Zurik: Warned by auditor, Alternatives Living officials kept on spending

Published: Nov. 13, 2014 at 8:51 PM CST|Updated: Nov. 19, 2014 at 8:44 PM CST
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From left: Alternatives Living executive director Melanie Duplechain, program director Ada...
From left: Alternatives Living executive director Melanie Duplechain, program director Ada Craige-Roberson and CFO Rickey Roberson

NEW ORLEANS (WVUE) - The state's legislative auditor is looking into a nonprofit that's spent tens of thousands of agency dollars on personal expenses. We have new questions for the nonprofit and how they've reacted to findings about their business.

Records handed over to the state's legislative auditor show New Orleans-based Alternatives Living, Inc. owes the Internal Revenue Service about $1.3 million for failing to pay payroll taxes.

“This is completely mismanaged, and the agency is being used as a bank by the directors and the officers,” CPA Patrick Lynch said.

At the same time, they've spent tens of thousands of dollars of the agency's money on food, cars, tickets, gas and even travel.

Rickey Roberson, the nonprofit's chief financial officer, acknowledges the expenditures.

“Well, that's true,” Roberson told us. “But like I said, it depends on what the charges are because sometimes, if I'm working while I'm on vacation or something like that, or even if I'm out of town, if I have Internet access that I need to use to handle the company's business, then that's an appropriate charge…. We're always discussing stuff. And a lot of times we gotta run to dinner, just to have some breathing room so we can talk, because we're dealing with employee issues and stuff like that. That's why a lot of times, we do a lot of strategic planning and discussing, employees, employees' needs, clients' need, stuff like that.”

The internal auditor for the nonprofit sent the officers a scathing audit in late September 2012 that pointed out personal expenditures, including those credit card charges. Still, after that audit, the nonprofit had dozens of questionable expenses, such as purchases at the teen clothing store Love Culture; meals at Stella, Red Lobster, Zea and Borgne; tickets to sporting events and entertainment; hotel rooms; even a charge at the Hilton Grand Vacation Club in Orlando.

Four days before Christmas 2012, Roberson sent the auditor a letter, telling her the company officers will "only pay for charges that are business related,” and that they "plan to use credit cards for business purposes."

But the day they sent that letter, they made a $225 purchase at a Walmart in Florida. The next day, they rented a car in Florida and bought gas. On December 29, they charged $1,300 on the Carnival Liberty for excursions and incidentals, and apparently bought meals after the cruise at Rainforest Café and Bennigan's. And on New Year's Eve, they paid for a room at the downtown Miami Hilton.

“I think this was actually something that we were working on with the accountant when we were out of town already,” Roberson said. “When we book the cruise, when we gave the card for the incidentals. That was done way before that.”

As for why they didn't take the company's credit card off the incidentals bill, Roberson simply told us, “Never thought about it.”

Even this year, in April, they had three charges at the Conrad Hotel in Miami. The nonprofit says those charges were for food and drink.

The company's credit card charges have decreased this year. But Lynch called that “kind of a little bit too late - too little, too late.”

Roberson is married to Alternative Living's director of programs, Ada Craige-Roberson. Records show their daughter, who's not an employee has a cell phone paid for by the nonprofit.

“If they are not employees, isn't that using the agency's money to fund mom and dad's gift to the kids of a cell phone?” Lynch asked.

Their daughter's cell phone comes to $131 a month.

“It's been on the account for a long time,” said Craige-Roberson.

Her daughter is 16 now. She's had that company-paid cell phone since she was 10.

“It never even occurred to us as an issue until you asked for the cell phone records,” Craige-Roberson insisted.

The internal auditor actually warned the nonprofit that the area of personal expenses can be subject to intense analysis and scrutiny in the event of an audit by the IRS, or other such inquiry or investigation.

“It's stealing,” Lynch said. “If it's personal expenses, it's stealing. There's no two ways about it.”

Lynch told us these personal expenses could mean they skipped out on income taxes, paying personal expenditures out of the nonprofit's account.

“If it was about that, we could have just increased our salaries,” Craige-Roberson responded. “We make less money now, since we've made the transition, than we made in previous years, many previous years before then.”

We found, though, that they did increase their salaries.

Alternatives Living's Form 990's - tax paperwork the nonprofit has to file with the IRS every year – show Rickey Roberson's salary went from $54,500 in 2007 to $97,050 in 2012. Ada Craige-Roberson's compensation rose from about $60,000 to $96,300. According to those records, the nonprofit's grants increased in that time period, too.

“They have also gone down a little bit since, too,” Roberson said.

What are they now? Craige-Roberson told us, “98... I think it's like 98-something… is it 98?”

“Yeah,” Roberson confirmed.

Records back that up, that their salaries have gone down only slightly.

“I can envision the IRS revoking their 501(c)(3) status, using this money for personal expenditures,” Lynch warned. “And we're not talking a few hundred dollars, we're talking a significant amount of money.”

“I mean, that makes me sick to my stomach to hear,” Craige-Roberson told us.

Alternatives Living's officers said they did not intentionally do anything wrong. “In our minds, we're not really thinking we're paying for our personal vacation on the company,” said Craige-Roberson.

The officers said they've been talking to the state's legislative auditor, who has already launched an investigation. But Lynch said the facts could also get the attention of the IRS.

“If you can prove that they were intentionally running those expenses which were personal through the organization, then it is what we call stealing,” he told us. “You're taking the assets of that agency, Alternatives Living, Inc., and using it for your personal funding. That's not appropriate use of the agency's resources.”

Roberson emailed FOX 8 Thursday, saying the nonprofit began a payroll deduction for the cost of the cell phone, immediately after the interview.

We should point out again that Alternatives Living's credit card charges have gone down significantly this year.

Also, we don't know when the legislative auditor will release a report on the nonprofit.

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