Council member in funding flap
Thursday, April 17th 2008, 4:00 AM
Last year she sponsored $82,500 in Council "discretionary funds" into a nonprofit that employed both her sister and nephew, the Daily News has learned.
Arroyo's sister, Iris, was "fiscal officer" for the South Bronx Community Corp., where a former employee accused her of incompetence that led to thousands of dollars of federal liens filed against the group.
The Arroyos' arrangement comes as the feds charged two staffers of City Council member Kendall Stewart on Wednesday with embezzling discretionary funds through their nonprofit.
No one has been charged with a crime in the funding of the nonprofit that employed Arroyo's relatives, and Stewart himself has not been charged with a crime.
Each City Council member is given a set amount to spend annually on "discretionary" items that are usually pet nonprofit causes within their districts.
Stewart's aides were charged with siphoning off $145,000 in such funds through a nonprofit he funded.
Council member Arroyo is the former director of South Bronx Community Corp., which purports to "provide various services to the elderly, disabled and low income families" in the Bronx. Her mother, Assemblywoman Carmen Arroyo, was director of the nonprofit years before.
In her Council biography, the younger Arroyo claims to have been a "volunteer" at South Bronx, though records show her collecting $33,000 to $45,000 a year in 2001 and 2002.
She left the nonprofit after being elected to the Council in February 2005. Early last year, she was co-sponsor of a $75,000 "member item" and sole sponsor of a $7,500 member item for South Bronx Community Corp., records show.
Arroyo confirmed Wednesday she'd sponsored the money for the group, but insisted it was allocated only after her sister, Iris, and Iris' son, Richard, had left.
"I know that when the Council discretionary funds were allocated, I know that they were no longer there," she said.
Nevertheless, she couldn't say when her sister left. As of February 2007, Iris Arroyo was signing tax documents as the group's "fiscal officer," records show.
Also the group received $50,000 in discretionary funds in 2006, although at the time sponsors were not publicly listed.
The 2007 discretionary money was to go for senior programs administered by the Department of Aging. Wednesday, a contradiction emerged regarding that agency.
With Stewart, prosecutors say the Department of Aging recently rejected his request to fund a nonprofit run by his chief of staff, citing conflict of interest.
Nevertheless, the agency appears to have approved Arroyo's funding of a nonprofit employing her sister and nephew.
A spokesman did not return calls.
In a lawsuit, a former employee questioned the competence of Iris Arroyo, claiming she failed to keep up with payroll taxes and as a result, federal liens were placed on the South Bronx Community Corp. in 2000 and 2001.
The liens were settled, but reemerged in 2006 with a new lien for $48,000. That remains outstanding.
The former employee, Belinda Santos, once an Arroyo inlaw, said in court papers she urged Iris Arroyo to keep up with the payroll taxes and quit because Iris would not listen.
In response, Izquierdo blamed Santos and accused her of using South Bronx monies to pay her car insurance. Santos denied using money for personal benefit.
The case was settled with South Bronx acknowledging the lien was its responsibility.
The nonprofit has also benefitted from state taxpayers, care of Arroyo's mother, the assemblywoman. She co-sponsored state member items totalling $141,500 for the agency while it employed her kin, records show.
Assemblywoman Arroyo did not return calls.