A forensic audit of a well-known non-profit that has operated in Hartford more than 60 years has shown what was called “pervasive governance failures, systemic internal control weaknesses, and patterns of conduct that strongly suggest potential fraud and misappropriation of public funds” by the organization and related parties.
The Blue Hill Civic Association closed its operation last spring after establishing itself as a pillar of the north Hartford social service network for decades. The state cut off funding in March, effectively shuttering the operation and resulting in layoffs of all staff, after learning that the nonprofit had failed to report to the state that it lost $300,000 five months earlier, apparently through a fraudulently intercepted wire transfer.
The forensic audit performed by Clifton Larson Allen LLP found that, over the course of multiple fiscal years, BHCA received more than $15 million in state funding, yet operated without adequate policies, oversight, or accountability mechanisms.”
Further, funds were “routinely disbursed by BHCA to subrecipients without executed agreements, projected budgets, or documented compliance checks. MOUs were frequently backdated, passthrough arrangements lacked transparency, and significant discrepancies in reported expenditures went unchallenged,” the law firm wrote.
In one example cited, the audit report notes that the circumstances surrounding the BHCA “employee handbook updates reveal significant failures in internal controls, oversight, and stewardship of public funds.”
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“Despite invoices and payments totaling $84,000 to SHEBA Consulting for handbook revisions, there is no evidence of substantive work product, meaningful policy updates, or documented involvement by Ms.[Sonserae] Cicero. Instead, internal communications show that handbook revision responsibilities were assigned to BHCA staff, and the 2007 handbook remained in use for years following the disbursements to Ms. Cicero.”
Federal authorities in August had issued grand jury subpoenas ordering the state to produce records as part of an investigation of possible irregularities in the distribution of tens of millions of dollars in government grants to social service and business nonprofit organizations in Hartford.
In particular, federal prosecutors at the time sought “all documents concerning any personal or non professional relationship” between two people who emerged as major players in the extensive Hartford nonprofit scene, state Sen. Douglas McCrory, D-Bloomfield, and Sonserae Cicero-Hamlin, who operates a nonprofit consulting business through the SHEBA Resource Center.
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“This forensic audit is a strong reminder that when taxpayer dollars are involved, we have zero tolerance for fraud, waste, or mismanagement,” said Gov. Ned Lamont said in a statement. “The findings at Blue Hills Civic Association are deeply troubling and underscore why we need stronger guardrails around legislatively directed funding. My administration has steadily tightened controls across state government, from strengthening procurement rules, to expanding risk-based monitoring of grants, modernizing financial systems and improving transparency in how public dollars are spent.
“We will continue to root out fraud wherever it exists, hold bad actors accountable, and ensure that appropriated state funding reaches the communities it is intended to serve, while helping those in need,” he said. “At the same time, we remain committed to supporting legitimate community organizations, but that support must be grounded in strong oversight, clear accountability, and rigorous safeguards that protect Connecticut taxpayers.”
“These practices violate fundamental principles of grant management and raise serious questions about the integrity of BHCA’s operations,” the law firm wrote.
According to the Lamont statement, DECD directed firm to expand its audit to include all BHCA’s subrecipients and that report will be shared when it is done
“DECD recognizes that the funding freeze has had a substantial impact on community organizations that were funded through BHCA and its subrecipients. However, the allegations of fraud and misappropriation of public funds set forth in the audit do not permit the agency to continue such funding without additional due diligence.”
The firm wrote that, as a result of “deficiencies in BHCA’s record-keeping, grant recipient monitoring, and financial reporting practices, CLA was unable to reach a conclusive determination regarding the majority of grant funds disbursed by BHCA. However, as outlined in this report, CLA has identified $208,000.00 in unsupported disbursements that either violated conflict of interest best practice standards or were used to pay for services that were not performed.”
“Additional review and investigative work, including further examination of both BHCA and its subrecipients, may reveal further instances of fraud, waste, or abuse,” the report says.
Since last year, federal investigators have been examining how tens of millions of dollars has been distributed among Hartford nonprofits, some of which play a vital role across the city’s economically distressed north side.
The investigation went public last July after federal prosecutors empaneled a grand jury and issued subpoenas to several nonprofits and the Department of Economic and Community Development, the principal state conduit for delivering taxpayer money to charitable organizations.
The audit also found:
- BHCA’s policies did not meet state requirements for record retention and auditability
- BHCA board oversight and transparency in sub-recipient grant awarding were lacking
- Monitoring activities, such as site visits and financial reviews, were not consistently performed or documented by BHCA, and discrepancies in subrecipient reporting were not adequately addressed.
The audit noted that CLA recommends that DECD require legislative grantees to “implement formal, documented procedures for grant awarding and monitoring, strengthen internal controls, ensure transparency and board oversight, and maintain accurate and complete records. Timely communication of material claims or losses to DECD and other stakeholders is essential for maintaining trust and compliance.”