When state Treasurer John Kennedy announced in July he was seeking to bring a group of NGOs into compliance with state financial reporting rules, he gave the organizations more than a month to turn in the necessary documents without penalty. But the deadline passed Wednesday, and more than half of those groups remained noncompliant, including at least one tied...
When state Treasurer John Kennedy announced in July he was seeking to bring a group of NGOs into compliance with state financial reporting rules, he gave the organizations more than a month to turn in the necessary documents without penalty. But the deadline passed Wednesday, and more than half of those groups remained noncompliant, including at least one tied to a Baton Rouge lawmaker.
Kennedy said Thursday he will refer 19 non-governmental organizations to the new Office of Debt Recovery, an arm of the Department of Revenue that is statutorily charged with recovering debt owed to the state. Only seven of the 34 groups were fully compliant by the Wednesday deadline, and another nine had submitted information that must be audited by the state.
View full sizeA list of noncompliant NGOs, as provided by state Treasurer John Kennedy's office. These 19 groups will now be referred to the Office of Debt Recovery. Under new reporting rules enacted after Hurricanes Katrina and Rita, any NGO that receives money from the state general fund is required to provide quarterly reports on how it used that money.
But 34 organizations that received more than $4.2 million of taxpayer money in 2007 and 2008 hadn't been keeping up with those standards, Kennedy said in late July when he first announced his intention to go after the groups.
He set Sept. 4 as the deadline for turning in the necessary financial documentation, including a comprehensive budget, receipts and contact information. By Wednesday, 19 groups that received more than $2 million of taxpayer money hadn't even contacted the treasurer's office.
The FBI's New Orleans field office confirmed this week they are looking into the noncompliant organizations, but wouldn't provide any more information on the nature of their inquiries.
"I'm doing research to see, but this may be an IRS matter alone," FBI spokeswoman Mary Beth Romig said Thursday. The IRS New Orleans office said it does not confirm potential or ongoing investigations but said nonprofit organizations can be investigated for participating in activities from which they're legally barred, such as campaigning.
The 19 noncompliant groups are being turned over to the Office of Debt Recovery, which was created by the state Legislature during the 2013 session; this will be its first major investigatory task.
"We have the ability to go in, investigate and we're going to have financial tools available to us to recover the money," said Doug Baker, spokesman for the Department of Revenue. Baker said the office cannot impose penalties on these groups, their boards or founders, but the office can investigate any means to recover the appropriated state money and mandate its return.
That would be a boon for the state, where even $2 million extra flowing into state coffers could mitigate recent budget cuts and line-item vetoes to higher education and health care.
Kennedy also said he recommended that the state legislative auditor take a closer look at nine of the groups that have provided financial documentation in recent days and weeks. Their deadlines would be extended for a limited time as auditor determines if they are in compliance with the state rules.
View full sizeThese nine NGOs have been referred to the Legislative Auditor for further review after submitting financial information to the state Treasurer. State Sen. Yvonne Dorsey-Colomb, D-Baton Rouge, has ties to at least two of the 34 groups. She has previously accused Kennedy of going after the NGOs as a way to bolster his possible run for governor in 2015.
The Colomb Foundation, run by the senator's husband Sterling Colomb in Shreveport, is being recommended for audit. The organization lost its tax-exempt status in 2010 and has continued to receive state funds through the capital outlay budget -- $370,000 since 2009. It also has not corrected the information online and still claims to be a 501(c)(3) non-profit.
Dorsey-Colomb also has ties with Serenity 67, a community services center in Baton Rouge that was formerly run by her legislative aide. The group, which received $150,000 in 2008, has been referred to the Office of Debt Recovery.
"There is no Serenity. They aren't an organization. They don't have a staff," Dorsey-Colomb said Thursday, noting that the organization hasn't been active in years. She said her aide planned to forward any old documents to Kennedy but she didn't know when that would happen.
"I don't have an answer for that," she said. When asked how her aide would weather any consequences levied for being noncompliant, she said, Kennedy "has to do whatever he feels he has to do."
In addition to the Colomb Foundation, at least nine of the 34 groups were nonprofits registered with the IRS that have had their 501(c)(3) statuses revoked. An additional seven had no phone or contact information to verify they even existed.
A representative for the Rayville-based Community Services of Richland, Inc., said she was unaware her organization was noncompliant until she saw reporting of the treasurer's announcement. The group remains noncompliant and will be referred to debt recovery, but the representative said she has "nothing to hide." The group is not a registered nonprofit agency with the IRS.
Lauren McGaughy is a state politics reporter based in Baton Rouge. She can be reached at lmcgaughy@nola.com or on Twitter at @lmcgaughy.