S.C. Education Dept Wants Autism Group to Return $52,000

December 9, 2013

Investigative Reports

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AutismThe state Department of Education is seeking repayment of $52,046 awarded to the South Carolina Autism Society after conducting an audit of the nonprofit organization’s financial records for the grants.

The audit was done after The Nerve revealed in August that Craig Stoxen, 48, the longtime president and CEO of the West Columbia-based nonprofit, shot himself to death in February in a nearby hotel room amid an investigation by the state Office of Inspector General (OIG) into the mishandling of public funds by the organization.

A July OIG report said a total of $462,060 in funds allocated by the Department of Education (DOE) and the state Developmental Disabilities Council (DDC) – a division of the Governor’s Office – to the Autism Society (SCAS) for fiscal years 2010 through 2012 was unaccounted for, and that an ex-bookkeeper said she submitted false grant-reimbursement requests at the direction of the SCAS president, resulting in nearly $189,000 in overpayments.Stoxen isn’t named in the report, though OIG officials confirmed his identity for The Nerve.

In an Oct. 25 letter to Kim Thomas, the Autism Society’s interim director, Nancy Williams, director of DOE’s Office of Auditing Services, said its audit of accounting reports and other financial records provide by SCAS to her office found that $52,046 of $173,655 in funds awarded to SCAS by the Education Department through the federal Individuals with Disabilities Education Act (IDEA) Program in fiscal 2010 and 2011 is “unaccounted for or inadequately supported by financial records.”

The letter, provided last week by the Education Department at The Nerve’s request, asks that the SCAS reimburse $52,046 to the department.

“Government funding should be limited, first and foremost, to those activities that are absolutely required, with strict oversight in place,” department spokesman Dino Teppara said Friday in a written response to questions by The Nerve. “Trust in the government by the people is sacrosanct, and every penny of taxpayer money needs to be accounted for. This isn’t the government’s money; it’s the people’s money.”

“What happened here is shameful,” Teppara continued, “and it’s not going to happen again.”

Williams in her letter to SCAS recommended that the organization:

  • Ensure that its financial management system “appropriately segregates expenditures” as required in signed agreements with the DOE;
  • Establish and maintain “appropriate time and effort reporting”; and
  • Maintain “adequate documentation to support all expenditures”

People with autism, which currently has no known cause and no cure, usually have deficiencies in verbal and non-verbal communication, social interactions and leisure activities, according to SCAS’ website. Autism typically manifests itself in the first three years of life, the site says.

The Nerve on Friday sent written questions to Thomas and Erik Norton, an attorney with the Nelson Mullins law firm in Columbia and a member of the SCAS Board of Directors, but received no response.

In Aug. 5 letter to supporters, Norton, the immediate past SCAS board chairman, said the organization “does not agree with all the factual findings or characterizations of those facts in the OIG report, but agrees with OIG that additional safeguards for state grant money are needed.”

Norton told The Nerve then he didn’t know if Stoxen misspent any funds, noting, “We are trying to substantiate all of those expenditures.”

Asked Friday if his agency had determined whether Stoxen stole any SCAS funds, Inspector General Patrick Maley in a written response said, “Our findings do not include a determination of any stolen public funds by the former president.”

The July OIG report, however, alleged that Stoxen, who had been with the Autism Society for 13 years, acted unethically at the very least.

“Given the collusion between the Society’s president and its bookkeeper in making up accounting numbers and records, a systemically weak accounting system, and many unusual and unexplainable transactions, the risk of unaccounted for funds being expensed through the Society’s accounting system and then converted to personal benefit was high,” the report said.

“Troubling too,” the report also noted, “were reports the president reluctantly fired the former bookkeeper only due to her fraud being known by fellow employees, and subsequent to her dismissal, the president shredded a large volume of documents, which was an unusual activity for him.”

The Nerve’s review of SCAS federal tax records from 2009 through last year found that Stoxen’s salary increased to $111,615 from $82,232 during the period, a hike of nearly 36 percent. The OIG reports said the SCAS president had an “unusually high salary” and “what appeared to be excessive purchases of technology.”

The report said the former bookkeeper, who isn’t identified in the report, admitted to stealing $5,771 in 2011 and 2012 by using the organization’s business credit card for personal expenses, though she said she repaid that amount.

Asked Friday whether the report findings on the ex-employee were forwarded to any law enforcement agency, Maley in his written response said his agency is “waiting to present findings to the Attorney General’s office until the completion of the audit conducted by the S.C. Department of Education in order to determine if there are any additional findings from that audit relative to the bookkeeper. We understand that audit has been completed and a copy has been requested.”

Maley said his office does not have “any specifics on any reimbursements” by the Autism Society to state agencies that provided funding to the organization, adding, “You will need to contact the other agencies directly.”

Of the $462,060 in unaccounted funds, $273,241 was allocated by the Education Department through state budget provisos, which “did not provide any specific requirements for the services to be performed … nor did it require any state agency oversight or subsequent reporting by the (Autism) Society on its expenses or accomplishments,” the report said.

After subtracting the $273,241, the OIG recommended that SCAS reimburse the Education Department and Developmental Disabilities Council the remaining $188,819 in unaccounted funds. The Nerve earlier sent written questions to the DDC about the OIG report but received no response.

The Autism Society relies heavily on public funds. In fiscal 2012, $978,000, or about 86 percent, of the organization’s total revenues of $1.14 million was funded by state agencies, the OIG report said.

The report found that the expenses incurred by the Autism Society for service coordination and information-referral services with the S.C. Department of Disabilities and Special Needs (DDSN) exceeded program revenues provided by the state agency by a collective $385,392 for fiscal years 2010 through 2012. Although DDSN had been cutting its reimbursement rates, SCAS “maintained its full operational footprint resulting in deficit spending in the program, likely supported from those programs with the unaccounted for funds,” the report said.

A day after The Nerve’s initial story on the SCAS investigation, the DDSN Commission voted to review its related policies and practices.

In a written response Friday to The Nerve, DDSN spokeswoman Lois Park Mole said officials with her agency and the Autism Society met to “review SCAS’ financials.”

“Some service expenditures were mislabeled,” Mole said, though she didn’t provide specifics. “The SCAS has taken corrective action to ensure accurate cost reporting in the future by using a fund-based accounting system.”

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.