Oversight? What oversight?

Charity accused of fraud

GOVERNMENT | Bruce Rushton

Tower of Refuge, a charity run by a felon and his wife that has been accused of defrauding the state of Illinois, was so loosely run that one member of the organization’s purported board of directors says that there really wasn’t a board.

Left to their own devices, Lorenzo and Bevey Louden, who run Tower of Refuge, have landed in a heap of trouble. Accused of ripping off taxpayers, the couple is no stranger to financial messes. A criminal probe is in the offing.

Neither of the Loudens returned a phone call for comment, but the couple owes nearly $200,000 in delinquent federal taxes dating back to 2007. Tower of Refuge lost its headquarters to foreclosure in 2013, with the Loudens ending up on the wrong end of a judgment totaling nearly $55,000. And all the while the state of Illinois kept grant money flowing, with Tower of Refuge receiving tens of thousands of dollars in public money even though the executive office of inspector general established as early as 2011 that grant money might be missing.

The inspector general says that Tower of Refuge can’t account for more than $16,500 in state grants. The money came from Illinois Department of Public Health funds intended to prevent HIV transmission as well as promote awareness and prevention of prostate cancer. Tower of Refuge, however, isn’t a medical organization but rather an agency that incorporated in 2005 with the purpose of helping felons freshly released from prison re-enter society.

Why would the state give money for prostate cancer awareness and HIV testing to an agency formed to help felons adjust to life outside prison?

“It is not uncommon for the (department) to issue grants to community-based organizations to conduct outreach and education to underserved communities,” explains Melaney Arnold, IDPH spokeswoman, in an email. “The prostate grant was for targeted outreach to the homeless and individuals recently released from correctional facilities. Educating individuals about the need for screenings can save the state money in treatment costs and help the individual live a longer, healthier life.”

But Tower of Refuge, which received $210,000 in state health department grants in 2010 and 2011, didn’t spend all of the money on HIV testing or cancer awareness. “Fraudulent.” “Unlawful.” “Falsified.” The inspector general’s report released Feb. 18 is filled with blistering descriptions of how the Loudens conducted business.

Tower of Refuge submitted false documentation to the state to receive thousands of dollars for office supplies, computers and other equipment, according to the inspector general’s office, which found no proof that such things were ever purchased. People whom the Loudens said were paid to perform outreach services told the inspector general’s office that they either performed no services or received lesser amounts than what Tower of Refuge told the state that workers were paid with money that ultimately came from state grants. Gift cards intended to reward the disadvantaged for cancer screenings were used by the Loudens at a nail salon, for iTunes purchases and for purchases in Las Vegas while Lorenzo Louden was in Sin City.

“After receiving the grants and inconsistent with grant agreements, Tower and its founders submitted false certification forms allowing it to unlawfully obtain grant funds,” investigators wrote in the inspector general’s report. “In short, Tower inappropriately obtained thousands of dollars in grant funds that were meant to help targeted communities.”

The Loudens have agreed to pay back grant funds that the inspector general determined were falsely obtained by Tower of Refuge. Arnold of IDPH says that the department is now auditing grants given to Tower of Refuge subsequent to grants given in 2010 and 2011 that were the subject of the inspector general’s probe. The state Department of Commerce and Economic Opportunity, which gave Tower of Refuge $76,500 in grants between 2010 and 2014, is also conducting a review to determine whether public money intended for job training was properly spent. DCEO learned of problems only after the inspector general released its report this month, according to agency spokesman Dave Roeder.

And more problems could be on the way for the Loudens.

Sangamon County state’s attorney John Milhiser said that he has asked the inspector general’s office for a copy of the investigative file on which the report was based.

“I asked to review the information for possible criminal charges,” the prosecutor says.

Lax oversight

Springfield Ward 3 Ald. Doris Turner, recently retired from the state Department of Public Health, was also a target of investigators with the inspector general’s office who found that she “violated her duty” by failing to monitor grants given to Tower of Refuge.

The inspector general’s office started its investigation early in 2011 and interviewed Turner several times, with the first interview held on Sept. 12, 2011. Turner, who was charged with overseeing Tower of Refuge grants to ensure that money was properly spent, told investigators that she relied on her secretary, whom she called the “de facto grant manager,” to check monthly reports from Tower of Refuge and other paperwork submitted by the charity to show that the nonprofit was entitled to public money.

Turner’s oversight didn’t improve even after she was put on notice that the inspector general’s office was investigating whether Tower of Refuge had engaged in financial irregularities.

In 2013, two years after the inspector general’s investigation began, Turner received a call from Lorenzo Louden, who told her that an entity or person whose identity was redacted from the inspector general’s report had conducted an investigation and determined that the state had overpaid Tower of Refuge by approximately $7,000 in expenses that had been claimed for two vendors. Turner didn’t follow up, according to the inspector general, even after she was told by IDPH officials that the required reimbursement hadn’t been made. She told the inspector general’s office that she didn’t ensure that the reimbursement was made because she didn’t know what grant the money had come from.

It wasn’t the first time that Turner has found herself in the midst of questionable, even illegal, state grants to nonprofits. In 2005, Turner initially denied that a Chicago nonprofit had used HIV grant money to purchase a Hummer when a high-ranking IDPH official raised concerns.

“I can assure you that no funds…within my office were used toward the purchase of the vehicle,” Turner told the official in an email, according to a 2011 story published by the Chicago Sun-Times.

