Audit says nonprofit misused $1 million

Easthampton human services office scrutinized

By Amanda Cedrone
Globe Correspondent / August 26, 2011

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A nonprofit human services provider in Western Massachusetts that works with mentally ill and emotionally disturbed children misused more than $1 million in taxpayer money, the state auditor’s office said yesterday.

The report said that the Northeast Center for Youth and Families Inc. mishandled funds over a five-year period, the auditor’s office said in a statement.

The organization, based in Easthampton, serves about 600 mentally ill and emotionally disturbed children in Massachusetts; it also operates in Connecticut.

“We want to ensure that human service providers like the Northeast Center are spending public funds legally, appropriately, and wisely to maximize every dollar and help the greatest number of physically and emotionally needy children, adults, and families,’’ Auditor Suzanne Bump said.

The center responded on its website that it was in compliance with state rules and regulations.

“It is possible that we will continue to disagree with one or more of the auditor’s findings,’’ the center said. “In any event, we will cooperate with the Commonwealth in its prescribed process for the resolution of audits.’’

Bump said the center sent inflated cost information to the Department of Youth Services between 2006 and 2008, resulting in an unjustified overpayment of more than $650,000.

The center also inappropriately used $406,360 to cover out-of-state operating losses in Connecticut, the auditor said. And it hired independent consultants who could not be paid by the state, according to the report.

In 2007, NCYF allowed its workers’ compensation insurance to lapse for 21 days, the auditor’s report said.

During that time, an employee was injured, and the group misused more than $7,000 in state funds to pay the claim, Bump said.

Bump also questioned the center’s doling out nearly $1 million in bonuses over a three-year period.

That issue was referred by auditors to the Department of Youth Services for review.