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Legal aid funds spent on perks, GAO reports

Investigators say expenses not monitored

Email|Print| Text size + By Larry Margasak
Associated Press / January 18, 2008

WASHINGTON - Legal aid programs serving poor people spent federal money on booze, interest-free loans for staff, late charges on overdue bills, even lobby registration fees, investigators say.

The parent organization that distributes grants to programs in all 50 states, Legal Services Corp., failed to monitor how the money was spent, congressional investigator said in a new report. It did not specify how much money was misspent, but questioned the use of more than $1 million in payments.

The report, obtained by the Associated Press, was based on an examination of spending at 14 of 138 legal aid programs financed by Legal Services Corp. in Washington, D.C.

Managers and directors "have taken the audit very seriously and have cooperated fully throughout the process," said John Constance, Legal Services spokesman. "Proper stewardship of taxpayers' dollars is a very important responsibility both at LSC headquarters and for each of our grantees." Constance said the group would refer allegations of misspending to its inspector general.

Among the organizations whose activities were questioned in the report: Nevada Legal Services Inc.; California Indian Legal Services Inc.; Legal Aid and Defender Association of Detroit; Legal Services for New York City; Philadelphia Legal Assistance Center; Wyoming Legal Services; and Laurel Legal Services Inc. of Greensburg, Pa.

Some of those groups were not identified in the GAO report, but congressional offices disclosed they were among the ones targeted by GAO investigators.

After an April 2006 visit to the Las Vegas office of Nevada Legal Services, the GAO cited the conclusion of inspectors' checking the program's performance: "Overall, this program is in very good shape. Its delivery structure is sound, its management is excellent, and its case handling staff are performing at a high level."

But less than one year later, during a February 2007 visit by compliance inspectors and congressional investigators, federal officials decided to investigate questionable transactions, including a complex $3.6 million real estate deal.

The Legal Services Corp., a nonprofit that is funded by Congress, distributes grants to legal aid groups in all 50 states. The state and local groups help poor people involved in civil cases, including domestic violence, child custody, housing foreclosures, veterans and Social Security benefits, consumer problems, and health issues. Three of four clients are women, mostly mothers.

Congress gave the group $348.6 million for the past fiscal year.

The Associated Press previously reported on extravagant spending on hotels, meals, limousines, and other perks by the corporation's presidentially appointed board of directors and top staff in Washington .

"It is not acceptable to Congress or the taxpayers for scarce funds to be spent on the enrichment of others instead of on legal services," said Senator Mike Enzi of Wyoming, the senior Republican on the Committee on Health, Education, Labor and Pensions.

Senator Charles Grassley of Iowa, the senior Republican on the Senate Finance Committee, said the findings were "more documentation of abusive and wasteful spending that is jeopardizing the ability of the Legal Services Corporation to provide legal assistance to people in need."

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