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Attorney helps mayor’s ally keep CEO job with nonprofit

Attorney helps mayor’s ally keep CEO job with nonprofit

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L. Nathan Hare, the chief executive for one of the region's best-known human services agencies, was fired in October by board directors who felt he mishandled important financial matters. The directors then hired a forensic accountant to examine the books.

But Mayor Byron W. Brown and one of his confidants came to the rescue. Hare was back the next business day as the head of the Community Action Organization, a nonprofit planted squarely inside the mayor's political base.

Attorney Adam Perry of the Hodgson Russ law firm did more than return Hare to a job that paid him $112,000 a year in 2016, the most recent year in which his salary information was available.

Perry, the agency's lawyer, sent dismissal letters to some of the same directors who tried to fire the chief executive. At least four directors are now off the board.

The CAO of Western New York, begun during President Johnson's War on Poverty, today runs programs designed to help the poor find jobs or homes, to help get people off drugs and to educate preschoolers. It has hundreds of employees and spends more than $50 million a year, most of it government-provided.

The News obtained internal documents indicating that directors harbored serious questions about financial matters and felt Hare was withholding important information.

"For quite some time, we had been having difficulty with communication," Jennifer Shank said of the board's relationship with Hare. When they got answers from him, they were often vague or "nonsensical," she said.

Shank said she had been an unpaid director for 16 years and the board's treasurer when Perry told her in a January letter that she was no longer a board member. When she and Hare's other critics were dismissed, the work of a forensic accountant they had hired stopped, Shank said.

Doris Cummings-Ford, a board member since 2011, said the board decided that replacing Hare was in the best interest of the low-income people CAO serves.

"We came to the conclusion that we needed another CEO, because he wasn't taking the actions he should be," Cummings-Ford said. "If you can't do the job, you shouldn't be on the job. I always liked him as a person. But people can be nice but might not be capable of running things efficiently."

Asked to comment, Hare called the effort to terminate him part of the CAO's internal workings and not a public matter. He declined to be interviewed. Perry, too, declined to answer The News' questions about his role in the events.

As for the mayor, his spokesman, Michael J. DeGeorge, said, "No termination took place and the mayor has no comment on something that didn't happen."

The leader of a national charity watchdog group said the nonprofit organization's actions should draw scrutiny from the state attorney general.

"It looks like a CEO takeover of the organization," Daniel Borochoff, president of Chicago-based CharityWatch, said when The News described the situation to him. "The board needs to be deciding who's voted in and who's voted out. They did make that decision, and he's still operating as if he's the CEO. There's enough money involved that regulators would be interested in this."

Firing of Hare

Hare learned on Oct. 19 that he had been fired. The directors had voted, a couple of weeks earlier, to let him go, with severance that would pay him until the end of the year. Over the coming days, they drafted a separation agreement and a memo telling Hare he had lost their confidence and trust.

"The board has met with you to discuss deficiencies," the board wrote. "Since then, you have assured us things would be rectified. However, there have been continued deficiencies in your performance. This was discussed with you numerous times and has not resulted in improvement on your part."

Earlier in 2018, the CAO's outside auditors, Szymkowiak & Associates, warned the board about 16 deficiencies in internal controls. The auditors found, among other things, that 30 terminated employees were listed as vested in an underfunded retirement plan though they had too few years of service to be vested. A CAO-run clinic billed health insurers for services that didn't match the services given patients. The CAO missed, by more than 90 days, a record-keeping deadline for the federal Head Start program.

Then during 2018, the directors learned the CAO missed out on a $250,000 grant it regularly received from the state Office of Children and Family Services. That followed the near loss of a state grant in 2017 because the agency hadn't sent along required paperwork.

"Your finance department has yet to improve to our satisfaction," Hare was told in his termination letter. He was reminded of a promise he reportedly had made months earlier. "We have yet to receive consistent timely monthly (not year to date) finance reports on the deadline set by you."

Further, a majority of directors expressed concern that Hare played a behind-the-scenes role in the removal of a longtime board member, John Calvin Davis. According to former member Cummings-Ford, Davis was always asking for financial reports he believed should have been provided. "At no time," the termination letter said, "is there a legitimate reason for a CEO to have a hand in the removal of a board member without the request of said board member."

The letter was signed by Jenine Dunn, the board president at the time. Three months later, she was dismissed from the board.

Hare sent off an email disputing Dunn's complaints. The grant from the Office of Children and Family Services, he said, failed to arrive because it was not approved by the State Assembly's Ways and Means Committee. But Assemblywoman Crystal Peoples-Stokes, D-Buffalo, promised to shepherd it through for the state budget that begins on April 1, 2019, he told the directors.

