Renewal funds halted over possible fraud

Empowerment zone's village center may have misspent $70,000

August 31, 2004|BY A SUN STAFF WRITER

The nonprofit corporation overseeing Baltimore's multimillion-dollar federally funded empowerment zone revitalization effort has suspended funding to one of its five community-based village centers and says there is "the possibility of fraud" in the center's alleged misspending of $70,000.

Empower Baltimore Management Corp. suspended all funding in late June to the Harlem Park/Lafayette Square Village Center after an internal review found missing documents in the administration of a program to help find jobs for unemployed residents and an allegedly improper payment of $7,000 to the group's chair, officials said.

A further review found additional problems, including alleged improper payments of $22,000 to the group's executive director and $17,000 in unauthorized payments for furniture, Diane Bell, executive director of Empower Baltimore, said yesterday.

The suspension of funding and allegations of misspent money were first reported yesterday in The Daily Record.

A two-page explanation prepared for a meeting of the Empower Baltimore board last week said that as empowerment zone officials reviewed bank and payroll records from the village center "it became clear that there was the possibility of fraud."

Empower Baltimore contacted the Maryland Department of Human Resources, which is the conduit for $100 million in federal funding to the empowerment zone. The state agency then contacted the Office of the Inspector General of the U.S. Department of Health and Human Services, officials said.

The director of the Harlem Park/Lafayette Square Village Center, R. Howard Hill, and the group's chairwoman, Kari Jackson, resigned in late June, Bell said.

Efforts to reach Hill and Jackson yesterday were unsuccessful.

The Harlem Park/Lafayette Square Village Center has received about $2 million in empowerment zone funds since it was created in 1997, including about $500,000 last year and $200,000 in the first half of this year, officials said.

Village centers are locally controlled organizations designed to make empowerment zone services easily accessible to residents.

The empowerment zone has allocated about $8 million to its village centers. Most of the money to revitalize dilapidated sections of East, West and South Baltimore has gone to initiatives such as business loans, job training and homebuying grants.

Four other village centers exist, two each in East and West Baltimore. A fifth lost its funding in 1997, after similar problems with misspending.

Bell said the Harlem Park/Lafayette Square Village Center was unlikely to have its funding restored since Empower Baltimore is scheduled to go out of business in December, when its 10-year statutory authority expires.

Residents of Harlem Park and Lafayette Square can continue to obtain services through other village centers or through the empowerment zone's main office, she said.

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