Federal covid aid spending gets flagged

Concerns raised in audit referred to U.S. attorney

LITTLE ROCK — An Arkansas deputy legislative auditor on Thursday questioned whether all of more than $400,000 in federal coronavirus relief funds awarded by the state to The Urban League in Arkansas and distributed through the Performance Tax Group were distributed to the 17 intended organizations and whether the funds were spent to provide meals in all 45 counties, as required by the grant award.

Arkansas Department of Human Services Secretary Mark White told lawmakers the department has referred concerns raised by Arkansas Legislative Audit and the department’s Office of Payment Integrity and Audit to the U.S. attorney’s office in the Eastern District of Arkansas.

“There is a potential criminal investigation in the offing here,” White told the Legislative Joint Auditing Committee’s Standing Committee on State Agencies.

The state Department of Human Services disbursed $4.7 million in federal coronavirus relief funds to the community outreach program within the department’s Division of County Operations, Deputy Legislative Auditor Tom Bullington said in reporting on the audit of the department in the fiscal year that ended June 30, 2021.

During the approval process for granting the awards and the corresponding issuance of the grant funds, the department used a third-party administrator for vetting potential sub- grantees, he said. In turn, the sub-grantees agreed to provide the department’s Office of Payment Integrity and Audit with supporting invoice/receipt documents after spending the funds received, as required by the department’s proposal for federal coronavirus relief funds.

The third-party administrator awarded and disbursed 262 grants to approved sub- grantees in amounts ranging from $ 1,000 to

$ 450,000 per grant award, Bullington said. For its review, Arkansas Legislative Audit selected the highest distributed grant award of $450,000 to The Urban League in Arkansas.

The Urban League’s application for federal coronavirus relief funds documented that it would serve at least 45 counties in need at $10,000 per county, he said. The Urban League subsequently contracted with the Performance Tax Group to distribute the funds to various organizations in the anticipated 45 counties, he said. The Urban League provided a summary listing of 17 organizations to whom the Performance Tax Group issued grant funds as well as the total amount paid to the league and the group for administrative costs.

Alongside bank statement documentation, auditors determined that $404,300 in grant funds was portrayed as distributed to the 17 organizations, with the remaining $45,700 retained by The Urban League and Performance Tax Group as allowable operating costs, Bullington said.

Auditors’ review of the summary listing and detailed support provided for the 17 organizations spending $404,300 in grant funds revealed various concerns, he said.

These concerns include that The Urban League’s listing of how the grant funds were disbursed did not match the Performance Tax Group’s bank statement detail of disbursement, according to Bullington. Although the summary listing totals the original $450,000 grant, six of the payee amounts listed on the summary differed from the bank activity detail, and The Urban League and the Performance Tax Group are two of the six payees with differing amounts, he said.

He said auditors do not consider the amounts documented as disbursed to be verified against the total amount received by each organization because the signed acknowledgement forms between The Urban League and the Performance Tax Group with the applicable organizations to whom the Performance Tax Group disbursed the funds did not list the official amount of funding received by the organizations.

Bullington said the Performance Tax Group made nine cash withdrawals totaling $165,750 in order to issue 36 cashier’s checks among the 17 organizations, and supporting documents provided by the tax group for 26 of the cashier’s checks totaling $85,000 listed no identifying bank information, so auditors question the validity of the cashier’s checks.

The majority of the supporting documents provided by the various organizations for spending the funding was considered to be inadequate, and some was unreadable and could not be reconciled with the amount noted as disbursed, he said.

A total of $21,500 was issued by electronic transfer to two separate organizations, owned by the same individual, that are not considered a food and meal service type vendor, Bullington said. He said the organizations are Inclusion Job LLC and Inclusion Magazine LLC and are owned by Supha Xayprasith-Mays. He said that supporting documents suggest the organizations further sub-granted the funds to various charitable groups to provide meals, but the documentation was considered incomplete in detailing how all of the funding was spent.

In addition, the Performance Tax Group distributed a total of $192,550 in grant funds to one organization to serve 21 counties, Bullington said. He said the organization is West Ninth. He said that information submitted as support for providing meals consisted of email correspondence among various county organizations and lists of people who were provided meals. But he said not all 21 counties were represented in the information and auditors could not calculate or verify the amount spent for each county due to poor presentation of the information provided.

White told lawmakers that department officials have asked the providers to provide more documentation and have asked for refunds of the money, where that is necessary.

Officials for The Urban League and Performance Tax Group and Xayprasith-Mays could not be reached for comment by telephone late Thursday afternoon. In the May 24 primary, Xayprasith-Mays lost a bid for the Democratic gubernatorial nomination.