Audit Assails Operation of Program to Aid Poor : Poverty: City controller says mismanagement threatens to shortchange needy residents. Independent monitor urged to oversee disbursement and collection of money.

A key Los Angeles City anti-poverty program is so badly managed that thousands of needy residents are at risk of being shortchanged on services ranging from child care and job training to low-cost home repairs, city Controller Rick Tuttle said Monday.

The disarray in the $7-million-a-year federally financed program is so serious, Tuttle said, that an independent monitor should immediately oversee the disbursement and collection of money.

The recommendation came as Tuttle’s office completed a major, yearlong audit of the Neighborhood Development program, which issues grants and loans to nonprofit groups that build or refurbish buildings for employment training, child care and other services for residents who meet low-income guidelines. The funds come from the U. S. Department of Housing and Urban Development but are distributed through the city’s Community Development Department.

CDD oversight of most of the projects examined--involving several million dollars in grants for community organizations from San Pedro to the San Fernando Valley--was “ineffective or virtually non-existent,” auditors concluded.

Grants and loans were issued without proper supporting documentation, contracts were not enforced, questionable activities were not properly reported to high-ranking officials and, in some cases, CDD employees sought to mislead auditors and other outsiders about problems in the program, auditors found.

“They’ve done a terrible job,” Tuttle said. While auditors found no clear evidence of fraud in the poverty program, Tuttle said, shoddy paper work and other problems make it difficult to determine if taxpayer funds have been properly spent.

The mismanagement also means there is “a greater risk for those economically disadvantaged in terms of (not) getting services they are entitled to,” he said.

Parker Anderson, CDD general manager, said that, through a recent reorganization and other measures, his agency has addressed many of the shortcomings cited by the auditors. “We take our charge of serving the poor and disadvantaged of the city very seriously,” he said, adding that CDD officials will study the audit to determine what additional improvements may be necessary.

Reacting to the audit, Mayor Tom Bradley on Monday called for City Administrative Officer Keith Comrie to conduct a management audit of the entire Community Development Department. He also instructed Comrie to monitor CDD actions until the management audit is completed.

The audit was prompted by a Times investigation last year of alleged political influence and misuse of city-funded projects involving the Rev H. H. Brookins, a bishop in the African Methodist Episcopal Church and an influential supporter of Bradley.

The audit reiterated earlier allegations by city investigators that Brookins improperly obtained a $334,000 loan to rehabilitate a Crenshaw Boulevard building that he owned, unbeknown to CDD officials. The building housed nonprofit anti-poverty programs headed by Brookins.

Citing conflicts of interest, the city has sued Brookins to recover nearly $50,000 in rent paid to Brookins’ private company. Brookins has denied any wrongdoing and his attorney, J. Stanley Sanders, said Monday that settlement negotiations are under way.

Tuttle said his auditors found numerous irregularities in the handling of the Brookins loan, and also found that CDD officials did not act in the city’s best interest at a number of junctures.

The audit also concluded that about $74,000 was improperly advanced to one of Brookins’ organizations, repayment of the entire loan was not immediately demanded when Brookins admitted that he owned the building and CDD forgave up to $61,000 in past-due interest.

CDD officials have said the interest was waived after Bill Elkins, Bradley’s special assistant, urged the department to find a way to negotiate a settlement favorable to Brookins. Elkins has denied asking for special treatment for Brookins.

Tuttle said the Brookins case was an example of the lax management controls at CDD, but auditors did not focus on any political influence that may have affected decisions.

Tuttle’s tactics were questioned by Brookins’ attorney, who said the bishop was never contacted for comment about the audit. “This is the first I heard that he actually went forward with it,” Sanders said.

In addition to the Brookins project, auditors examined a dozen other programs and found similar CDD oversight problems. They included loans to a Sunland-Tujunga YMCA, a Los Angeles youth training program, a Skid Row family service program and a San Pedro home for the mentally ill.

Los Angeles City Councilman Robert Farrell, who heads the committee that oversees CDD grants, said he is “very concerned” about the findings and has called for Tuttle to appear before his committee on Thursday. “We’re going to look into this immediately,” Farrell said.

A spokesman for the Los Angeles office of the U. S. Department of Housing and Urban Development, which funds the CDD projects, said the agency is “very interested” in the report and would be reviewing it to determine what action may be necessary.

Paul Lee, director of litigation at Legal Aid Foundation, a poverty law firm, said: “There hasn’t been much effective administration of any of these programs. Again, none of this is new criticism. It has been going on for several years.”