Report: Nonprofit misused $130K in COVID relief funds
Money used for back expenses
A nonprofit that previously contracted with Baltimore City to clean up alleyways and streets and remove trash misused almost $130,000 in federal COVID funds, according to Baltimore City Inspector General Isabel Mercedes Cumming.
According to a report released Thursday, Cumming said an unnamed nonprofit had scored a contract with the city’s Department of Planning and was given a $414,000 advance to begin work in January 2023.
The money was allocated via the city’s $641 million American Rescue Plan award and overseen by the Baltimore Civic Fund and Mayor’s Office of Recovery Programs. The Baltimore Civic Fund is an outside foundation that administers grants on behalf of the city.
Cumming declined to publicly identify the nonprofit, and the work the organization performed is not detailed in her report, but contracts obtained by The Baltimore Sun from the Board of Estimates and Baltimore City Comptroller’s Office match funds awarded to a city nonprofit called The Lazarus Rite. The contract was set to run through January 31, 2025.
The Lazarus Rite was one of six organizations that the city said in February 2023 would receive grants totaling $14.6 million in ARPA funding under the Clean Corps program, a municipal beautification program started in 2015 by thenMayor Stephanie Rawlings-Blake, a Democrat.
The Lazarus Rite provides jobs and workforce training to people recently released from prison.
Its president and founder, Christopher Ervin, did not immediately respond to a request for comment. His website touts the group’s work cleaning up West Baltimore neighborhoods like Druid Heights and Harlem Park.
Per Cumming’s report, The Lazarus Rite improperly used about $130,000 from its planning contract to pay back expenses related to a separate contract it held with the city’s Department of Public Works, which violated the contract it held with the planning department.
The group used the remaining $285,000 of its advance properly, according to the report.
A Lazarus Rite employee and subcontractor complained to the planning agency last May that the organization had not paid them wages or for services rendered, according to Cumming’s report, after which the city investigated and terminated The Lazarus Rite’s contract.
WBFF-TV first reported the contract termination in June.
According to a city review of The Lazarus Rite’s finances between January and April 2023, the organization paid almost $70,000 to the IRS for quarterly payroll taxes; $56,000 for work equipment; $55,000 to repay a loan; and $30,000 for a vehicle, ending in the nonprofit reporting a negative account balance and unable to pay back its initial advance.
In a response letter to Cumming’s report, the city director of planning, Chris Ryer, said his office, along with the Mayor’s Office of Recovery Programs and the Baltimore Civic Fund, had taken “quick compliance actions” when the issues were discovered, and that city agencies had developed “robust training and monitoring processes to ensure compliance and minimize the risk of fraud, waste and abuse.”
Ryer said the Baltimore Civic Fund is trying to recoup the advance from The Lazarus Rite, and may take “additional enforcement actions” if unsuccessful.