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CAO inches toward transparency as its leader fires back

Community Action Organization of Western New York, which recently posted armed guards to block the public from a board meeting, has taken a step toward transparency.

The agency still bars the general public from its meetings. But it says it will stream audio of its board meetings.

“We heard our critics, and friends,” agency CEO L. Nathan Hare said in a letter to The Buffalo News. “We will be more open.”

No one should think it's in response to the controversy swirling around the agency, he cautioned.

"This is not a fresh action in the face of admonitions about transparency,” he wrote.

The agency has been in the spotlight because the board of directors voted to fire Hare in October. He did not leave.

Instead, most of the volunteer directors who voted to terminate him were removed from the board in January. The ousters were triggered when the board accepted a report questioning the legality of the appointments. The report was written by an agency lawyer and confidante to Mayor Byron W. Brown.

Since then, the federal Office of Head Start, which last year provided $43 million for CAO programs serving young children, has launched a review of agency audits and board meeting minutes. The state Attorney General's Office is looking into CAO, one of its officials said. So is the Erie County Comptroller's Office. The state Department of State, which provides about $3 million in community services block grants, is monitoring CAO as well, a spokesman there said.

Despite its significant government funding, CAO operates as a nonprofit and is not legally required to open its meetings to the public. But the federal legislation that authorized CAO and similar groups across the country requires that such organizations “provide for reasonable access to public information.”

For five weeks, Hare has declined interview requests from The Buffalo News. But he has written a series of statements taking issue with articles about the agency.

"Here are the most important points I want you to know," Hare said in a recent letter to his employees. "There has been no impropriety of any kind, either in the financial or the program administration of the CAO. The CAO was and is in excellent shape."

In Hare's statement to employees, in a letter to The News that he submitted for publication, and in a separate letter to the newspaper sent by the CAO board, four main assertions emerge. On some issues, Hare contradicts the former CAO directors who want their seats back. And he contradicts internal documents some of the former directors provided to back up their statements.

The points Hare makes:

• Hare says his firing was unjustified and illegal. "To be clear,” he wrote in his letter to CAO employees, “there is nothing in the record supporting a performance problem on my part.”

Hare may disagree with the board's assessment last year, but a paper trail documents the board’s monthslong dissatisfaction with him. In September 2017, for example, then-board president Jenine Dunn reminded him that the directors expected more financial information from him and his team.

“Mr. Hare,” Dunn wrote in an email, “per our conversation this afternoon you have agreed to … ” She then went through a four-point checklist. Atop the list was the requirement to “ensure your finance department generates financial statements for the board’s review at least one week before each meeting.” The other directors received a copy of the email as well.

Four months later – 10 months before the vote to fire him – the board president sent another memo: “On Jan. 3, 2018, the CAO Board of Directors met to discuss specifically their concerns about the failure to provide certain financial reports.”

The memo reminded Hare that this had been an “ongoing concern” since December 2016. Dunn told him that if he did not present that month’s financial report as required “you will face disciplinary action.”

When the board gave Hare his termination letter on Oct. 19, it began by saying “throughout 2017-2018, the board has had the need to discuss your performance.”

In immediate written responses to his termination notice, Hare said little about the board vote being illegal. Days later, agency lawyer Adam W. Perry nullified the termination vote for reasons he has not publicly specified. Hare states in his recent letter to employees that votes were cast by ineligible board members and certain eligible members were blocked from voting.

He also contends that three meetings held in October, including the one at which the board voted to fire him, were "illegal and secret."

In protesting his termination, Hare argued in October that he didn’t deserve to be fired. He acknowledged but minimized the fact that board members had expressed concerns about his performance.

“I believe I have given the Community Action Organization every bit of my energy, passion and persistent commitment to the CAO’s goals and its integrity as an organization,” Hare concluded, as he asked for a hearing before the full board of directors.

• The board, Hare says, never hired a forensic auditor. The News has reported that the board of directors, as it voted to fire Hare, also voted to hire a forensic auditor, but the firm's work was thwarted when some of Hare's critics on the board were ousted. Ultimately, the firm was not able to do an audit.

In his letter to CAO employees, Hare said the forensic audit “never started because no auditor was ever hired.”

