Fresno County seeks better oversight of nonprofits

Published online on Saturday, Jun. 13, 2009

Fresno County officials said for years that Genesis Family Center efficiently provided excellent taxpayer-funded service to vulnerable children.

Yet Genesis founders Elaine Bernard and Carol Dela Torre found hundreds of thousands of spare dollars to embezzle without drawing attention from county and state agencies that provided the money.

The county has canceled contracts with Genesis and will be seeking new nonprofit organizations to take its place. But what lessons have been learned to ensure it doesn't happen again?

County officials say they aren't sure.

"What went wrong?" said Catherine Huerta, director of the county's Children and Family Services Department. "I think that's the question the world wants to know. How did this happen? I don't know."

Huerta says she knows of no county effort to find the answer.

Lizelda Lopez, a spokeswoman with the California Department of Social Services, said the state, too, is in the dark.

"It's a very unique situation," she said. "I don't know how it could be replicated."

And lawyers for Bernard and Dela Torre say it's not really a county problem at all -- that Genesis, not the county, was the embezzlement victim.

But at least one nearby county took responsibility for preventing fraud and found a way to do it.

Kern County several years ago went through a similar embezzlement scandal with a nonprofit agency that provided counseling to the poor. County officials, recognizing the damage done to public trust, responded by creating a compliance and accountability office charged, among other things, with investigating complaints of fiscal mismanagement.

Walter R. McDonald, an expert in public policy issues involving human services agencies, said it is rare for child-welfare agencies to provide quality service at the same time they're generating enough surplus cash for someone to steal.

McDonald, who in 1980 founded the Sacramento-based Walter R. McDonald & Associates, a nationwide consulting firm, said the typical problem is just the opposite: Agencies don't get enough money.

But when scandal comes in social services agencies, McDonald said, governments commonly appoint a panel of experts and community leaders, get to the bottom of the corruption, and publicly recommend a solution.

"They attempt to demonstrate they are taking steps to correct the problem," McDonald said.

The 71/2-year Genesis saga has been a source of nonstop embarrassment to top Fresno County officials.

The case began in early 2002 with the raid of Genesis offices by officials from the Fresno County District Attorney's Office. There was a long trial with a hung jury, the prospect of a second trial, the sisters' sudden plea bargains, a controversial August sentencing hearing where both got probation, the recent jailing of Bernard for violating her probation, the decision by the Genesis board to sever all ties with the sisters, and the Board of Supervisors' decision this month to end $5 million of contracts with the agency.

Through it all, county officials praised Genesis. Now they know something went wrong.

"The issue has brought some light and focus to us," said County Administrative Officer John Navarrette.

"I don't think we did a real good job of monitoring," said Supervisor Susan Anderson.

"If you don't check on [the agency], you're helpless," said Supervisor Phil Larson.

But other than promises to stiffen the language in contracts and keep a closer eye on nonprofits, county officials admit they don't know how else to prevent another nonprofit from misusing tax dollars.