A defunct Worcester social service agency charged more than $143,000 in questionable expenses to the state before it closed, according to a recent report from the state auditor’s office.
The troubled nonprofit, the Henry Lee Willis Community Center Inc., also accumulated about $1 million in debt to the state and other creditors, including $235,569 to the state’s unemployment insurance fund, by the time it shut down.
The community center, which provided a variety of social service programs in Central Massachusetts and relied primarily on state funding, was finally forced to close its doors last Feb. 15 after four state agencies pulled their contracts because of concerns about the center’s management and continued financial woes.
The financial problems appeared to have been years in the making. The Dec. 19 audit found that the Department of Children and Families flagged the nonprofit’s financial problems as early as 2009. The agency’s own auditor repeatedly noted that the nonprofit had problems with its credit card documentation in fiscal years 2009 through 2012.
In just three months of spending examined by the office of State Auditor Suzanne Bump, investigators found that more than one-third of the $21,000 in charges it examined did not have any supporting documentation and therefore should not have been reimbursed by the state.
The audit found that the agency also billed the state more than $57,000 to lease an Audi A6 Quattro all-wheel-drive luxury vehicle for its executive director. “It was not fiscally prudent for the center to use its limited funds in this manner, given its poor financial condition,” the report said.
In addition, the auditor’s office said the agency paid $10,000 to hire a public relations firm in December 2012 after learning it was in danger of losing its state contract, racked up $28,700 in interest and late fees on taxes and other bills because it mismanaged its finances, and failed to justify nearly $40,000 in payments to its for-profit affiliate, Willis Social Enterprise Center Inc., for maintenance services.
The audit also found that the for-profit company had failed to make required corporate filings with the secretary of state’s office since 2008.
Neither Henry Lee’s chairman, Henry Ritter, nor its executive director, Carlton Watson, could be reached for comment. Unlike most state audits, the report does not contain a response from the agency because it closed before the study could be completed.
Still, the audit found that the agency regularly ran deficits over the past decade, partly because of high administrative costs and poor management of the for-profit affiliate, which lost more than $517,000 over its first two years, according to its financial records.
To improve the situation, the nonprofit explored a merger with another unnamed social services agency in May 2012, but the talks fell apart because of Henry Lee’s financial troubles, according to the state report.
Ultimately, four state agencies pulled their contracts in late January and early February.
The center’s programs, from housing to substance abuse, have since been transferred to other agencies. The agency’s real estate holdings were sold to pay its mortgages and other debts.
But even after the sales, the state was still owed $533,457 in July.
“If any money is found to be available, the Commonwealth should recover these funds,” the report said. But the report does not indicate whether that is likely.
Officials from the state’s auditor’s office and the Executive Office of Health and Human Services said they could not answer questions about the money owed to the state Tuesday because key staff members were on vacation.
Mayor Joseph Petty of Worcester did not return a call seeking comment about how the region has been affected by the agency’s closure.
A Department of Revenue spokeswoman said the center was current on its state taxes.
The nonprofit, which was founded in 1991, focused particularly on serving minorities, operating emergency family shelters, distributing food to the poor, and helping people recover from substance abuse.
The organization had a $12 million annual budget and boasted that it served approximately 17,000 people a year.Todd Wallack can be reached at email@example.com. Follow him on Twitter @twallack.