Former board treasurer Jennifer Shank said the board voted on Oct. 4 to move forward with a forensic audit, on the same day it voted to fire Hare. In a board meeting on Oct. 24, then-board president Dunn told the directors and CAO attorney Perry that the local accounting firm of Chiampou Travis Besaw & Kershner had been selected, Shank said. Kelly G. Besaw, a partner in the firm, declined to comment.

“At the Oct. 24 board meeting, everyone was made aware of the fact that we were engaging in a contract with the forensic auditors,” Shank said. “Adam (Perry) said he wasn’t sure if a forensic audit was what needed to happen. Jenine just told him this was a voted-upon action by the board and it is going to take place.”

Shank intended to accompany the firm's personnel during their first visit to the CAO offices. On Jan. 8, she sent this email to, among others, Hare and Deanne Montgomery, the agency's vice president for finance.

“As previously reported 12/21/2018 by our board president, the board has acquired the services of an auditing firm and they will begin their engagement on Thursday, January 10, 2019. I anticipate your cooperation as they proceed with their compliance work,” Shank wrote.

Hours later, she received notice she was no longer on the board.

"The News has never named that supposed auditor and no record of its hiring exists in board minutes," Hare wrote to the employees. "Since no second outside audit was ever started, there was no 'forensic audit' to be stopped."

Countered Shank: “The contract was not enacted because of our removal from the board.”

• To Hare, the dysfunction was with board governance, not agency management. Hare says CAO's board of directors was under review in 2018 by the state Department of State, which watches over nonprofits and ensures compliance with community services block grants. A CAO internal email indicates the department last year was looking at the CAO board's record-keeping, attendance issues and the filling of vacancies.

Then came the October vote to fire Hare. In the months afterward, Perry, the CAO lawyer, “did a thorough investigation of each board seat” and looked at “all board actions during 2018,” Hare wrote in his recent letter to CAO employees.

Perry then summarized his findings in a Dec. 14 letter to the state Department of State, according to Hare.

The Department of State then found fault with Dunn in her role as president, Hare wrote. Hare declined Tuesday to provide The News with a copy of the Department of State correspondence. Dunn has refused to comment about CAO matters, noting that she has retained an attorney, Linda H. Joseph of Schroder, Joseph & Associates, who is also representing Shank.

Perry's report then became a focus of a board meeting Jan. 7, Hare wrote. The members voted to accept the finding that some of them had not been properly elected, he told the employees. Those wrongly elected members were then informed the next day they were off the board, Hare said. Six directors were ousted. At least four had voted to fire him in October.

"To be clear," Hare wrote to the employees, "some board members, who were against the proposed personnel action against me, were advised they had never been properly elected to the board. And some board members, who were in favor of the proposed board action against me, were advised that their status was unchanged."

Minutes from the Jan. 7 meeting show that the board accepted a report from Perry's law firm, which Hare said addressed the legality of six members serving on the board. Hare said the vote to accept the report prompted the removal of the six the next day.

"After a board vote on Jan. 7, various members were advised they were not part of the board because of specific legal defects in their election," Hare wrote to The News.

Shank, the ousted board treasurer, said she attended the Jan. 7 meeting. She acknowledged the board voted to accept the report on the six members' appointments. Shank said there was no discussion at the meeting about the contents of the report or that it would prompt the removal of board members. She said she and others objected to voting that night because they had not read the report, which was not available at the meeting.

City Court Judge Craig D. Hannah, the current board president, did not respond to a request for comment.

In letters dated Jan. 8, Perry informed certain members they were off the board. He told them there had been a problem with their election and they were "not a member of the CAO board of directors."

• Hare says the mayor does not control CAO. Hare sought to correct another notion, that the mayor has influenced CAO events. The mayor back in October did ask that directors reconsider their move to fire Hare and was rebuffed, two former directors have said. Brown and Hare have been friends for years, said a former CAO director and Common Council president, George K. Arthur.

Still, Hare wanted his employees to know he is his own man.

"Mayor Brown does not control the CAO, me, or our board," he wrote. "In fact, the city funds two programs at approximately $55,000 a year to the CAO, which operates a $51 million budget."

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