The foundation paid fees for exclusive clubs and a $1,500-a-month car allowance for its executive director, Rhea Chung, who has been placed on leave.
By Abby Sewell, Los Angeles Times | http://lat.ms/zgj7ZN
February 16, 2012 :: A foundation created to help needy students at Los Angeles Trade-Technical College paid its director tens of thousands of dollars in bonuses, membership fees at exclusive private clubs and a $1,500 monthly car allowance, according to interviews and records reviewed by The Times.
- The Trade-Tech Foundation paid a $5,000 initiation fee at the California Club in downtown Los Angeles for Executive Director Rhea Chung.
- It also paid for other membership fees for her, including the L.A. Philharmonic at $2,300 a year and the Central City Assn. at $8,000 annually. The foundation covered more than $9,000 for Chung's golf outings in the last two years. Records show she played on Christmas and the Fourth of July.
Problems at the foundation sparked two internal audits as well as an inquiry by the L.A. County district attorney's Public Integrity Division, which is looking into whether any funds at the foundation were misappropriated.
The college district placed Chung on administrative leave Jan. 17, and officials said they were also looking into allegations that foundation checks were forged. Officials did not identify the target of that probe.
FOR THE RECORD:
An earlier version of this article described Miguel Santiago as chairman of the L.A. Community College District's board of trustees. Santiago is the president of the board.
Records show Chung's pay and expenses dwarfed the amount the foundation gave out in scholarships to students, which was $43,350 in the 2011 fiscal year and $105,400 in the first half of the current year. Chung is one of a handful of employees paid by the foundation, which last year reported $610,481 in income, primarily from events and donations.
Faculty and students are questioning why more of the money raised by the foundation was not going to help the 17,000 students at the school, at a time when community colleges are dealing with higher fees and budget cuts. The downtown L.A. campus, which trains people in skills like welding and fashion design, serves the poorest population of any college in the L.A. Community College system and one of the poorest in the nation.
In an interview at the California Club, Chung denied any wrongdoing and said all her expenses and bonuses were approved by the foundation board and college president.
She defended her golf outings and club memberships, saying they helped her meet business leaders who might make donations to the foundation. Chung maintained that Trade Tech President Roland "Chip" Chapdelaine had been informed at "every step of the way" and had signed her checks.
Chung, who holds a doctorate in education from USC, had been Chapdelaine's executive assistant before she was appointed head of the foundation and acting associate dean of advancement, community and government affairs at the college in 2009.
"I'm an individual who's been working hard at these projects that [Chapdelaine] asked me to do. We made a mark as an organization," she said. "…It's too bad that he doesn't see the value of the work that's been done."
Chung earns $113,460 a year under her contract with the community college district, with half of her salary paid by the foundation, a quasi-independent nonprofit with an all-volunteer board that is overseen by the college district.
On top of her salary, Chung drew a $22,000 "performance bonus" last year from the foundation, something not allowed by district policy. She received an additional $22,000 to oversee the Open Academy youth orchestra, a separate legal entity primarily funded by the foundation.
An internal audit by the L.A. Community College District found that it was a conflict of interest for Chung to run both the orchestra and the foundation, because it could appear that she was more interested in the orchestra's financial health than in the foundation's.
The audit also found that the youth orchestra was renting space in a building owned by the family of foundation board Chairman Darryl Holter, chief executive of the Shammas Group, which operates car dealerships, and that Holter's daughter was being paid to teach music lessons. The audit called that a potential conflict of interest. Holter said the orchestra's rent and his daughter's pay were below market rates and that he had disclosed the potential conflict to the foundation.
Roger Gillott, a spokesman for the board, said in a statement that the board was made up of business people who volunteered their time to raise money for the college, as well as contributing money themselves. They relied on Chung to handle day-to-day finances, he said.
Some members of the foundation's all-volunteer board said they did not approve Chung's extra pay and were not aware of it until recently. Chapdelaine said he had, on occasion, signed checks for foundation expenses but that he had not authorized Chung's car allowance, bonus pay or extra pay for the orchestra.
The foundation board voted in April to give Chung the car allowance, which is the same amount paid to some top district officials, although some board members expressed concerns that the amount was too high.
The foundation also was mired in fiscal trouble in 2009, when the previous board chairman was accused of taking $148,000 from the foundation's bank account without authorization. District officials persuaded him to return the money with interest, and he was not criminally charged. Some board members wanted to go to the police, according to meeting minutes, but they ultimately opted not to after the college district's legal counsel recommended against it, and Chapdelaine "expressed concerns about the negative press outcome."
Chapdelaine said he didn't have a vote in how the board handled the situation and said he does not believe the two cases necessarily suggest a bigger problem.
The recent district probe began over the summer, when the orchestra wanted to sponsor a summer camp on campus and a question arose about insurance, Chapdelaine said. College district Chancellor Daniel LaVista said officials launched the internal audit after they became aware of a potential conflict of interest between the foundation and orchestra.
LaVista and Miguel Santiago, president of the district's board of trustees, wrote to Dist. Atty. Steve Cooley on Jan. 26, advising of "potential criminal activity" and referring to possibly inauthentic signatures on some checks.
The auditors suggested the foundation should stop paying the car allowance and bonus. College and foundation officials said the payments have ceased, and the board cut ties with the youth orchestra.
Foundation board member Ben Wong, director of local public affairs for Southern California Edison, acknowledged that the board should perhaps have asked more questions.
"I think when things are going well, you tend to assume that everything else is being run properly and efficiently," he said.