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Main Streets nonprofit under investigation for financial irregularities

Posted by Matt Rocheleau  July 25, 2011 05:49 PM

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Updated 9:30 a.m. on Wednesday, July 27 with comments from the Jamaica Plain Neighborhood Development Corporation director:

A Main Streets nonprofit that receives city funding and assistance is under investigation by police, the mayor’s office, and its own board for possible financial irregularities.

The investigation into Hyde / Jackson Square Main Street, first reported by the Jamaica Plain Gazette, was launched earlier this month when the organization’s governing board filed a police report requesting the probe, board chairman Jason LaGorga said today.

“We believe this incident to be isolated and is not symptomatic of the organization as a whole or the City of Boston Main Streets program,” LaGorga said in a statement. “The board is committed to rectifying the situation as well as continuing its work helping small businesses in and around the Hyde Jackson Square neighborhood of Jamaica Plain.”

The police report lists the Jamaica Plain Neighborhood Development Corporation as the “victim,” LaGorga confirmed. A copy of that report was not immediately available at police headquarters.

On Tuesday evening, the neighborhood development corporation's executive director Richard Thal said his organization's role has been as the Main Street group's "payroll processor," which it also does for some other small nonprofits.

"As the bill was mounting over the years, [the Main Street organization] began noticing some problems," with their financial records, he said, declining to go into further detail.

The Main Street group's former executive director, who could not immediately be reached Monday, told the Jamaica Plain Gazette he resigned at the beginning of July because he and his partner are moving.

The former director told the Gazette he was unaware of a police investigation, though he did know there had been some questions about the organizations past financial records -- particularly payments owed to the neighborhood development council that were sent out late. He said those issues began before he became executive director in 2009.

Kerry O’Brien, spokeswoman for the city’s neighborhood development department, which oversees the Boston Main Streets program, also said she could not discuss more about the investigation because it is ongoing.

“The city is confident that the board will rectify this situation,” she said by phone Monday. “The Mayor has ordered a complete review of their spending practices, independent of the [other two] investigation[s].”

Officials said no Main Streets entity in Boston has ever been the subject of an investigation before.

Founded in 1995, the Boston Main Streets program uses city funding to support business districts by improving storefronts and public spaces.

Last year, the city paid $30,500 to the Hyde / Jackson Square group for the executive director’s salary, officials said.

They each receive “financial and technical assistance and intensive training in the Main Street approach” from the city as well as the National Trust Main Street Center, the city’s website says. “Six full time staff" assist the local districts, which "also have access to city architects, design staff, transportation planners and technical assistance specialists."

Otherwise, the district-level organizations operate as nonprofits within that citywide program. They each conduct their own fund-raising efforts. The organizations manage the funds they raise via their own independent governing structure, treasurers and financial records. The groups recruit their own volunteers and host events to enhance a commercial district’s image and attract consumers.

There are 19 Main Streets organizations, representing commercial districts across Boston.

The city commits a “significant portion of its federal Community Development Block Grant funds” to Main Streets.

Grant funding, however, is issued directly to store owners from the citywide Boston Main Streets program, meaning it would not be included in the district-level financial records review.

Hyde / Jackson Square Main Streets is in the process of interviewing for a new executive director.

E-mail Matt Rocheleau at mjrochele@gmail.com.

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