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December 13, 2012

 

DiNapoli: After-School Provider Diverted Public Funds For Personal Use

State Education Department Failed to Monitor $2.7 Million Contract

The executive director of Baychester Youth Council (Baychester), a Bronx after-school provider, sought reimbursement for $250,400 in inappropriate or undocumented expenses, including an electronic theater that was installed in her home, according to an audit and investigation released today by State Comptroller Thomas P. DiNapoli.

“This director used public money to buy two televisions and a Blu-Ray home theater at the expense of children in need,” DiNapoli said. “The State Education Department should be a better watchdog of high-risk providers such as Baychester, which failed to pay taxes and had its New York City contracts terminated.”

The Comptroller referred his findings to the Bronx District Attorney’s Office for further investigation of Earnestine Russell, executive director of Baychester. The provider had a $2.7 million, five-year contract with the State Education Department (SED) to provide 200 children in grades five through eight with academic enrichment programs during non-school hours.

DiNapoli’s auditors and investigators found that, from July 2010 to June 2011, Russell submitted $250,400 in unsubstantiated or inappropriate claims, including $189,303 which could not be accounted for and, $3,519 for electronic equipment delivered to and installed in Russell’s home. Russell also admitted to giving a $3,000 loan to Baychester’s board chair and using $4,990 for her own rent and a personal hotel stay. Auditors also concluded that at one point Russell paid employees in cash but kept no legal record of how much each employee received.

As a result of the Comptroller’s findings, SED discontinued payments to Baychester and cancelled its contract. The contract is part of the federally-funded 21st Century Community Learning Centers program administered by SED, which is intended to help students meet standards in core academic subjects such as reading and math, and other enrichment activities.

DiNapoli’s auditors also found that SED did not request documentation to support the expenses claimed by Baychester, yet approved payments totaling $545,000 during the Comptroller’s examination.

Other risk factors that should have raised suspicion at SED included Baychester’s failure to:

  • Pay federal and state withholding taxes and unemployment insurance on time;
  • Submit timely Annual Filing for Charitable Organizations to the New York State Attorney General for 2007, 2008 and 2009;
  • Report $18,419 in revenue it collected from parents and other groups; and
  • Comply with its New York City Department of Youth and Community Development contracts. Those failures included Baychester’s improper payments to Russell’s relatives and led to the contracts’ termination.

In response to the Comptroller’s report and recommendations, SED stated that it has cancelled its contract with Baychester, begun recovery of Baychester’s improper expenses and has boosted oversight of Community Learning Center grantees.

For a copy of the report visit: http://www.osc.state.ny.us/audits/allaudits/bseaudits/bse2011-0021.htm>


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