Dysfunction at a Charity That Relies on Council Largess

By RUSS BUETTNER and SERGE F. KOVALESKI

Published: April 28, 2008

Hiram Monserrate, a city councilman from Queens, has supplied more than $400,000 in city funds in recent years to a nonprofit agency that has been run by some of his closest aides and whose financial records have devolved into what its current director calls “a mess.”

Andrea Mohin/The New York Times

Libre, a nonprofit group, had offices in Corona, Queens until November. In recent years, it received $400,000 in city money from Councilman Hiram Monserrate.

Andrea Mohin/The New York Times

Libre’s latest director, who says its records are “a mess,” moved it to Jackson Heights, above, where he runs Latin Technologies.

Andrea Mohin/The New York Times Hiram Monserrate

The organization, Libre, which offers a wide array of programs and services for the Latino community, has not filed a tax return for the past two years. It has never registered as a charity with the state attorney general’s office, as required. And its director says unpaid bills and poor record-keeping grew so problematic that he had to all but shutter Libre last year.

“Libre is a mess,” said Rodolfo Herrera, the director. “I don’t think it’s a mess because they were stealing money. I think it’s because they didn’t know what to do with paper.”

The millions of dollars that council members dole out to community groups each year rarely received attention until last month, when it was revealed that the Council had been using the names of fictitious groups to park money that it could later spend without going through the normal budget review process.

Now a spectrum of analysts, from auditors for the city comptroller to federal investigators to lawyers for the city’s Department of Investigation, are scrutinizing just what kinds of programs City Council members are financing with the discretionary funds they control.

Libre, whose name stands for Latino Initiative for Better Resources and Empowerment Inc., has not been identified as the subject of any special review. But it resembles, in its close ties to Mr. Monserrate, other organizations that have drawn scrutiny.

Mr. Monserrate, a former city police officer, negotiated the lease for Libre’s former office, according to the building’s superintendent, and one of the group’s former top executives says he was directly recruited for the job by the councilman. In recent years, its four principals included two women who worked as Mr. Monserrate’s chief of staff and his director of constituent services.

P. Wayne Mahlke, Mr. Monserrate’s legislative and budget director, said the councilman had no control of Libre and had believed that its finances and tax filings were “in full compliance.”

“The council member knows Libre provided services to the community and has been a strong organization,” Mr. Mahlke said. “Yes, they went through some difficulties, but that was all their own internal difficulties.”

Libre has told city officials that it provides recreation and education programs, assistance to immigrants and job training for people in Queens. A more detailed picture of the organization’s activities was unavailable because Mr. Herrera said he was not directly involved in program services and other staff members did not return calls.

Neighbors of Libre’s former office in Corona, Queens, said that the office was seldom crowded and that staff members generally seemed to be involved in dispensing advice on how to reach government agencies.

Libre has also served as something of a clearinghouse for city funds. Mr. Monserrate’s office said Libre dispensed a third of the money it received to other organizations that the councilman had deemed worthy of support, like the Corona Basketball League and the Colombian Parade Committee.

City Council officials said Friday that they knew the names of all the organizations that were the ultimate recipients of such “pass-through” appropriations. The Council speaker, Christine C. Quinn, and the city’s Law Department made efforts last year to increase the monitoring of pass-through funds, which have been used for more than a decade.

But Council officials said they relied primarily on the city agencies that actually expend the money, under contract, to make any background checks on recipient groups. The checks can be cursory, however, as was made clear in an indictment last month.

The indictment accused two aides of Councilman Kendall Stewart of Brooklyn of embezzling $145,000 from a nonprofit group they ran. Prosecutors said in the indictment that officials at the city’s Department for the Aging had initially denied Mr. Stewart’s request to give money to the group, the Donna Reid Memorial Education Fund, after noticing that it was based at the home of his chief of staff. But a subsequent request was approved by the Department of Youth and Community Development.

