Problems mount for AIDS agency

Crisis: Fund raising suffers amid staff upheaval and a federal probe at HERO.

May 22, 2004|By Julie Bell | Julie Bell,SUN STAFF

One of Baltimore's most comprehensive AIDS organizations faces a widening crisis as board members resign, key staffers are laid off and a federal investigation continues.

Six employees of the Health Education Resource Organization, including the agency's fund-raising coordinator and its housing services director, were laid off this week. This added to an exodus that began in mid-March when the organization fired its deputy director three days after she alleged that Dr. Leonardo R. Ortega, the executive director, had misused agency money - a claim he has denied.

Four board members have resigned since those allegations were made, including clinical social worker Jeffrey Falk. He quit Monday morning just before an emergency board meeting called after the agency failed to pay some of its employees last week.

"The bottom line is I no longer feel comfortable taking fiduciary responsibility for HERO when I have not gotten enough information to make a determination one way or the other what's going on," Falk said in an interview.

The layoffs and resignations come at a critical time for HERO, which is struggling to attract donations for its June 4 AIDSWalk, the agency's biggest private fund-raising event of the year. They also come despite outside reviews that found no spending improprieties in two different grant programs.

The agency - which provides medical and legal help, counseling and other services for 3,400 clients with HIV and AIDS in Baltimore - gets the bulk of its budget of more than $4 million from government sources.

Financial crunch

But a dip in donations, which began with the weak economy and worsened with the allegations, has contributed to a financial crunch so severe that several top agency executives, including Ortega, who makes $122,000 a year, have worked without pay and intend to take salary cuts once pay resumes.

"By this time last year on AIDSWalk, we had $100,000 in pledges and cash," board member Wayne Merrick said. This year, he said, donor reluctance has meant "we're nowhere close" to that.

Meanwhile, HERO narrowly avoided the immediate revocation of its seal of excellence from the Maryland Association of Nonprofit Organizations. The association had threatened to revoke the certification - awarded to groups that meet its standards for accountability and governance - if HERO didn't produce requested financial records and other documents by 5 p.m. Tuesday.

HERO previously had submitted only a portion of the requested documents, then asked for a lengthy extension. The request was denied.

A HERO staff member delivered two boxes of documents at 9 a.m. Wednesday to the association's offices, good enough to keep the designation for now, association Executive Director Peter V. Berns said. The association's review continues.

Ortega has said his contract allows him to use HERO funds to pay for a personal trainer, and that he did not use the agency's credit card for personal business or give unauthorized loans to a fellow nonprofit.

Independent reviews

HERO continues to get federal grants, and at least two outside reviews of a portion of its programs have found no wrongdoing. The state said an audit revealed that $50,000 in AIDS Administration grant money was properly spent. And Baltimore, through which $1.4 million in federal funds flows to HERO, has decided to continue providing funds after a review.

"From all indications, none of the programs we fund have any irregularities that we could see," said Barbara Blount Armstrong, acting executive director for Associated Black Charities, the city's agent in overseeing about $1 million for HIV and AIDS health and support services.

Still unclear is why HERO failed for months to make payments to Health Care for the Homeless, said Jeff Singer, the organization's chief executive officer. Health Care for the Homeless provided two doctors and a nurse for HERO's medical clinic. The staffing funds were covered by a federal grant.

Healthcare for the Homeless received a payment of $123,000 from HERO last month, but Singer said this week that the delay was a factor in his nonprofit's decision not to renew the contract with HERO.

"They got paid," Ortega said, declining to explain why it took so long. "That's irrelevant to what happened there. That's history. We have to look forward."

HERO board President Carlton Smith said he would not comment on the medical clinic contract without an attorney present. But he said the organization should be able to make a definitive statement about its finances in mid-June, once the federal Department of Housing and Urban Development and outside auditors hired by the board complete their work.

The federal investigation is still an issue. Smith confirmed that the FBI has subpoenaed HERO documents from January last year through the present. An FBI agent also met with some staff members, as well as with agencies that provided grants to HERO, although Ortega said he wasn't interviewed.

Kevin Ropp, a spokesman for the Federal Health Resources and Services Administration, said his agency, which has renewed a $300,000 grant for HERO's clinic, is continuing to work with HERO to find a new clinic provider.

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