Thursday, September 27, 2012

Job-training group BUILD, signatory of CBA and Atlantic Yards booster, on shaky ground with budget, back taxes, and spending (Nets tickets, rent, precinct council), according to former CFO's complaint to NY AG

The job-training organization Brooklyn United for Innovative Local Development (BUILD), a controversial but intensely loyal source of community support for Forest City Ratner's Atlantic Yards, is on shaky ground, its former Chief Financial Officer has charged in a complaint (bottom) to the New York State Attorney General.

(Update: BUILD eventually closed Nov. 16, leaving a bitter personal and professional dispute between BUILD officers and the former CFO.)

BUILD, which formed as Atlantic Yards was unveiled and has relied on Forest City for free office space/utilities and most of its funding, has seen its budget run low, even as it owes more than $115,000 in back payroll taxes, according to the complaint.

Moreover, the letter charges that CEO James Caldwell has spent money irresponsibly, including for Brooklyn Nets tickets ($8700), rent for five individuals, a car payment, clothing for a subordinate, and for the 77th Precinct Community Council, which he heads. Larger sums were allegedly misallocated to items seemingly part of BUILD's mission--like MetroCards for trainees, part of $38,201 for transportation--but not authorized by its funders.

BUILD's former CFO Lance Woodward, fired August 1 in what he contends was a wrongful act, has urged the Attorney General's Charities Bureau, which oversees non-profit organizations, to investigate. He asks for Caldwell to be removed from BUILD, a new board established, and restitution of misallocated funds.

His letter, backed by voluminous appendices, charges Caldwell with misallocating and misappropriating more than $120,000 from 1/1/11 to 8/31/12, using BUILD checks and its credit card.

There's clearly deep tension between the two men, though they were once quite close. Some have described Woodward as "like a son" to Caldwell, who helped the younger man get his footing after he was once homeless.

The dismissal letter Caldwell provided Woodward cited insubordination, failure to perform duties, and lack of proper supervisory performance--none of which, according to Woodward, were the subject of written or verbal warnings.

Caldwell's response: a "disgruntled employee"

After contacting Caldwell last week, I two days ago provided him with a copy of Woodward's seven-page letter. Yesterday, I posed some general and specific questions, including about BUILD's financial stability. Caldwell sent a general response, via Chief Operating Officer Daisy James:
We are of course dismayed that a disgruntled employee, who was dismissed for performance, after we made great efforts to assist him and provide him with employment, would surreptitiously take documents and other materials from our office during and post-employment and provide them to a blogger.
We've worked very hard for nearly a decade now trying to help the most impoverished of our neighbors develop jobs skills and obtain jobs. We've done this in one of the most difficult economic environments in our City's history.
We will of course review carefully the document you provided, along with counsel, and will respond directly to the Attorney General's office. We are not going to have a conversation about Mr. Woodward's allegations, or why we believe he would do this, via the media or your blog.
"I truly believe I had a fiduciary responsibility," Woodward said, regarding his provision of information to the Attorney General, including information gathered from BUILD financial accounts--passwords left unchanged--in the month after his dismissal.

Budget troubles

BUILD's door, 485 Hudson Ave.

It's unclear how much the allegedly misappropriated spending--if the complaint is accurate--was aimed to benefit Caldwell directly or to serve as an old-fashioned neighborhood benefactor. The letter cites spending on gifts and charitable support for neighborhood organizations.

Other spending deemed misallocated, such as on graduation ceremonies for those in BUILD's customer service training program, seems mission-oriented although, according to Woodward, not permitted under the spending guidelines established by funders.

BUILD's main funder has been Forest City Ratner, via its Atlantic Yards Development Corporation (AYDC), which in the fiscal year that expired 3/31/12 contributed $340,000, plus free rent and utilities likely worth more than $40,000 a year. The Consortium for Worker Education (CWE) and other job-training groups have also bolstered BUILD's budget; last year, CWE gave $65,000.

Woodward said he attempted to raise the issues of off-budget spending and the need to pay taxes with Caldwell but was rebuffed. Beyond the issue of fiduciary responsibility, he may sue for wrongful discharge.

While BUILD does have a repayment schedule with the IRS, reducing the debt may not be easy. According to Woodward, neither  Forest City nor CWE promptly renewed their most recent rounds of funding, which expired at the end of March and of June, respectively. A CWE representative said yesterday that "we are currently in negotiations with BUILD." (I queried Forest City last night and will add their response if I get it.)

