy showed The Sun a copy of her receipt book, pages were missing and several were filled out with vague notations, such as "Gary -- $50."

Ms. Gaddy is similarly informal about payroll taxes. She and her advisers concede that she has never paid Social Security or other withholding taxes for Patterson Park workers, even a driver who earns up to $100 a week. While the IRS is not permitted to discuss specific cases, an IRS spokesman said that for any employee earning $600 a year or more the law requires -- at minimum -- filing income tax Form 1099. Ms. Gaddy says she has filed no such forms.

Last year, Ms. Gaddy drew money from a Patterson Park checking account to pay a $120 fine assessed in connection with her unsuccessful 1991 race for a City Council seat. Federal law prohibits nonprofits from any activity on behalf of an individual candidate. Ms. Gaddy says she was unaware of the prohibition, even though it appears in Patterson Park's own charter.

* Fraud and theft. In one incident, a volunteer forged Ms. Gaddy's name on a piece of letterhead stationery and used it to secure a line of credit to purchase a BMW from the state agency for surplus property, according to state officials.

Ms. Gaddy said she was unaware of the car purchase until she received a dunning letter from Claude Misher, of the state's Department of General Services. After determining that Ms. Gaddy's signature had been forged, she was not held accountable for the car, said Dave Humphrey, a spokesman for that agency. He said the state never recovered the car because it was destroyed by an electrical fire.

Patterson Park also has been hurt by theft among shelter residents, Ms. Gaddy said. She said the problem became so acute last year that it forced a temporary shutdown of the charity's men's shelter.

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