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FEDS DIGGING INTO EHC
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San Jose Mercury News (CA)-October 17, 2008
Author/Byline: Karen de Sa
Mercury News
Edition: Valley Final
A routine inquiry begun a year ago at a youth shelter run by Santa Clara County's most prominent homeless-services agency has now progressed into an investigation of possible fraud.
Concerns first arose in October 2007, when a federal official monitoring millions of dollars in government spending on shelters for runaway youths paid a visit to EHC LifeBuilders in downtown San Jose. Alarmed that children and teens fleeing the streets were being cared for in an unlicensed facility, she alerted the state's community care division, and the shelter known as Our House was forced to shut its doors the next day.
Now the agency is receiving more unexpected federal scrutiny -- this time, from the U.S. Department of Health and Human Services' Office of the Inspector General, which is responsible for digging out fraud, waste and abuse of public funds. The new investigation comes as EHC has abandoned long-held plans to reopen the 14-year-old shelter; the group announced last week that it is shifting its youth shelter program to serve young adults, for whom licensing is not required.
The Office of the Inspector General does not comment on open investigations, and EHC managers downplayed last week's surprise visit, saying they don't believe the interviews amount to an investigation.
Yet Sparky Harlan, director of the Bill Wilson Center -- which now runs the county's only licensed runaway youth shelter -- was among those questioned last week by the inspector general's office and said the inspector was "responding to a complaint of possible fraud at another agency." Because of confidentiality requirements, Harlan did not disclose the name of that agency, but others familiar with the investigation have confirmed EHC is the focus and that the questions center on fraud.
The allegations appear to include whether EHC tried to pass off phony licensing documents for the shelter, and whether the unlicensed facility was even eligible for the decade-plus of federal funding it had previously received.
When Health and Human Services program officer Evelynn Brown last October asked EHC for proof of a license at the shelter, she instead received a 1993 waiver with a different address on it -- for a building that had been demolished. Brown also reported finding children, including a pregnant teen and a boy who had spent 11 months at the temporary shelter, mixing among homeless adults. And because the facility was unlicensed, employees were unlawfully dispensing medication and providing counseling.
What's more, although federal grantees are required to screen staff through fingerprinting and background checks, Brown said those safety measures were lacking.
EHC officials said this week that they have always fingerprinted their employees but that their personnel files were organized incorrectly until this year and they were unable to provide documentation of the fingerprinting; they thought the license-exempt document they produced applied to different locations; and although they were mixing children and adults in a drop-in center, they did not house them together in the shelter.
Under its charismatic founder, Barry Del Buono, the non-profit EHC has grown through government grants and private donations into an organization with a $10 million operating budget that serves more than 10,000 men, women and children each year through a variety of programs.
Over the past year, however, EHC has been in tumult, including the resignation of Del Buono and widespread layoffs after the revelation of funding and management irregularities. EHC's own auditors revealed "significant deficiencies" affecting the agency's ability to administer federal programs, and the Department of Housing and Urban Development is currently conducting a review of $7 million in spending.
Last week, as news of the latest inquiry surfaced, EHC announced its decision not to reopen the runaway shelter, which still had not met state licensing requirements that ensure safe conditions at a new location on South Third Street. Agency managers described the shift in plans as an effort to serve another overlooked population -- young people ages 18 to 21 who are barred from youth shelters but feel out of place mingling with homeless adults. Beginning this month, these "transition-age youth" are being housed for as many as 90 days in EHC's new, multiuse Sobrato House not far from the former Our House site.
The new shelter fills a widely acknowledged gap in care for troubled young adults, many of whom have left the foster care system destitute; there are only four such shelters in the state. "These are the youth who the system has already failed," said EHC program manager Hilary Barroga. "We can't continue to fail them anymore."
But the celebration is colored by uncertainty surrounding the unusual visit from the Inspector General's office.
"They were asking about services to youth," Barroga said, stopping short of characterizing the visit an investigation. "There's no reason we would be under investigation with the Inspector General."
Barroga said EHC has received approximately $200,000 in federal funds each year since 1991 to run its drop-in center and shelter for homeless youths. But in recent weeks, the agency withdrew its pending application for additional funds provided through the federal Runaway and Homeless Youth Act.
Observers familiar with local homeless programs say the withdrawal may reflect the agency's nervousness about continuing to accept federal funds for a shelter that had not reopened for more than a year.
Brown, the program officer with the U.S. Department of Health and Human Services, was the first to formally lodge concerns about EHC's youth shelter. EHC was far from the only agency Brown found problems with when she arrived in California last year; she reported violations at as many as a dozen agencies from Santa Cruz to Southern California, including employees housing youths at their homes and funds being used to run phantom shelters.
After some grantees, including EHC, complained that she was overly aggressive and difficult to work with, Brown was recently placed on administrative leave. But her former boss praises her approach as just what's needed to protect vulnerable children.
"Everything she found was proven to be true, and nothing has been trivial," said Karen Morison, a former associate commissioner for the federal Family and Youth Services Bureau.
Santa Clara County Supervisor Liz Kniss said she was unaware of the investigation launched by Brown but noted her own ongoing concerns about EHC. Kniss abstained from an August supervisors' vote to give the agency more than $1 million for a no-bid contract, citing its history of poor fiscal control.
"I frequently felt we weren't getting good information from them," Kniss said, "and that the financial situation was obfuscated."
Contact Karen de Sá at kdesa@mercurynews.com or (408) 920-5781.
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