SAN DIEGO: Sources cite allegations that records forged at ECS
By Jeff McDonald
UNION-TRIBUNE STAFF WRITER
April 1, 2004
Local prosecutors have opened a criminal investigation into Episcopal Community Services, one of the area's oldest and most-respected charities that also has weathered questions about its leadership before.
The District Attorney's Office is particularly interested in records charity officials turned in to the county that investigators suspect were doctored to make it appear the organization was meeting the terms of public contracts, several sources said.
During the past two weeks, prosecutors have been interviewing former ECS officials and collecting documents to determine if reports, checks or other paperwork were forged or manipulated, as some people suggest.
The District Attorney's Office would neither confirm nor deny the probe. But a handful of former ECS directors and vice presidents said they were interviewed or provided documents to investigators in recent days.
Several disputes County officials "are investigating a number of questionable business practices at ECS, some of which are disturbing to me," said Joel Craddock, a former ECS vice president who met with investigators. "Whether or not these constitute criminal wrongdoing will be up to the district attorney."
Craddock is one of several top officials who quit San Diego-based ECS in the past year and a half because of disputes with the agency's executive director, the Rev. Amanda Rutherford May.
May, 53, is an Episcopal priest and a certified public accountant who took charge of the charity in 1994. May, who declined several requests for comment yesterday, oversees more than $20 million a year in government contracts and private donations to serve homeless, mentally ill and other clients.
The investigation began in the middle of last month after Craddock and other former colleagues met with county Supervisor Dianne Jacob to lay out concerns about the way ECS spends and accounts for its government contracts, including some San Diego County-funded programs.
They took their case to Jacob only after warning Bishop Gethin Hughes of the Episcopal Diocese of San Diego about what they suspected was wrongdoing within the charity, and seeing no changes in ECS leadership.
The bishop was stunned when he was told of the investigation during an interview yesterday. "I'm just shocked that it's reached this point," he said.
Hughes, who is chairman of the 13-member ECS board of directors but gets just one vote, said he raised questions at a board meeting several months ago, after reports about accusations of misconduct first became public.
"I've expressed as forcefully as I can my deep concerns and urged them to take action," he said.
However, none of those concerns rose to the level of criminal wrongdoing, he said, and the other board members did not agree with him. "I did give it my best shot and nothing came of it."
He said he would not comment about the district attorney's investigation. "I'm not going to jump in and condemn someone before I have all the details," Hughes said.
Jacob, the county supervisor, was compelled enough by what she heard and the documents she saw during a meeting last month with former ECS officials that she contacted the district attorney within hours.
"Their allegations are deeply troubling and exceed the scope of what county auditors have the authority to examine," Jacob said in a prepared statement. "I cannot be more specific."
The supervisor called the group courageous for not simply looking the other way. "They decided that they could not stand by and watch as the charity's mission became compromised," the statement said. Previous investigation Episcopal Community Services, or ECS, was founded in 1927 as the charitable arm of the diocese. Its primary mission is to care for the area's neediest people and at the same time to spread the word of Christ.
Over the years, ECS grew in both size and budget. It now employs almost 500 workers and spends more than $20 million a year serving thousands of poor and sick people a day and providing such services as housing, counseling, day care, job training and drug and alcohol recovery programs.
Last September, the agency moved to new offices, consolidating many of its programs into the City Heights Center on University Avenue. At the same time, it is working to boost fund raising and stoke a new endowment, which recently received $1 million pledges each from Price Charities and the Hervey Family Fund.
The San Diego Union-Tribune reported in 2002 that San Diego County auditors uncovered serious lapses in management, record-keeping and other ECS activities over several years. The auditors subsequently ordered changes in protocols and demanded thousands of dollars be repaid to government agencies. Two months later, the newspaper relied on a trail of public records and audit findings in outlining a wider series of missteps and deficiencies within ECS programs funded by city, state and federal government agencies.
The publicity prompted internal reviews by the ECS board of directors and the Episcopal Diocese as well as questions from some of the private donors who give large amounts of money to the charity, May, ECS' executive director, said later.
Government regulators did not undertake much additional scrutiny of the agency's records - an issue that might eventually become part of the district attorney's investigation.
Meanwhile, ECS continued to rack up citations and penalties from the various auditors and compliance monitors who routinely examine grants and other projects. The charity also has been saddled with high turnover among its top administrators.
No fewer than six vice presidents, directors and others moved on in recent months - many because of disagreements over how programs were managed and books were kept. Several of those are the same people who brought their concerns to the bishop, then Supervisor Jacob and the district attorney.
"It is not my intent to see the Rev. May in jail, but she should be stopped from using county and donor funds to cover the salaries of her brother, son, daughter and friends," said Guinevere Kerstetter, the former chief financial officer who left in 2002 over an accounting dispute with May.
According to multiple former ECS employees, revenue was used to hire friends and relatives of the executive director while programs were cut. More than one ex-worker said some of the people May brought in were unqualified, performed poorly or failed to show up.
"I could never understand how the agency passed county and outside firm audits," said Steve Pesicka, a longtime ECS program director who left last year and is cooperating with investigators. "Nor did I understand how the bishop and board of directors continued to accept fiscal reports from the executive director without questions or scrutiny.
"It didn't make sense when some of my programs didn't have money for essentials like toilet paper, paper towels and copier refills."
Eight additional former ECS executives contacted by The Union-Tribune said there were serious problems with the organization but declined to discuss them publicly. Standing by May May is a San Diego native and Stanford University graduate who also earned a degree from the London School of Economics. She was appointed ECS executive director 10 years ago, when the agency was emerging from a major reorganization, and is credited with building the charity into the multiservice agency it is today.
An ordained minister who occasionally preaches to Episcopal congregations, May is by many accounts capable of incredible kindness and generosity. But she also swears frequently and publicly berates employees who disagree with her, some former employees said.
ECS board members appear to be unwavering in their support of May and her management practices. When told about the criminal probe yesterday, several of the volunteer directors said they do not believe the organization had broken any laws.
"Am I surprised to hear there is a criminal investigation? Yes," said Rolfe Wyer, who is president of the board of directors. However, "I am standing behind her."
Board member Johanna Hunsaker, a professor of management and organizational behavior at the University of San Diego, was firmly in support of the current ECS leadership.
"I have compete confidence in the executive director, Amanda May," said Hunsaker, who declined to comment further.
Tally Jarrett, who was elected an honorary life member of the ECS board, said he could not imagine charity officials doing anything illegal. "I think our finances are in pretty good shape," he said.
Several other board members did not return telephone messages yesterday seeking comment on the probe.
The board has a previously scheduled daylong retreat today at the San Diego Yacht Club. Bishop Hughes will be out of town on unrelated business, but Wyer said discussions would include the district attorney's investigation.
END