A beleaguered Somerville nonprofit has hired a consultant that specializes in leadership transitions and company turnarounds to be its new interim director.
Lynne Molnar will serve as interim executive director of the Community Action Agency of Somerville starting Dec. 3, according to an announcement from the agency Monday.
CAAS has been under scrutiny since June, when former executive director Kimberly Smith-Cofield resigned. Two audit reports on the nonprofit obtained by the Globe since then have indicated Smith-Cofield used company credit cards to make over 100 personal purchases.
The announcement of Molnar's hiring comes days after the state's Department of Housing and Community Development declared the agency was in danger of losing its eligibility for block grant funding.
A forensic audit, conducted at the request of the Deparment of Housing and Community Development and finalized last week, revealed Smith-Cofield made over $28,000 in personal purchases between 2010 and 2012. The findings are under review by the office of Attorney General Martha Coakley.
The agency, which provides Head Start for Cambridge and Somerville preschoolers, has a $5.5 million annual budget predominantly funded by grants.
In a statement Friday, the Department of Housing and Community Development said the agency would lose its block grant eligibility if it failed to make significant leadership and organizational changes.
The statement, from Matthew Sheaff, communications director, Department of Housing and Community Development, and dated Nov. 16:
"At today’s meeting with the Community Action Agency of Somerville, an independent auditor confirmed federal funds were misused by the agency. Due to those findings, the Department of Housing and Community Development is requiring the full repayment of misused funds and has referred the matter to the Attorney General’s Office. Further DHCD is requiring the agency’s Board to relinquish its CSBG designation or present us with an approach that includes a partnership, alliance or leadership change that will ensure the Somerville area can be served by an effective organization with strong leadership and safeguards for state and federal funds. Our primary purpose remains ensuring that the children and families in Somerville continue to receive the high quality services they deserve and ensure that state and federal funds are utilized for their intended purpose. We look forward to working together on behalf of the community of Somerville."
Molnar has worked as an advisor to nonprofits for 20 years and holds graduate degrees from Boston University in business and Harvard University in education, according to the announcement from the agency. She is also an election commissioner in Cambridge. She will receive a $90,000 annual salary.
Molnar will take over for Melissa McWhinney, who has served as acting executive director since Smith-Cofield's resignation.
The agency has already begun to make the changes sought by the state, newly appointed president Sonja Darai said in a statement Monday. Four of the agency's board members, including its former president, have resigned since June, along with finance director Jeffrey Karon.
"Today, CAAS is a very different agency than it was during the time examined by the forensic audit," Darai said.
A proposed amendment to the city of Somerville's ethics ordinance would require nonprofits to be reviewed by the City Auditor. The legislation, which is endorsed by Mayor Joseph Curtatone, has been expedited by the Board of Aldermen and is expected to be considered in a meeting Tuesday, Nov. 20.