But that wasn’t true, as an internal IDPH investigation ultimately revealed. More recently, Turner last fall testified in federal court that she signed off on hundreds of thousands of dollars in grants for nonprofits operated by Leon Dingle and his wife, Karin, who were convicted of mail fraud, conspiracy and money laundering in December and are set for sentencing in July.

Turner, who was not charged with any crime, testified that she approved dozens of grants for the Dingles on orders from her boss, Quinshaunta Golden, former IDPH chief of staff who has pleaded guilty to bribery and mail fraud in connection with the Dingle case. The Dingles, who live in Chicago, received $3.4 million in IDPH grants to raise awareness of cancer and HIV in minority communities but spent the money on luxury cars, homes, gifts and a membership to a yacht club.

Stone-faced and silent, Turner refused to answer questions about Tower of Refuge, the Dingle case or anything else as she left a city council committee-of-the-whole meeting on Tuesday. She retired from her state job in December, going to the office for the last time one day after the inspector general’s office completed its report on Tower of Refuge. She is unopposed for re-election to the city council and is also chairwoman of the Sangamon County Democratic Party.

Money troubles

Reports filed with the Internal Revenue Service and the Illinois secretary of state indicate that the Loudens had full control of Tower of Refuge while the charity was under investigation and collecting state grants.

Michelle Higginbotham, who is listed as a Tower of Refuge board member in the charity’s 2013 annual report filed with the secretary of state, says the board never met except for planning sessions leading up to the charity’s annual fundraising banquet. Nor did the board review the agency’s finances or set salaries for any employees, including the Loudens, she says.

“I think the whole term ‘board’ is a misnomer,” said Higginbotham, who is associate publisher of the Springfield Business Journal, a sister publication of Illinois Times. “We really functioned more as a planning team or fundraiser. … We would get together every week or so leading up to the banquet. Once the banquet was over, we would go months without meetings. There was never any discussion of salaries or finances outside of, ‘This is the goal of the fundraiser.’” Higginbotham and the Loudens were the only members of the charity’s board in 2013, according to the nonprofit’s annual report filed with the secretary of state that year. The state report is at odds with the charity’s 2013 report filed with the IRS, which shows just two people, the Loudens, on the board, even though Tower of Refuge told the state that Higginbotham sat on the board with the couple. According to annual state reports, the number of board members fluctuated between three and four with the Loudens a constant, but, save for the Loudens, none of the people named as board members in state reports are named as board members in IRS filings.

In 2012, Tower of Refuge told the IRS that someone named Delpatrice Tribbet sat on the board with the Loudens; no such person appears on the state report filed that year, nor does Tribbet’s name appear on the charity’s 2011 state report, even though Tower of Refuge told the IRS that year that Tribbet – and no one else – was on the board with the Loudens. Higginbotham says that she has never heard of Tribbet.

With no evidence of a bona fide board of directors, it’s not clear how Tower of Refuge set salaries, but IRS records show that pay for the Loudens has dropped considerably in recent years. In 2011, the year that the inspector general launched its investigation, Lorenzo Louden was paid more than $62,000 and his wife made nearly $46,584, according to IRS records. The agency had less than $235,000 in revenue that year, records show.

In 2012, Lorenzo Louden’s pay dipped to less than $45,600 while his wife’s salary dropped to less than $41,300; the charity had slightly more than $230,000 in revenue that year, according to IRS records. In 2013, when the charity’s revenue dropped to less than $172,000, Lorenzo Louden was paid less than $36,000 while his wife received less than $27,000.

Even as their income from Tower of Refuge dropped, tax liens against the Loudens piled up. The IRS began slapping the Loudens with liens in 2007. The total owed now stands at $195,960. At least some of the liens stem from income earned by a basement-waterproofing company that the couple ran from the same building that housed Tower of Refuge.

In 2013, Heartland Bank and Trust Company foreclosed on Tower of Refuge’s headquarters on New Street and the Loudens ended up with a judgment against them of nearly $55,000. Higginbotham recalls that Lorenzo Louden told her that someone else owned the building, Tower of Refuge was merely a tenant and the bank, once it gained title to the building, had jacked up the rent. In fact, court records show that the building was owned by the Loudens.

Higginbotham says she helped the Loudens find a new home for Tower of Refuge, which is now located on South Fourth Street. The building’s owner, sympathetic to the charity’s plight and eager to help, agreed to favorable lease terms, Higginbotham recalls.

Even as the inspector general’s office investigated Tower of Refuge, the charity was honored by the Greater Springfield Chamber of Commerce as Nonprofit of the Year in 2011. Higginbotham says that she first met Lorenzo Louden at the chamber’s awards banquet and was impressed. They exchanged business cards, and Lorenzo Louden eventually asked her to join the charity’s board.

Arrested for murder in Chicago in 1978, Lorenzo Louden was incarcerated until 1994. He makes no secret of his criminal past, and Higginbotham and others were convinced that he had turned his life around. Regardless of the state investigation, Tower of Refuge provides crucial help to recently released inmates who need help finding jobs and places to live, Higginbotham says.

“Lorenzo is a very charismatic person,” Higginbotham says. “I felt like they (Tower of Refuge) were providing a much-needed service.”

Higginbotham says that she wants to give the Loudens the benefit of the doubt, but that’s tough in light of the inspector general’s report.

“I think there are too many discrepancies over too long a period of time for them to all have been honest mistakes,” she says.