State investigates use of charitable funds by Conn. ambulance service

Groton Ambulance Association has also come under recent scrutiny for failing to staff ambulances


By Deborah Straszheim
The Day

GROTON, Conn. — The state Office of the Attorney General is opening an inquiry into the use of charitable funds by the nonprofit Groton Ambulance Association Inc., a spokeswoman for the attorney general said Thursday.

The ambulance association — which has come under scrutiny in recent weeks for failing to staff ambulances — paid its office manager $134,276, according to its most recent tax filing, and previously allowed her and the former vice president of the board of directors to borrow money, federal tax records show.

Groton Ambulance provides ambulance services to about two-thirds of Groton, including the city of Groton and much of Groton town.

"Our office is unable to comment at this time on the legality of any particular action by this association, and any questions about adequacy of ambulance service are appropriately within the purview of the state Department of Public Health and local officials," said Jaclyn M. Falkowski, director of communications for the Office of the Attorney General.

"However, we do have questions concerning the management of this nonprofit organization and, consistent with the attorney general's authority, we will be opening an inquiry in order to look into the organization's use of charitable funds. It would be inappropriate to comment further while this inquiry is pending."

The tax filing shows the association provided loans without a written agreement, so it is unclear exactly whether interest was charged or what the schedule was for repayment.

Nonprofit organizations must report their revenue, expenses, salaries and other financial information to the IRS.

Ambulance President George Timothy Law said Thursday that the organization required employees to sign paperwork if they borrowed and that the debt was paid back through payroll deduction.

"It wasn't free money that was handed out," Law said. "It was done because we felt an obligation to help employees, and at the time we had the money to do so."

Law said if someone was struggling financially and asked for money, the board would provide it, basing its decision on how long the person had worked for the nonprofit, how often they worked and their ability to pay the money back.

Law said the board of directors would "probably seriously consider changing" the policy because of the scrutiny it has received. He declined to comment on the tax filing, but said he'd contacted the association's accountant so he would have additional input at an upcoming meeting. 

Law said the larger loans were given before his time on the board. 

The 990 tax form, which covers the period from May 1, 2013, to April 30, 2014, reported that Deborah Brown, who manages the office, worked an average of 67.7 hours per week and earned $134,276. 

The filing by Groton Ambulance also showed the organization previously loaned Brown $20,563, and loaned Marvin Burkhalter, the former vice president of the board who has since moved out of state, $11,150. 

Both loans were approved by a board or committee, and neither was accompanied by a written agreement, according to information reported to the IRS on the 990 form.

Burkhalter owed a balance of $6,136 on his loan as of the 2013 filing. Brown was due a $787 refund for overpaying her loan, the filing said.

Burkhalter did not receive a paycheck from the ambulance company but was entitled to reimbursement for expenses such as cell phone use as a board member, Law said.

Some members Groton Ambulance petitioned for a special meeting at 7 p.m. on Monday at the association building at 217 Newtown Road to consider the election of officers and directors, affirm its desire to continue doing business and request that the board pursue a service agreement with the town of Groton.

Groton Ambulance does not have a services provider agreement with the town, although it has served for decades.

Groton Ambulance has an executive board of three members; a president, vice president and secretary who make financial decisions; two at-large members who may be employees or volunteers; and a sixth "membership officer," Law said.

The president and vice president are elected to two-year terms every other year at an annual meeting typically held in June, he said. The annual meeting has not been held yet this summer.

Groton Ambulance has four full-time employees now and 26 per diem workers, Law said. The starting pay for a per diem emergency medical technician at the association is $13.50 per hour, but pay increases to nearly $20 per hour at the top step, Law said. About two-thirds of the staff "tend to be higher on the pay scale," Law said.

Ambulance association member Michael Stammel collected 15 signatures to petition for the meeting.

"There will be nominations and elections for open board positions only," Law told him in an email. "You cannot remove a director unless the membership follows the bylaws." 

Current vacancies are the position of vice president and two others.

Last month, Rich Moravsik, the chairman of the Groton Town Council's Public Safety Committee, said he was investigating complaints that the ambulance association provided no service on seven Sundays in April and May and did not respond to five calls in the last week of June.

Moravsik requested data for the 45 days that began July 9 and ends Sunday, after hearing complaints about a decline in service and at a Groton Fire Officers' meeting.

At the time, Law said Groton Ambulance had experienced a temporary staffing shortage that was being fixed. Part of the difficulty was the need to use per diem employees, he said, because the association could not afford to hire full-time staff because of the cost of benefits.

The state's director of the Department of Public Health's Office of Emergency Medical Services, Raphael M. Barishansky, will meet with Moravsik and other town officials to discuss the service and complaints in September.

Town Manager Mark Oefinger said he has no doubt that the ambulance company "has got some housekeeping issues that they need to take care of." But the goal should be to help them fix the problems, he said.

"If the thought is they're salvageable and can be fixed, let's put our efforts there," Oefinger said, "as opposed to publicly dismantling an organization that has been providing service for decades."

The town provides an annual subsidy, most recently $105,951, and leases the building to the nonprofit for $1.

Moravsik said he reviewed the organization’s tax forms dating back to 2001. Groton Ambulance reported income of $1.63 million in its filing for 2013 and spent about $1.82 million. He noted that the office manager earned six figures.

“She makes more than the police chiefs,” Moravsik said. “She makes more than most town officials.”

He also said the lending raises questions.

“They have no written agreement on the borrowing, and it seems like the person who is in charge of the office is getting the largest loan,” he said. “My instinct would be, ‘Who authorized it?’”

“It would be a best practice for a nonprofit to have specific policies in place regarding any loans, including specifics of repayment terms and any conflicts of interest in those loans,” said Rick Cohen, director of communications for the Washington, D.C.-based National Council of Nonprofits, a resource and advocacy group for charitable nonprofits.

“The board of directors is the ultimate governance and financial steward of the organization and should ensure best practices are followed,” Cohen said.

Financial best practices would include a written conflict of interest policy, whistleblower policy and review of executive compensation, he said.

The ambulance tax filing shows it has no written conflict of interest policy and no written whistleblower policy, nor does not it have compensation reviewed by an independent person or use comparable data to support it.

Law said the company may not have policies checked off on a tax form, but it isn't required to have them all. "That doesn't necessarily mean we're doing anything wrong by not having (them)," he said.

IRS spokeswoman Anny Pachner wrote in an email that she is "prohibited from discussing a particular or specific taxpayer's tax matter."

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©2015 The Day (New London, Conn.)

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