Widespread financial mismanagement could be to blame for a nonprofit failing to distribute COVID relief funds to local aid agencies.
Or it was fraud.
Those agencies are owed $243,907, according to a forensic review commissioned by Monroe County and released Friday.
"It's hard to assess based on the record whether it's mismanagement or fraud because of all the money moving in so many different directions," said County Attorney John Bringewatt. "Then there's a question to be asked: Is the fact that the accounting records were such a mess — is that deliberate or is that negligence?
"Those are the questions that will have to be answered."
The county has provided the results of the review to the U.S. Attorney's Office, the FBI, the U.S. Department of Treasury, and the New York State Attorney General's Office, County Executive Adam Bello said during a news conference Friday afternoon.
Monroe County hired the nascent Community Resource Collaborative in May 2023 to serve as the fiscal agent for a network of about a dozen neighborhood nonprofits going by the name Neighborhood Collaborative Project.
Over the following months, the county disbursed more than $1 million in federal pandemic relief funds to the organization. But by January 2024, the neighborhood groups — in areas ranging from food pantries to homeless outreach and workforce development — had stopped receiving checks.
The county learned the evening of Feb. 6, via email from Community Resource Collaborative CEO Anthony Hall, that the nonprofit had launched an internal investigation into "mismanagement of funds and negligence regarding the agency's financials," Bello said.
The county froze payments and launched the review. The goal: to determine what happened to the $1.1 million that the county had released to the collaborative thus far.
"CRC was co-mingling multiple funding streams together into the same bank accounts," Bello said. "Money from the (COVID relief) grant as well as money from other grants, loans and lines of credit — and not keeping track of which money came from where."
The organization also received more than $1 million from other sources, including New York state, the city of Rochester and ESL Foundation, Bello said.
It's yet unclear what happened to that money.
"There are many victims here," Bello said. "It's not just the county, but all those good organizations that are out there on the streets, all the partner organizations of the NCP and most importantly, the people that they're serving, that really need the services that are not getting it due to the pause on the NCP activity. Those are the real victims."
The county is reviewing applications for a new fiscal agent to replace the collaborative and get things back online.
EFPR Group, the Rochester accounting firm hired to conduct the forensic review, did not conduct an audit, and thus did not address whether CRC's books are accurate. And they note that their report and conclusions are subject to change as various records requested were not provided — including canceled checks from one of the collaborative's three bank accounts.
Bello acknowledged that the county had assessed the collaborative as "high risk" — which he said did not assess a program's strength or credibility but indicated it lacked experience handling complex federal grants or funding streams.
"High risk does not indicate a high risk of committing fraud," Bello said.
Given the designation, the county instituted a higher level of monitoring, including monthly check-ins, on-site visits and continuous review of invoices and other records. Bello credited that review for limiting the amount of missing COVID dollars.
The report includes summaries of interviews with key personnel showing that Tina Paradiso, the collaborative's former COO, said she took the job not knowing the size of the grant, would not have taken the job if she had, and didn’t have time to design an appropriate accounting system. The group's board of directors was inactive.
Auditors cited a lack of internal financial oversight by the collaborative, while finding that the co-mingling of funds between bank accounts resulted in grant funding on programs for which it wasn’t intended.
Today the organization is likely insolvent and unable to fulfill its outstanding obligations, the report concluded.
One of CRC’s bank statements showed a balance of $2,900. Along with debts owed the neighborhood groups, and likely on three loans and a line of credit, are two car loans that appear to total $158,000, records show.
State and federal law enforcement agencies have also opened investigations into Community Resource Collaborative.
Democratic County Legislator Rachel Barnhart said in a statement that she believes the county “has culpability in this mess” and that the report doesn’t address its shortcomings around the process by which CRC was selected for the contract and subsequent oversight.
“A further inquiry needs to be made about what went wrong at the County level, and how we can prevent this from happening again,” Barnhart’s statement read.
