KCBD Investigates: Possible embezzlement at city funded non-profit

Updated: Apr. 12, 2016 at 1:03 PM CDT
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LUBBOCK, TX (KCBD) - Over the last two years, North and East Lubbock Community Development Corporation, or NELCDC, has received more than a half a million dollars from the City of Lubbock.

Its mission is to promote economic development in North and East Lubbock.

You may remember in February of last year, we reported on possible conflict of interests by both city officials and NELCDC board members.

And while questions linger about how the organization spends your money, there is new information that suggests the organization continues to be troubled.

We have confirmed that NELCDC has asked the Lubbock County District Attorney for a criminal investigation into possible embezzlement from the non-profit by a former employee.

We have also learned the non-profit, that uses your money to operate, has not conducted regular annual audits, just one more reason why City Councilwoman Karen Gibson said she continues to vote against funding the organization.

"I voted for it in the beginning and then when you see things not changing, you begin to not vote for it after that," Gibson said.

NELCDC is budgeted to receive more than $350,000 dollars this year. That money has not yet been allocated because NELCDC has not presented a budget to the city council.

Gibson agrees that north and east Lubbock needs attention."We need sidewalks fixed, we need ADA compliance stuff done, we need curb and gutter over there," Gibson said.

However, Gibson said she will not vote in favor of using city dollars to help fund the non profit.

"So much of theirs goes to administration, insurance, and travel and training and board meetings and stuff that and I just think those funds could be put to better use," Gibson said.

There is more to NELCDC's problems than questions from the city council.

After performing the 2009 audit, NELCDC auditors wrote, "We identified certain deficiencies in internal control over financial reporting..."

Two years later, the situation worsened.

In 2011, auditors informed NELCDC that the deficiencies in internal controls had escalated into "material weaknesses."

We are told NELCDC is working to complete audits for the last three years.

"Do I like the way they do their audits? No. Do I like the way they do their budgets? No. Do I have any control over that? No," Gibson said.

Now, subsequent to these warnings from auditors, comes word of a request for a criminal investigation into a former employee possibly embezzling money from the non-profit.

On February 13th, Lubbock Mayor Glen Robertson sent NELCDC Executive Director Monique Coleman an email requesting the facts regarding these allegations, who has known about the issue and for how long.

Robertson wrote that he had been informed that the board and staff had known about these allegations for several years and had not disclosed this knowledge to the city manager or any council members.

Robertson also asked if this is why an audit had not been provided and if current or past legal representation had been involved or have any knowledge of the criminal allegations.

Robertson wrote, "NELCDC is receiving taxpayer funds and we have the fiduciary responsibility to the taxpayers."

We reached out to NELCDC's attorney for comment; she told us she could not comment on an ongoing investigation.

We began asking questions about this latest revelation almost three weeks ago. Councilwoman Gibson said she learned about it last week.

"That may be why I found out, because you all were asking questions," Gibson said.

Several things have changed at NELCDC since we began our investigation more than a year ago.

For example, Councilwoman Latrelle Bright Joy's law firm represented the organization in 2014.

We interviewed her law partner and chairman of the NELCDC David Langston last year about his thoughts of a possible conflict of interest.

"I think it was properly characterized as the appearance of impropriety," Langston said.

Now, a year later, a different law firm represents the organization.

Also, in 2014 we discovered the executive director of NELCDC was being paid a salary of $75,000 a year while receiving a second salary as an employee of the city of Lubbock.

The NELCDC has now hired an executive director who is not a city employee.

City council members are waiting for the NELCDC to present its budget before voting on whether to allocate funds to the organization.

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