Prostitute’s Claim Stuns Ministry to Runaways : Homeless: A man, 20, says Father Ritter, founder of Covenant House, gave him money and had sex with him.

Father Bruce Ritter’s network of runaway shelters has made him a hero to millions, a beacon of hope on the nation’s most troubled streets.

Just a month ago, no less a fan than former President Ronald Reagan dropped by Ritter’s New York Covenant House shelter to offer his own hard-luck story as an inspiration to the youths there. When a temporary Covenant House office opened in Hollywood early this year, Los Angeles County supervisors proclaimed “Father Bruce Ritter Day.”

But this week, Ritter’s reputation, as well as his $85-million-a-year fund-raising operation, threaten to come crashing down around him.

A 20-year-old male prostitute, who had sought refuge at Covenant House, has alleged that Ritter funneled at least $25,000 from the program to lavish cash and other gifts on him as well as pay for his apartment while the two were engaged in a sexual relationship. The scandal has dominated local television news and the front pages of New York tabloids.

Manhattan Dist. Atty. Robert M. Morgenthau has confirmed that his office is in the “earliest stages” of an investigation of Ritter, but declined to comment on details. He did, however, make the unusual move of condemning unspecified news accounts as being riddled with “numerous inaccuracies.”

The New York Post, which broke the scandal, said the probe has included wiring the young man with a recording device so that investigators could eavesdrop on at least one conversation that he had with the priest last month.

Anne Donahue, the executive director of a 20-bed Covenant House shelter that opened last month on Hollywood Boulevard, said in an interview Friday: “There’s no question in my mind that this will be rapidly cleared up. We all knew the risk of working with the kids we work with.”

Covenant House had initially hoped to make its Los Angeles debut in a much larger facility. However, it was forced to scale back amid friction with other youth groups, which had complained that their own operations would fall victim to Covenant House’s superior public relations and political skills.

On Thursday, Ritter held a tearful news conference to deny the allegations of financial and sexual impropriety, and assert that his worst transgression was the “almost unforgivable” lapse in judgment he showed in spending two nights alone with the troubled young man he sought to rescue from the streets.

The 20-year-old prostitute approached Covenant House in New Orleans last February, seeking protection from the drug dealers and organized crime figures for whom he worked, Covenant House spokesman John Kells said. He was given the alias Tim Warner, and sent for protection to New York, where Ritter said he recognized someone who needed special help.

Ritter said he took the case himself, because “frankly, I had more experience than anyone else.” Kells said it was not unusual for Ritter and other Covenant House staff members to spend much time, even overnight, with the particularly troubled young people who are put in its mentoring program.

“The mentors are encouraged to take the kids home and treat them as their own children,” Kells said. Other groups, however, have criticized this approach as blurring the line between professional and personal involvement.

At the news conference, Ritter produced an independent audit that he said proved that Covenant House spent only $9,800 to house, employ and help educate Warner, which is lower than its $15,000 average per case.

When the young man began failing to attend Covenant House-financed classes at Manhattan College and slipping back into prostitution, Ritter chastised him and warned that he could face expulsion from the program. At the news conference, Ritter speculated that this might have caused the bitterness that led the young man to accuse him of wrongdoing.

However the investigation is ultimately resolved, Ritter told New York Newsday columnist Dennis Duggan, “it’s something I’ll have to live with the rest of my life. I will always see that question in the eyes of people. Did he or didn’t he? I didn’t. But I was stupid.”

Over more than two decades, Ritter has expanded Covenant House from a one-man operation in his East Village apartment to a giant network that claims to rescue, shelter and counsel 25,000 young runaways a year in six U.S. and Canadian cities and four Central-American countries. Its blue-and-white vans are a familiar sight, scouring the seediest areas for young runaways who might need help.

Ritter has been deluged by accolades. In his 1984 State of the Union Address, Reagan singled Ritter out for special praise. Last month, Ritter, who has often been compared with the legendary founder of Boys Town, received the Father Flanagan Award for Service to Youth from that Nebraska boys’ home.

But he has also gathered his share of detractors, including those who say that Covenant House is a monument to Ritter’s own ego, and is far less effective than programs that operate on a smaller scale.

Many of those complaints resurfaced early this year, when Ritter laid plans for a 100-bed shelter in Hollywood. In a struggle with rival youth programs that was mediated by City Councilman Michael Woo, Covenant House agreed to start on a much smaller scale than it had initially planned. Nonetheless, Donahue said, it is sheltering at least 50 young people a night, in its own facility and elsewhere, and plans to open other facilities around the city over the next few years.

Ritter has come up against the most wily of political opponents, and won. Proving wrong the adage that you can’t fight City Hall, he outbid and outmaneuvered New York Mayor Edward I. Koch in a bitter 1987 battle to buy a Manhattan building that Koch had wanted to use for jail inmates.

Koch accused Ritter of “dirty pool,” but conceded: “I can’t win it. . . . It is very difficult to enter combat with a priest, especially one suffering from cancer.” Ritter has undergone treatment for Hodgkin’s disease, a lymphoma which is now in remission, Covenant House spokesman Kells said.

The current scandal, with its allegations of homosexual behavior by Ritter, comes at a particularly bad time for the Catholic Church in New York. Last Sunday, in front of St. Patrick’s Cathedral, about 4,500 demonstrators protested the church’s policy on AIDS, saying it was an attack on gays.

Chanting protesters also entered the church and lay down in the aisles, forcing Cardinal John J. O’Connor to interrupt his sermon as they were carried out.

Researcher Lisa Romaine contributed to this story.