FBI is asked to investigate AIDS nonprofit

Organization's director accused of misusing funds

March 26, 2004|By Kate Shatzkin and Lynn Anderson | Kate Shatzkin and Lynn Anderson,SUN STAFF

Baltimore's health commissioner is asking the FBI to examine the finances of a local AIDS organization whose executive director received large bonuses, paid for a personal trainer with charity funds and authorized a loan to another nonprofit organization whose board he leads.

Dr. Peter L. Beilenson said last night that he is seeking the investigation because Health Education Resource Organization, known as HERO, receives federal money through the city to provide services to its 3,500 clients with HIV and AIDS.

Beilenson said he had "great concern" about allegations raised last week about executive director Leonardo R. Ortega, who fired deputy director Indira Kotval three days after she told HERO's board of directors she thought he was misusing funds.

A spokesman for the FBI could not say whether the Baltimore office would investigate Ortega.

Investigations into allegations of white-collar crimes are rarely discussed in public, said Special Agent Barry Maddox.

In an interview Wednesday, Ortega said he had not misspent HERO money. He said his employment contract with the organization allowed him to pay for the trainer as part of a "wellness package" and authorized the bonuses, which could come to $16,000 this year on top of his $122,000 salary.

He said the contract also gave him the power to make the loan to Centro de la Comunidad, an East Baltimore Latino organization, and that the $3,000 was quickly repaid.

Still, Beilenson said, "The allegations were serious. It's quite a high salary for a nonprofit in the city. The thing that bothers me is paying himself bonuses. That may be OK in the corporate world, but what is it tied to? That is just very unusual."

HERO's current and former board treasurers released a statement Wednesday saying an internal investigation found that Ortega had done nothing wrong. The statement included a sentence that said it was endorsed by the board's executive committee. But other board members have said privately that they are not satisfied with the inquiry. They are scheduled to meet Monday.

The board inquiry "is not adequate when there are significant amounts of federal funds," Beilenson said. "I think it's incumbent upon us to make sure there's a full investigation."

HERO has an annual budget of more than $4 million, most of which comes from government grants such as the federal Ryan White program named for a young victim of AIDS.

The organization, founded 21 years ago to address the emerging AIDS epidemic, operates a drop-in center at 1734 Maryland Ave. that has a clinic for HIV patients, and legal, housing and mental health services. The Ryan White program provides care for low-income and uninsured people with the virus.

Beilenson said the Health Department would continue to pay the grant to HERO while seeking an investigation but would do so with "strict controls."

The Maryland Association of Nonprofit Organizations is also examining HERO's books because the organization is certified under its Standards for Excellence program, which requires compliance with standards of governance and accountability.

Ortega could not be reached for comment last night.

Roderick G. Clark, HERO's development director, declined to comment on Beilenson's call for an investigation. "I can't say anything," he said. "I didn't know about this."

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