BUILD’s busy offices occupy 1100 or so feet ground-floor space at 485 Hudson Avenue, just off Fulton Street, a zone where gritty Downtown Brooklyn morphs into gentrifying Fort Greene. It’s the southern end of a factory-turned-office building, bought by Forest City Ratner in 1989, that includes the 80 DeKalb Avenue tower on the north end.

(At $30/sf, a plausible sum at least among high-rise Downtown Brooklyn office listings, the space is worth $3300 a month, or $39,600 a year. A 2010 audit of BUILD, below, posted on the state's Charities Bureau web site, estimated the value of utilities at $28,500, though it's not clear whether that's the annual total. The organization also gets free building maintenance.)

Pattern of controversy

Caldwell at 9/21 arena ribbon-cutting with portrait of the
  late Marie Louis, BUILD COO; copyright Nancy Siesel
Woodward and some fellow former employees, believers in the organization's mission to help serve Brooklyn's vast number of unemployed, have expressed dismay about BUILD only in its most recent incarnation.

But BUILD, formed around the time Atlantic Yards was formally announced, has faced broader criticism before. Co-founder Darnell Canada left BUILD in March 2004, just a few months after the launch, stating, "I am resigning out of the need to distance myself from those in the organization who see this organization as financial self gain, [rather] than for the needs of the Brooklyn community." Canada, who died in May 2011, never offered further clarification.

BUILD, whose officers and staff, including Caldwell and Woodward, had been volunteering their time for about a year and a half, began to receive support for Forest City Ratner in August 2005, two months after they signed a Community Benefits Agreement (CBA). The CBA, though billed by Forest City as "historic" because it was the first in New York, differed from benchmark CBAs in Los Angeles because the groups in Brooklyn were all supporters of the project from the start.

Though Caldwell and former Chief Operating Officer Marie Louis accurately denied earlier charges that BUILD was funded by Forest City, by September 2005, such denials were dishonest. A 10/14/05 New York Times article revealing the payments nevertheless proclaimed the CBA as representing a "modern blueprint" for harvesting public support.

(BUILD also erroneously claimed it expected $5 million in support from Forest City, a sequence played up in the documentary Battle for Brooklyn.)

The organization was rocked by a lawsuit filed last November by seven participants in a coveted pre--apprenticeship training program who said they were promised jobs and union cards and required to go through unsafe, unpaid training. That lawsuit, which names Caldwell individually, BUILD, and Forest City among the plaintiffs, remains pending. In that case, Forest City's lawyers also represent BUILD.

Still, Caldwell and Louis recruited many people, especially from their base in Prospect Heights and Crown Heights, to toil as volunteers and then work for relatively low pay. BUILD, though new to the employment services field, has in its current office been regularly busy with walk-in visitors seeking jobs and getting basic help with such things as job search and resume preparation.

BUILD has not met its charge under the CBA to prepare people for high-paying jobs at Atlantic Yards, but it had--as of May--placed 460 people in lower-skilled jobs, including at Forest City's malls. It put several cohorts of 25 people through unpaid Customer Service Training, and played a role in recruiting people for the 1900 part-time jobs at the Barclays Center, though it's not clear how crucial that role was: the city's Workforce1 service took charge.

All the while, BUILD, which didn't so much negotiate as embrace the CBA, provided people to rally for Atlantic Yards. Caldwell, who according to 2010 IRS filings earned $64,000, has enthusiastically supported Forest City's plans, whether or not they have much to do with BUILD's mission.

Woodward
At a hearing this past June held by the State Liquor Authority (SLA), for example, Caldwell backed the plan by arena operators to serve liquor to up to 1800 VIP customers one hour after events, as late as 2 am, contending it would mean more jobs. The SLA ultimately dialed that back to 1 am.

Woodward's motive

Woodward said he aimed to restore integrity to BUILD, which has had several long-term employees driven away or fired, and lacks an independent board. (Board members are longtime Caldwell associates, with three of the four serving as officers on the Precinct Council.)

While criticism of BUILD may be perceived as damaging toward Atlantic Yards, Woodward said, "It's not my intention." He said "for the most part" he's supportive of Atlantic Yards; at a public hearing in July 2009, his testimony paired Bruce Ratner with George Washington as among those who've changed Brooklyn for the better.

He said he showed the complaint to Forest City shortly before he filed it with the Attorney General. He went public, Woodward said, to "vindicate my name."

Along with Woodward, four other individuals were either wrongfully terminated or left under duress, his letter states. Woodward said in an interview that he was acting on behalf of others who believe BUILD's facing an organizational crisis, as well as the memory of Louis, who used to say she considered BUILD "my baby."

