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FBI interviews 2 ousted CAO board members

The FBI has interviewed two former board members of the Community Action Organization, with agents asking questions about the firing and reinstatement of CEO L. Nathan Hare, why Mayor Byron W. Brown tried to stop Hare's dismissal, and financial operations of the agency, according to two sources.

In the past five weeks, FBI agents have spoken by phone or in person several times with the two former CAO board members, according to Jennifer Shank, who was one of those interviewed, and another source.

Agents have also reached out to a former employee of the anti-poverty agency, said two sources who requested anonymity because of possible impacts on their employment situations.

Federal agents knocked on Shank's door on Feb. 19, two days after The Buffalo News published its first story about Hare’s termination and the subsequent removal of board members, she said. The FBI talked to another former board member as recently as Tuesday, a source said.

FBI agents also asked Shank about Hare’s ties to Grassroots, she said. Grassroots, an East Side political club, came under scrutiny two years ago when its offices were raided as part of a corruption investigation into political operative G. Steven Pigeon. Grassroots, which helped launch Brown's political career, now receives much of its money from the mayor’s campaign fund.

Several current CAO board members have close ties to Grassroots, including County Legislator Barbara Miller-Williams, Councilman Ulysses O. Wingo Sr., former Councilman Demone A. Smith and City Court Judge Craig D. Hannah, the board president.

“I’m just hearing about this right now,” Hare responded when a News reporter called him Thursday to seek his comments about the FBI’s interest. Because he had just received word, he said he would not comment, but he then criticized The News, saying it has not told the truth about his agency.

Asked if he would cooperate with any FBI request for information, Hare said he would respond to any legal inquiry from the FBI, just as he responds to inquiries from the governmental agencies that have some oversight over CAO operations.

Hare has said in written statements to CAO workers and The News that false allegations of impropriety are being lodged by disgruntled former board members against him and the nonprofit.

"There has been no impropriety of any kind, either in the financial or the program administration of the CAO," Hare said in a recent letter to his employees. "The CAO was and is in excellent shape."

The mayor said he knew nothing about the FBI inquiries.

“From my perspective, The Buffalo News reporting on this has been biased, unethical and incredibly misleading,” Brown said. “For lack of a better term, just completely fake news.”

Brown declined to answer specific questions about the CAO, including about a meeting the mayor had with former board president Jenine Dunn over the firing of Hare.

When contacted by a News reporter, a spokeswoman for the local FBI office declined to confirm or deny that an investigation was underway, citing standard bureau policy.

A representative from the Department of Justice sat in with the FBI on at least three interviews, sources said.

“They’re looking at the legality of the things that have happened, whether there’s been any undue influence on what happened, whether anybody has gotten any benefit from the actions that were taken,” Shank said of the FBI.

In October, the CAO board voted to fire Hare, the longstanding CEO, according to former board members. But the next business day, he returned to work. CAO lawyer Adam Perry informed board members that there were technical problems with their vote to terminate Hare, Shank said.

In January, six directors, including four who voted to fire the CEO, were removed from the board, according to Hare.

Their unseating followed a board vote to accept a report from Perry, in which he found technical problems with the way those board members had been appointed, according to Hare. 

The board members, including then-president Dunn and then-treasurer Shank, were ousted two days before a forensic auditor – who Shank said the board had hired – was scheduled to begin work at CAO headquarters. Hare says Dunn and Shank improperly tried to hire the forensic auditor without the board voting to do that.  

One particular point of FBI interest, according to Shank: On Oct. 19, the day Hare received his termination notice, Brown asked Dunn to meet with him. The next day, the two met at a local coffee shop, according to an email the board president sent to directors at the time. 

Dunn told the mayor that she and the majority that fired Hare would not reconsider, according to Shank, who said Dunn told her about the conversation.

Hare has previously declined interview requests from The Buffalo News, but he has written a series of statements taking issue with articles about the CAO.

Hare has written that his firing was unjustified and illegal. He said some ineligible board members voted and some eligible board members were not invited to the meeting when the vote occurred.

CAO inches toward transparency as its leader fires back

 

The CAO is a nonprofit that sprang from a 1964 federal law authorizing a network of nonprofits across the country to help fight poverty. About two-thirds of the agency’s more than $50 million budget comes from government grants. The CAO’s Head Start program, which serves more than 2,300 children in Erie and Niagara counties, receives the lion’s share of those grants.

In the weeks since The News first reported on Hare’s termination and immediate reinstatement, the state Attorney General’s Office, state Department of State and federal Office of Head Start have confirmed they are looking into recent events at the CAO. 

Erie County Executive Mark C. Poloncarz welcomed news that the FBI is asking questions.

“I have publicly stated before, I think there needs to be a review performed to see who is legitimately on the board at this point,” Poloncarz said. “The county has a small contribution to the CAO, but the CAO performs a very important task as administrator of the Head Start program, so it is important to know things are being run properly there.

“Any investigation into the CAO is welcomed by this office,” Poloncarz said.

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