May 31, 2001 | Read Time: 2 minutes
By ELIZABETH SCHWINN
New York’s attorney general is investigating charges of financial mismanagement at Hale House Center, a Harlem children’s shelter.
Attorney General Eliot L. Spitzer named a six-member interim board to oversee the organization, and he subpoenaed its financial records after the center’s head admitted that she and other employees had borrowed money from the charity, according to Juanita Scarlett, a spokeswoman for the attorney general’s office.
The charity’s executive director, Lorraine E. Hale, said that she borrowed $115,800 to renovate her home and that other employees also had borrowed thousands of dollars. State law bars nonprofit groups from making such loans, Ms. Scarlett said.
The attorney general also is investigating other reports by newspapers and charitable watchdog groups, including one that Hale House spent less than half the money it raised on the children and babies in its care, and another that it had accepted millions of dollars in federal and city funds for housing and child-education programs that did not exist.
Hale House’s new board fired Ms. Hale earlier this month after she refused to honor an agreement with Mr. Spitzer’s office to resign, said board chairman Zachary Carter, former U.S. Attorney for the Eastern District of New York. Mr. Carter added that there is “substantial evidence” that the charity misspent its assets and engaged in self-dealing — making grants and loans that did not carry out a charitable mission — under Ms. Hale’s management.
Other members of the new board include Michael D. Lappin, president of the Community Preservation Corporation, a nonprofit group that makes mortgage loans for low-cost housing; and Elsie Crum McCabe, president of the Museum for African Art.
Hale House was founded in 1969 by Ms. Hale and her mother, Clara Hale, to care for abandoned children and babies born to women who were drug addicts or had AIDS. In recent years, the charity also has taken in children whose mothers are in prison, said Colleen Roche, a spokeswoman for the charity. The center now has 16 children in its care, she said.
The New York Philanthropic Advisory Service, a local charity watchdog group run by metropolitan New York’s Better Business Bureau, said the center did not meet the advisory service’s standards because it spent less than half of its revenue on program services and has repeatedly failed to cooperate with evaluators.
Financial records released by the charity earlier this year showed that of the $8.9-million the center received last year, $3.9-million went to program-related services. The charity has raised more than $43-million since 1992, according to its federal tax records.