Until November, Libre operated out of a two-story building on National Street in Corona, where neighbors said the organization sometimes held evening English classes but generally opened for only part of the day and rarely had more than three people working.

The building’s superintendent, Ismail Gaiby, said the office grew more crowded when Libre sponsored voter registration drives, which he said were often attended by Mr. Monserrate.

“There were a lot of people coming in and out,” said Mr. Gaiby, who also works at an Islamic book company and meat store on the block. “They would go out in the street and register the voters.”

Mr. Gaiby said Mr. Monserrate, accompanied by another man, personally negotiated Libre’s $1,100-a-month rent in April 2005 and delivered the security deposit, but Mr. Mahlke said the councilman “does not recall having any participation” in that process.

Libre was incorporated in July 2003, but it has filed only one tax return, which covered the fiscal year ending June 30, 2005. That return showed revenues of $49,750 and expenses of about $25,000, made up mostly of $19,200 in rent and utilities and $3,520 for printing.

The return said the group provided “street activities, including music and cultural enrichment for youth and adults,” and “back-to-school equipment and activities for young adults.” It listed Yoselin Genao, who was Mr. Monserrate’s director of constituent services, as the contact for Libre.

The return listed Julissa Ferreras as chairwoman of Libre’s board of directors, and indicated it was an unpaid position. City records indicate that during the time period covered by the tax return, Ms. Ferreras was also serving as Mr. Monserrate’s chief of staff, a post she did not leave until August 2005. Ms. Ferreras returned to work as Mr. Monserrate’s chief of staff last September.

In an interview on April 18, Mr. Monserrate gave an account that differed from what the records indicate. He said Ms. Ferreras had not held positions in his Council office and at Libre at the same time. He said that she took the position with the nonprofit only after ending her first stretch with the Council, and that he had required her to leave Libre last year when she returned to work for his office.

Ms. Ferreras, Ms. Genao and Mr. Herrera’s computer services company have also been paid for work on Mr. Monserrate’s political campaigns, records show.

The bookkeeping issues with Libre surfaced last fall, according to Mr. Herrera, who said Ms. Ferreras recognized that there was trouble with Libre’s books. Javier Cardenas, who was executive director at the time, left shortly after, and Libre began to search for a new director. Mr. Cardenas could not be reached for comment, and Ms. Ferreras did not return calls.

Efforts to find a new leader for the organization last October put Mr. Monserrate in touch with Herman Mendoza, who now runs a community outreach program in Corona, Mr. Mendoza said.

“He offered me the position” of executive director, Mr. Mendoza said. “I was working for an insurance company, and he said, ‘Hey, there’s an offer if you want to work, since you do a lot of work with the community.’ ”

But Mr. Mendoza said he found that he was Libre’s only staffer and left after three weeks.

“They couldn’t pay me a salary, so I had to get another job quick,” he said. “I guess there was no funding.”

Mr. Herrera, who had been Libre’s treasurer since its inception, said Ms. Ferreras asked him to take over as director in November. He immediately moved Libre into the small office in Jackson Heights where he runs two other firms, a Colombian radio station and a nonprofit organization, Latin Technologies, that offers technology training.

Latin Technologies has received $120,000 in city funds since 2004, most of it in discretionary awards from Mr. Monserrate.

In a telephone interview on Friday from Colombia, where he was visiting, Mr. Herrera said he planned to file Libre’s delinquent tax returns by the end of May. He said Libre’s only existing city contract called for it to distribute $32,000 of a $40,000 award to other community groups.

Mr. Herrera said he was unable to access Libre’s records because he was out of the country. Though he was the treasurer during the years in question, he said he did not monitor the books, a job that he said fell to Mr. Cardenas.

“All we’ve been doing is paying bills from the past,” Mr. Herrera said. “Libre doesn’t have employees. We are just cleaning up Libre debt.”

Reporting was contributed by Daryl Khan, Sharon Otterman, William K. Rashbaum and Ray Rivera.