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Criticized agency to drop state license to house mentally ill

The executive director of a small not-for-profit agency that provides housing for the mentally ill said late last week that it will turn in its state license rather than fight efforts to revoke it.

The state Office of Mental Health said the agency, Odollam, was incorporated as a not-for-profit agency but operated as a family business, complete with perks for Executive Director Larry Grace and his relatives.

Allegations include:

* One of Grace's sisters was the former board president, and the other served on the board in 2003, as did Grace's fiancee.

* Odollam bought a house at 915 Ferry Ave. from Grace and another from his brother-in-law, transactions that Grace confirmed. Both houses were renovated with grants Odollam received, but neither deal was reported to the state as required by mental health regulations.

* Odollam owns a pickup truck registered to Grace and should have been included as a fringe benefit in reporting to the Internal Revenue Service. Grace said his accountant disagrees.

* The agency rented a house to a friend of Grace's daughter, who lives in the house, for $200 a month, although the agency had spent $19,400 in 2002 and 2003 to fix it up. The state also said mental health patients who were supposed to live in the house had been placed in a smaller apartment for which Odollam charged them $350 a month.

* Some Odollam group home residents were refused keys to their apartments.

The state letter also alleges payments to Grace's son. Grace said his son earned $60 for mowing lawns.

"Odollam has not been operated consistent with the needs, goals and best interests of recipients," James B. McQuide, director of the state Office of Mental Health's Bureau of Inspection and Certification, wrote in a Nov. 8 letter to the agency, which has provided apartments to mentally ill adults in the Falls since 1996.

The agency has four units in its headquarters at 915 Ferry and owns four other dwellings around the city. Grace said it served 38 clients last year.

Jill Daniels, spokeswoman for the Office of Mental Health, said last week that the state is seeking another provider to serve Odollam clients as of June 30, the end of the agency's fiscal year.

Paul Grenga, Odollam's attorney, said the agency will stay in business, since a state license allows it to receive reimbursement for taking Medicaid clients. He said it can still take private-pay patients.

Grace said the agency is losing $148,000 in state funding. He wrote a letter to state Attorney General Eliot L. Spitzer in December complaining of ill-treatment by the state and the Niagara County Mental Health Department, which used to contract with his agency.

"Odollam is certainly an atypical service for the adult mentally ill, and it appears that I have ruffled feathers," Grace wrote in his letter to Spitzer.

Grace told The Buffalo News only one sister was on the board and he began dating the woman now his fiancee after she had joined.

The Office of Mental Health also charged that Odollam violated the rights of the mentally ill residents by placing motion detectors in the Ferry house, connected to an alarm system that alerted police if residents tried to leave their bedrooms at night.

Grace said he installed the motion detectors in 1999 because some patients were going out at night to buy crack cocaine.

e-mail: tprohaska@buffnews.com

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