N.J. hired auditor to verify if Allies Inc. spent money on cruises, dinner, hotels;
New Jersey State Comptroller Matthew Boxer. State Department of Human Services overpaid private agencies for services people with developmental disabilities never received.TRENTON — It’s been a year since the state comptroller said a nonprofit agency should repay as much as $160,000 in public money it spent on cruises, dinners and hotels — but so far not a single dollar has been returned.
Instead, the state has paid an additional $100,000 to an outside auditor to verify whether the comptroller was correct when it said Allies Inc. of Hamilton misspent the state’s money over a two-year period, state Department of Human Services spokeswoman Pam Ronan said.
Allies, which provides housing and work programs to 282 people with developmental disabilities, had $22.5 million in annual contracts for both 2007 and 2008.
The department’s audit, the results of which are due in the fall, took a much deeper look than Comptroller A. Matthew Boxer’s report did last August, Ronan said. Withum Smith and Brown of New Brunswick allocated five auditors who have spent about 1,400 hours pouring over Allies’ contracts for the years in question.
By comparison, the comptroller examined the 10 largest providers of services to disabled people and only found fault with Allies. His subsquent report examined only $305,444 in Allies’ expenses.
Boxer said Allies spent $111,851 of state funds to take managers, employees and disabled clients on two cruises — one sending 64 people to the Caribbean, the other taking 48 people to the Mediterranean. Those numbers break down to 31 employees going on the Caribbean cruise with 33 clients and 25 employees going on the Mediterranean cruise with 23 clients.
Other expenses included $9,300 in hotel bills for staff attending conferences in Atlantic City and Philadelphia — "in close proximity to the employees’ residences,’’ according to the report.
Allies spokesman Don Tretola predicted the latest audit will largely vindicate the organization. And if the agency has to return any money, it will be "miniscule" compared with the contract’s price, he said.
Although the nonprofit group disagrees with the report’s conclusions, CEO Krystal Odell has reorganized the corporate structure, Tretola said. There is a new board of directors, and a new accounting department — as a result of Odell’s having fired seven accounting employees early this year.
"We had several meetings to explain this is where we need to be, and they didn’t get it. It was tough,’’ Tretola said.
Allies contends the comptroller’s report was "unfair" and made the company’s dedicated managers and staff "look like criminals. It’s been a tough year for Allies,’’ Tretola said.
The most explosive accusation — that Allies used state funds to take clients and employees on the two cruises — isn’t true, according to Tretola. Clients bought their tickets with help from their families, donations or with their own savings. Allies employees got paid while on the cruise because they were chaperoning clients, "but the employees were on their own (paying) for everything else,’’ he said.
"The department’s Division of Developmental Disabilities knew about the cruises,’’ Tretola added. "We had their permission to have our consumers go on the trip.’’
Tretola also defended the hotel room expenses for employees attending conferences because some needed to drive much further to get to the group homes where they work.
"We have employees taking care of consumers in every county,’’ he said.
The outside audit resulted from the comptroller’s findings, Ronan said.
"The independent audit was engaged to determine all expenditures over a two-year period and identify, with as much certainty as possible, which of the Allies expenses were made with state dollars, versus the privately raised funds of the agency,’’ she said. The department used outside auditors to avoid any appearance of a conflict of interest.
"Because we hold $1 billion in provider contracts, independent auditors provide the added staffing and expertise for a thorough review," she said.
In the past year, Human Services has tightened its rules governing how private companies spend state money on salaries, travel and other expenses, Ronan said.
Comptroller spokesman Peter McAleer declined Thursday to comment on Allies’ latest statements.
"Our August 2009 report speaks for itself,’’ McAleer said.
Later this month, the comptroller plans to revisit that report and determine whether Allies is doing business differently and the department is monitoring contractors more carefully, he said.