Federal Investigation of Baltimore-Based AIDS Group Continues; Board Members Resign, Funding Threatened

The Health Education Resource Organization, one of Baltimore's most comprehensive AIDS organizations, is facing a "widening crisis" as board members resign, staff members are laid off and a federal investigation into the group's spending practices continues, the Baltimore Sun reports (Bell, Baltimore Sun, 5/22). HERO's board of directors in March launched an investigation into allegations that Executive Director Dr. Leonardo Ortega misused the organization's funds to hire a personal trainer and give himself thousands of dollars in bonuses. HERO Deputy Director Indira Kotval, who was fired after outlining to the board her concerns about Ortega, wrote in a report released earlier this year that she had been concerned about Ortega's frequent absences over the previous six months. When Ortega's assistant quit and outlined her own concerns about him, Kotval examined organization records and discovered that Ortega had paid a personal trainer with the group's funds and listed the expenses under the heading "community relations." He also had awarded himself multiple bonuses of up to $3,000 each between November 2003 and January 2004, when the organization was having financial difficulties. Kotval said she also saw checks for $500 to $650 in per diem charges for food and travel, some of which were written during times when Ortega was not on business for HERO. Baltimore Health Commissioner Peter Beilenson asked FBI to investigate (Kaiser Daily HIV/AIDS Report, 4/2). HERO Board President Carlton Smith confirmed that FBI has requested HERO records and has met with some staff members, according to the Sun.

Reviews
A state audit of a $50,000 grant and a city review of HERO's use of $1.4 million in federal funds found no wrongdoing, the Sun reports. In addition, HERO "narrowly avoided" a revocation of its Maryland Association of Nonprofit Organizations "seal of approval," according to the Sun (Baltimore Sun, 5/22). HERO received the seal of excellence three years ago for complying with MANO standards of accountability and governance (Kaiser Daily HIV/AIDS Report, 4/2). MANO had threatened to revoke the certification if HERO failed to present financial records and other documents by the evening of May 18. A HERO staff member delivered two boxes of documents on the morning of May 19, and MANO Executive Director Peter Berns said it was "good enough" for HERO to keep its certification while the review continued, according to the Sun.

Staffing, Funding Problems
Six HERO employees were laid off this week, and four board members have resigned since the allegations about the misuse of HERO funds were made in March, the Sun reports. Clinic social worker Jeffrey Falk resigned on Monday prior to an emergency board meeting that was called after HERO failed to pay some of its employees last week. Although the organization receives the majority of its $4 million budget from government funding, a drop in donations has led to a "financial crunch so severe" that several agency executives have worked without pay and will take pay cuts when salary payments resume, according to the Sun. In addition, HERO is struggling to attract donations for its June 4 AIDSWalk, which is the agency's biggest private fundraising event. "By this time last year on AIDSWalk, we had $100,000 in pledges and cash," Board Member Wayne Merrick said, adding that the group this year is "nowhere close" to that amount this year (Baltimore Sun, 5/22).

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