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U.S. attorney: No criminal case now against Johnson, Hood Corps
By Denny Walsh and Terri Hardy
Sacramento Bee (California)
November 7, 2008
The findings submitted to the U.S. attorney's office thus far from an investigation of Mayor-elect Kevin Johnson and his nonprofit Hood Corps do not warrant criminal charges, U.S. Attorney McGregor Scott said Thursday.
Scott said his office has asked for additional information and is awaiting an answer from federal investigators.
"No final decision has been made about whether there is any basis to proceed on either a criminal or civil front," Scott said.
He said a decision on a possible civil lawsuit – a more common outcome of investigations on the use of funds from the federal AmeriCorps program – awaits the results of an audit being conducted by the Office of the Inspector General for the Corporation for National and Community Service.
Inspector General Gerald Walpin last April began an investigation of Hood Corps, an urban Peace Corps-style offshoot of Johnson's St. HOPE organization.
In September, Walpin's office released the findings of that investigation, alleging Johnson and other St. HOPE officials had improperly diverted some of the $807,000 in federal grant money Hood Corps received between 2004 and 2007.
Citing the seriousness of the allegations, federal officials also announced St. Hope Academy, operator of Hood Corps; Johnson, St. Hope's founder and former president; and Dana Gonzalez, former executive director of Hood Corps, had been suspended from access to all federal grants and contracts for up to a year or until the completion of the investigation.
Walpin turned over the findings to the U.S. attorney's office for a decision on whether the violations cited by agents warranted criminal charges or financial penalties.
But Scott said this week the material submitted by Walpin's office fell short of proving criminal conduct on anyone's part.
"We have asked the investigating agency for information that would enable us to make an informed decision," Scott said. "We are still waiting for an answer."
He also said the inspector general's office is conducting a "line-by-line audit" of Hood Corps.
"Hopefully, the results of that audit will tell us whether there are grounds for a civil lawsuit to recoup misspent grant funds," Scott said.
William Hillburg, a spokesman for the inspector general, said Thursday he could not confirm his office was doing an audit and could not comment on the investigation.
Johnson's attorney, Matthew Jacobs, a former federal prosecutor, said Scott's reaction "confirms what we have believed all along. That is, professionals who have the expertise to evaluate evidence would quickly conclude there is no criminal conduct here."
If Scott's office decides there have been only administrative infractions, the matter would be passed back to the Corporation for National and Community Service, which could seek reimbursement of all or part of the grant money, and could claim damages up to three times the amount alleged to have been misused.
Johnson was not available Thursday to comment. His spokesman, Steve Maviglio, said, "The case is essentially meritless from the criminal point of view. We thought there might be some administrative fines, and we're prepared for that."
Frederic Levy, a Washington, D.C., attorney and expert in government contracting and compliance, said prosecutors "look to whether violations were knowing and intentional. The fine print in these grants is sometimes so arcane that inadvertence comes into play."
In its written suspension barring Johnson from receiving federal funds, the corporation cited a number of alleged grant violations, including diversion of funds.
"The diversion of grant funds is so serious a violation of the terms of the grant agreement that immediate action via suspension is required to protect the public interest and restrict the offending parties' involvement with other federal programs and activities," the suspension said.
Hillburg said Scott's preliminary analysis of the investigation does not affect the suspension. "It remains in effect," he said.
Among the specific violations cited in the inspector general's September release:
• Misusing AmeriCorps members, financed by federal grant funds, to personally benefit Johnson, including driving him to personal appointments, washing his car and running personal errands.
• Unlawfully supplementing St. HOPE school staff salaries with federal grant funds by enrolling two employees in the AmeriCorps program and giving them federally funded living allowances and education awards.
• Improperly using members for banned political activities, namely canvassing for school board candidates.
• Misusing AmeriCorps members to recruit students for St. HOPE's charter schools.
Call The Bee's Denny Walsh, (916) 321-1189.
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