Organizational culture

Woodward's complaint suggests a challenged culture at BUILD, which relied on two long-serving executives: Caldwell, a neighborhood and political activist with strong community ties but no college degree or experience in job-training, and COO Louis, a veteran nonprofit executive who was struck by cancer, worked at BUILD while going through treatment, and died in late 2011 at age 39.

A consulting firm's 2010 report on BUILD, cited in Woodward's letter, called Louis "a great asset" but said that BUILD lacked other staffers with comparable skill sets, putting "the organization at risk should she decide to leave." It also described the board as weak, and dependent on those board members who also served as BUILD's paid officers.

Internal conflict

Woodward, 42, has a political science degree from the University of California at Berkeley and worked in technology and construction companies, and on a political campaign. But he hit hard times after moving to the New York area from California in the spring of 2003. His work situation deteriorated and, without family support, found himself in the city shelter system, he said, for more than a year.

Caldwell and James were publicly thanked on arena
scoreboard at 9/21 event. Photo copyright Nancy Siesel
He met Caldwell, Woodward said, when a nurse at the Peter Young shelter on Pacific Street, a board member of the Precinct Community Council and later BUILD, recommended that he help with Tracy Boyland's Congressional campaign: Woodward, who's white, was seen as diversifying the effort on behalf of a black candidate. Soon after, Woodward joined BUILD as a volunteer, believing in its mission.

He contributed to the newsletter of the 77th Precinct Council and played various roles in BUILD once it got funded, working part-time and later full-time, becoming Chief Technology Officer. Upon Louis's death, Woodward was promoted to Chief Financial Officer, but said he served essentially as Chief Operating Officer.

His complaint traces internal conflict to the role of current COO Daisy James, who was hired in September 2011 as Employer Services Coordinator, responsible in part for teaching a Customer Service Training course.

James, a former Chief of Staff to Assemblyman Hakeem Jeffries, became principal trainer but, according to his complaint, her presence was divisive among the staff and Caldwell sided with James.

This past March, according to the complaint, Woodward had conversations with Caldwell about money being misappropriated and taxes left unpaid. He said Caldwell avoided conversation after that.

(BUILD's 2010 tax return, below, filed this past July, indicated $111,538 in payroll taxes as liabilities. An attached audit indicates one potential source of the group's troubles: a $78,612 write-off of a 2009 grant receivable that was never collected.)

In late July, two days before he was terminated, Woodward said, Caldwell told him James would become Chief Operating Officer and serve as his superior. Woodward resisted. Then, on August 1, Caldwell and James came into the office and Caldwell told Woodward that James was now his boss.

Woodward protested, saying the decision to promote James was not made by the board, which is responsible for hiring officers. Caldwell told Woodward to leave the office. Woodward refused to provide passwords for his computer, aiming to protect the organization's assets.

Caldwell then called the cops. As Woodward talked to the officers outside, Caldwell locked him out of the office. Given a termination letter, Woodward left.

Complaint details spending

Six weeks later, Woodward filed his complaint with the Attorney General. The letter details several categories of what Woodward considers misallocation of funds.

Caldwell spent $8,393 on labor, site rental and entertainment expenses for graduation ceremonies, as well as nearly $11,300 on food, mostly for graduations, but including several hundred dollars of what was Woodward termed Caldwell's " personal interests."

Caldwell also directed $5672.55 to cell phones, which Woodward says was not permitted under the agreements with the funders, CWE and AYDC.

Of $38,201 spent on transportation, most went for Metro Cards given to trainees and U-Hauls "related to moving supplies and equipment for events," but other spending went "to parking, parking violations and a personal car payment."  

Caldwell, according to the letter, directed $4454.17, including $1350 in loans, to the 77th Precinct Community Council, which he heads and which serves as a community power base. The money went to refreshments--key to getting neighborhood turnout--plaques, and even stuffed animals for distribution.

He spent $9715.74 on "entertainment," including two season tickets for the Brooklyn Nets, plus a local cruise, and a hotel room. Over a year, Caldwell spent $7470.55 on apartment rent for five people, both members and nonmembers of BUILD.

Caldwell, according to the filing, spent more than $3,000 in donations to groups and individuals, $1300 for flowers, $1500 for plaques and nearly $1000 for clothing.

Woodward identified $576.97 spent at "at Macy's for BUILD employee Daisy James." In a follow-up interview, he said records indicate the spending was for women's clothes, and James was seen that day with Macy's shopping bags.

Also, according to the letter, BUILD spent $7055 on labor for outreach and cleaning, work that could have been done by BUILD employees.
Complaint to NY Attorney General about BUILD (address redacted) BUILD 2010 IRS Form 990 and Audit

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