He said he had been providing timely financial reports and working on the problems board members had identified in the past. He denied doing anything improper that might have influenced the removal of Davis, the former board member, who is Peoples-Stokes' brother.

Hare asked the directors to delay his termination because he had given the CAO "every bit of my energy, passion and persistent commitment." He sent his email to the directors, top CAO staff and to Perry at the Hodgson Russ law firm. Hodgson Russ attorneys have served as counsel to the CAO's board for years.

Mayor intervenes

Meanwhile, Hare turned to a private attorney and called individual board members to ask them to reconsider. And someone made a call to the mayor, because the same day Hare was fired Brown asked to meet privately with Dunn, according to an email Dunn sent the other directors. She and the mayor agreed to meet over coffee the next day, Oct. 20.

There has long been an overlap between people associated with the CAO and the "Grassroots" political organization that launched Brown's political career, said George K. Arthur, a former Common Council president who was a director of the CAO at the start. Brown and Hare have worked closely together over the years, Arthur said, describing a symbiotic relationship between the two. "They go back," he said.

Dunn would not comment for this article. But she 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.

Still, Hare never found himself without a job.

"He never left the office," said Shank, the former board treasurer.

Come Monday morning, Oct. 22, Hare reported to work as usual, she said.

An influential lawyer

Perry is one of Brown's go-to lawyers. His bio says he helped in the search for a new human services commissioner, serves as president of Mayor Brown's Fund to Advance Buffalo and in 2009 was asked to lead the Citizen's Planning Council, the group that guides City Hall's capital improvement budgets. When the mayor's camp wanted a friend on the panel redrawing Erie County legislative districts, Perry was their choice. Perry has defended the city in high-profile lawsuits, and one analysis found that during Brown's first 11 years as mayor, City Hall paid Hodgson Russ more than any other firm for legal work.

As for the CAO, it gave Perry its "Agent of Change" award in 2011. Grassroots, the political group that gave the mayor its start, gave Perry an award in 2012.

A few days after Hare was fired by the CAO board, Perry told the board members during a conference call why Hare wasn't going anywhere.

For their vote on Oct. 4, eight board members met via a conference call. A majority voted for termination and two abstained, Shank said. Perry determined the vote had to be nullified because the board had not provided adequate notice of the special meeting. A couple of weeks later, the directors tried again to fire Hare. This time, the board vice president, Michael E. Johnson, who had abstained during the first vote, proposed that the question be tabled. With all of the fallout from the first vote, and Perry arguing to keep Hare on the payroll, the delay was approved, Shank said.

When asked by a reporter for his version of events, Perry initially said he could not discuss a client's confidential personnel matter. Then, when asked his legal basis for nullifying the board's decision, Perry denied Hare was let go. "No action was taken by the board," he said.

Is that because Perry voided the action? he was asked.

Perry wouldn't answer.

He was then read the board president's letter to Hare on Oct. 19: "We regret to inform you your employment is being terminated effective close of business today," it said. Perry was told of Hare's email to the directors, in which he acknowledged the "termination notice." At that point, Perry said he had seen no advance notice of any meeting held to fire Hare, and no minutes of such a meeting, so he could not conclude Hare had been fired.

In December, at least four of the directors who voted to fire Hare received letters on Hodgson Russ letterhead and signed by Perry. He told them his firm had prepared a report related to "board governance" and other issues, and they could come inspect it at the law firm without taking notes. Citing attorney-client privilege, he forbade them from discussing the topic with anyone.

None of the directors interviewed by The News said they read the report.

Perry sent Hare's critics another letter on Jan. 8. The letters told them of problems with their appointments to the board.

"Due to a deficiency in your qualifications and the process used by the Board to consider and vote on your election, that action by the Board was a nullity," the letters read, "and you are not a member of the CAO Board."

If board members had questions about their removal, the letter said, they were to ask Perry, not any CAO staff or board members.

The power to appoint as well as remove members lies with the board, according to the CAO’s bylaws. A board member can be removed for cause through a majority vote of the board. In the case of such a vote, a board member must be given 30 days notice of their possible removal.

Cummings-Ford, one of the dismissed board members, said she did not contact Perry after she received the letter indicating she had been removed from the board. Instead, she and others felt the best course was to make the situation public.

"You need to have a strategy," she said.

When interviewed, Perry acknowledged that a lawyer to a board cannot, on his or her own, remove a board member. But he refused to explain the legal basis for their removal.

"I cannot comment on communications with individuals associated with client matters," he said.

"It's not appropriate."

The Buffalo News: Good Morning, Buffalo

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