Baltimore Health Commissioner Asks FBI To Investigate AIDS Education Organization Over Allegations of Misused Funds
Baltimore Health Commissioner Peter Beilenson has asked FBI to investigate allegations that the executive director of the Baltimore-based AIDS education and service group Health Education Resource Organization misused the organization's funds to hire a personal trainer and give himself thousands of dollars in bonuses, the Baltimore Sun reports (Shatzkin/Anderson, Baltimore Sun, 3/26). HERO's board of directors last week launched an investigation into HERO Executive Director Dr. Leonardo Ortega's conduct. HERO Deputy Director Indira Kotval, who was fired after outlining to the board her concerns about Ortega, in a recent report wrote that she had been concerned about Ortega's frequent absences over the past six months. When Ortega's assistant quit and outlined her own concerns about him, Kotval examined organization records and discovered that Ortega had paid a personal trainer with funds from the organization and listed the expenses under the heading "community relations." He also had awarded himself multiple bonuses of up to $3,000 each between November 2003 and January 2004, when the organization was having financial difficulties. Kotval said she also saw checks for $500 to $650 in per diem charges for food and travel, some of which were written during times when Ortega was not on business for HERO (Kaiser Daily HIV/AIDS Report, 3/23).
Beilenson said he has "great concern" about the allegations against Ortega and asked FBI to investigate because HERO receives federal funds to provide services to 3,500 HIV-positive individuals in Baltimore, according to the Sun. "The allegations were serious," Beilenson said, adding, "It's quite a high salary for a [not-for-profit] 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" (Baltimore Sun, 3/26). Beilenson said that he met with FBI investigators on Friday to provide information about the $1.4 million in federal funds that HERO receives through the city Health Department. The department will continue to pay the grants during the investigation but will strictly monitor the organization, Beilenson said (Shatzkin, Baltimore Sun, 3/27).
HERO's treasurer on Wednesday in a report said that Ortega "did nothing wrong" by giving himself thousands of dollars in bonuses and billing the organization for travel expenses, the Baltimore Sun reports. A report by HERO Treasurer Lataysheia Lance and former Treasurer Sara Smalley said, "[I]n our opinion, there were no improprieties on the part of the executive director." Ortega said that his contract, which extends through 2005, calls for him to receive $16,000 in bonuses this year in addition to his $122,000 annual salary. Ortega said that his contract includes a "wellness package" that allows him to expense the costs of a personal trainer (Baltimore Sun, 3/26). However, HERO board member Lou Curran on Friday said that "statements that [Ortega] has been cleared of all wrongdoing are misleading and unauthorized. They're premature" (Baltimore Sun, 3/27).
In addition to the other investigations, the Maryland Association of Nonprofit Organizations has begun a review of HERO, the Sun reports. HERO received MANO's "seal of approval" three years ago for "complying with standards of accountability and governance," according to the Sun. MANO Executive Director Peter Berns said that his group routinely reviews not-for-profit organizations when "questions are raised" about a certified group, according to the Sun. If problems are discovered, MANO could ask HERO to correct them or remove the organization's seal of approval, Berns said, the Sun reports. The HERO board of directors is expected to discuss the issues at a meeting on Monday. Board President Carlton Smith did not return calls for comment, according to the Sun.
Kotval in her report also noted that Ortega made two payments totaling $6,000 to Centro de la Communidad, a Baltimore-based Latino organization of which Ortega is president of the Board of Directors, the Sun reports. Ortega said that he loaned the group $3,000 because it was having a "cash flow problem," according to the Sun. Ortega said his contract allows him to loan other organizations funds if the loans are approved by HERO's chief financial officer and if they are less than $5,000. Ortega said that the loan to Centro de la Communidad was repaid within a week, the Sun reports. Ortega said he later gave a $2,000 advance to the group to provide HIV outreach and a $1,000 payment to the group for sponsorship of a fundraising event, according to the Sun. "What you're doing is helping out another [not-for-profit]," Ortega said. Berns said that he knew no other example of one not-for-profit group loaning money to another, adding, "[W]e would need to really get a lot more information about the nature of this transaction before being able to offer an opinion about it" (Shatzkin, Baltimore Sun, 3/25).
Health Care for Homeless Contract
Health Care for the Homeless on Thursday told Ortega that it would not renew a contract through which the organization provides medical services to HERO, Jeff Singer, president and CEO of Health Care for the Homeless, said Friday. The contract, which is set to expire on Wednesday, covers two doctors and a nurse practitioner who work at HERO and handle a larger caseload at Health Care for the Homeless' downtown headquarters. Singer would not comment on whether the decision not to renew the contract was related to the controversy regarding Ortega, adding, "We take all factors into consideration when we make decisions, and the most fundamental issue is what's in the best interest of the patients." The medical staff will continue to work at HERO until all of the patients' cases are transferred to other doctors, a process that could take two or three weeks, Singer said (Baltimore Sun, 3/27).