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Reginald Davis, CEO of Strong City Baltimore, resigned this week, shortly after he and his predecessor, CEO Karen D. Stokes, were accused in a lawsuit of diverting funds intended for community-led projects.
The lawsuit is the latest blow to the once-nonprofit that sold itself after the 2015 Uprising as a pioneering fiscal sponsor for the city’s local black organizations.
In addition to the lawsuit, which alleges it diverted recipient funds to pay for its state-of-the-art new headquarters on East Biddle Street, the nonprofit faces an investigation by the U.S. Attorney’s Office in Maryland. The Brew has learned.
The office took over from an earlier investigation by Baltimore Inspector General Isabelle Mercedes Cummings.
FBI agents have also conducted interviews regarding Payroll Protection Program (PPP) applications. In at least one instance, Strong City management reportedly submitted an application on behalf of a client without their knowledge or approval.
The organization received a $1.43 million PPP loan in March 2021, which it says saved 100 jobs.
Asked about the U.S. attorney’s investigation today, spokeswoman Marsha Murphy said, “We don’t confirm or deny investigations, so we have no comment.”
In an email to supporters, Davis said he was proud to fulfill the organization’s mission to “do good. . . in the communities we serve.” He said he has no immediate plans other than to take a “much-needed break” and “focus on self-care, my healing journey and my family.”
Anwar Young, chairman of the board, said he was “out of town due to a bereavement” and could not answer questions.
He said Strong City’s legal counsel would respond, if necessary, to written questions submitted yesterday by The Brew.
So far no answer.
Tax lien and asset freeze
The strong city faces other challenges. An IRS tax lien was placed on September 23rd. The action stems from the failure to pay $88,309 in payroll and Social Security taxes in 2017.
And just two weeks ago, a Minnesota bank issued a garnishment order to enforce a $167,027 judgment.
The bank is seeking “all cash, funds, accounts, credits and/or property held by the garnishee,” according to a Dec. 20 filing in Baltimore County District Court.
The suit was filed by Aziza Pe&ce, The Be. Organization, Maryland Justice Project, Step Up Maryland, Fearlessly Loving Yourself, Helping Oppressed People Excel (HOPE) and the William Tipper Thomas Foundation.
It accuses Davis, Stokes and two other former officers — Operations Administrator Tyson W. Garrett and Budget Manager Todd Elliott — of “intentionally and knowingly” using community project funds to renovate the A. Hoen & Lithography building. Co. current home of Strong City.
“Defendant Stokes orchestrated the purchase and renovation of the Hoehn Building, intending it to be her legacy,” the lawsuit alleges. “When costs began to rise, Stokes began to use the funds that SCB held to cover the rising banks.”
PRIVATE COATING:
• Grassroots groups express concern over Strong City Baltimore’s shaky finances (9/10/20)
• The inspector general begins an investigation into the handling of Strong City recipients’ money (8/20/20)
• Former CEO defends Strong City amid complaints about fiscal sponsorship (21.08.20)
• Strong City Baltimore is sending financial statements to the wrong customers (2/12/21)
• Even after Strong City’s mismanagement is exposed, there is no help for the victims (29.05.21)
An insider like an accountant
The lawsuit says Stokes had hoped to recoup the misappropriated funds through a fundraising gala in March 2020, but the Covid pandemic thwarted her plans. A month later, she “abruptly retired.”
She was succeeded by Davis, her chief of staff, who initially oversaw Aziza and the other grassroots groups, according to the lawsuit.
After stories of financial mismanagement emerged The Brew and elsewhere, Davis hired Javier Goldin and the Bethesda-based Goldin Group to audit the project’s accounts.
Davies promised to be more accountable, create a “robust” accounting department and make improvements to the group’s fintech infrastructure.
Meanwhile, Goldin, posing as an independent auditor, became an employee of Strong City, “receiving a salary from the same entity he was supposed to independently audit,” the suit says.
End of fiscal sponsorship
In May 2021, Davis announced that Strong City would end its fiscal sponsorship program and undertake a final accounting of what it is owed on more than 100 community projects.
That never happened, according to the lawsuit. Instead, Davis and Goldin sent closure letters with “severely understated” funds and had “no intention of returning funds to sponsored projects.”
Kim Fawcett, founder of Aziza Pe&ce, said in the lawsuit that Strong City’s failure to refund $36,000 in her account forced her to work months without pay and eventually use personal funds to support her mentoring program of LGBTQ+ alive.
She said a $200,000 grant to Aziza from the Baltimore Children and Youth Fund was revoked after Strong City submitted “financial statements riddled with inaccuracies.”
Kim Sauer, co-founder of Fearlessly Loving Yourself, said she was evicted from her southwest Baltimore space because Strong City didn’t pay the rent.
“Strong City failed to deliver on every service contracted” – Kim Sauer of Fearlessly Loving Yourself.
“Strong City failed to perform every contracted service,” Sauer said in the lawsuit, forcing it to cancel its mentoring programs for teenage girls and face the wrath of angry parents and unpaid providers.
Monica Cooper, who created the Maryland Justice Project to help ex-felons, said she has raised more than $100,000 from the Open Society Institute, the Weisberg Foundation and others.
By depositing the money with Strong City, she thought she would receive monthly financial statements and timely vendor payments in exchange for a 10% fiscal sponsorship fee.
Instead, she says, her grant money was commingled with other recipient funds and diverted to pay for the Hoen Building and “the costs of other programs whose finances SCB mismanaged.”
Cooper says Strong City still holds $71,000 of its grant money. Attempts to contact Goldin, the accountant, were unsuccessful.
In the sea of vacant lots
The $34 million renovation of the long-abandoned Hoen Printing Works was financed primarily by various grants from the city of Baltimore and the use of historic tax credits by contractor Carl W. “Bill” Struver, who was trying to recover from the real estate bust during the The Great Recession.
When it was completed in 2020, the restoration won architectural praise and was hailed as a way to create jobs and promote civic pride in the deeply impoverished section of East Baltimore’s Collington Square.
“We want to find ways to create great new opportunities to revitalize the neighborhood,” Stokes said Baltimore magazine. “Baltimore has to be the best teaching laboratory in the country for this.”
“Baltimore has to be the best teaching laboratory in the country for this” – Karen Stokes at the opening of the Hoen Building in 2020.
Today, the sprawling complex is partially empty. A number of houses are being restored immediately to the east of the site. Otherwise, the former printing house is surrounded by crumbling houses, empty lots and piles of garbage.
There are now fewer than 20 employees at the headquarters, a far cry from Stokes’ plan to build a nonprofit after she took control of the Greater Homewood Community Corporation in 2007.
Stokes shifted the group’s focus from educational programming at Charles Village to the world of “fiscal sponsorship,” using its 401(c)(3) status to attract small organizations in need of a nonprofit sponsor to secure grants from private donors and public agencies.
In 2011, the group managed $700,000 as a fiscal sponsor for 35 projects. By 2019, $14 million had flowed into its coffers, according to Garrett, the former chief operating officer.
By then, the organization had been renamed Baltimore City Strong.
It was a name that better reflected the organization’s impact “in all corners of the city and beyond,” Stokes wrote in 2019. Baltimore Sun guest column.
• To contact this reporter: reuttermark@yahoo.com
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