I-Team Investigation: Inside the Dismas Charities audit


by Adam Walser


Posted on April 5, 2011 at 5:20 PM

Updated Tuesday, Apr 5 at 6:51 PM

LOUISVILLE, Ky (WHAS11) - Has a charity that helps convicts get back on their feet been misusing it's money? That's the question a state audit was supposed to answer. WHAS11 took a look inside the audit of Dismas Charities.

Huge salaries, lavish parties and luxury suites at sports venues are just some of the issues revealed in a new audit of Dismas Charities. WHAS11's Investigative Reporter Adam Walser has been covering the controversies at Dismas since last summer.

Kentucky Auditor Crit Luallen was asked to do a special examination of Dismas Charities after it was revealed that the charity had leased a luxury suite at the new Yum! Center at a price tag of more than $125,000 a year.

What Luallen found was an organization, which she says needs much greater transparency.

Many had never heard of Dismas Charities before news broke summer of 2010 that the charity planned to lease a luxury suite at the new Yum! Center. But we, as taxpayers, were footing most of that bill.

In fact, public monies fund 97 percent of its budget. $23 million in the last three years from the state of Kentucky for housing convicted criminals in half-way houses for the department of corrections.

After Dismas came under public scrutiny in 2010, the charity's board asked State Auditor Crit Luallen to look at its books. But since the charity gets less than 25 percent of its funding from the state - much of it comes from federal taxes - Dismas didn't have to let Luallen look at all of its books.

“They’re spending a lot of money that we think ought to be subject to public scrutiny. And I believe that to be the case no matter what the technical details are of whether they meet a legal threshold for open records,” said Luallen.

While she said she found plenty of areas of concern, there was a lot she said she couldn't examine, since she says Dismas failed to make those documents available. Luallen said Dismas failed to provide 20 types of documents requested, including financial statements for corporate headquarters, budgets for the past three years and salary information.

In a statement issued this afternoon, Dismas said: ‘The report offered that Dismas declined to supply certain documents. In actuality, Dismas supplied over 1,200 pages of records.  Any documents declined were either outside the scope of the review or were directly tied to the very competitive nature of our business.’

Luallen says much of the money went to such things as paying for a luxury suite at KFC! Yum Center, a party caboose at Papa John's Stadium, galas, golf tournaments and other questionable expenditures.

When asked to comment on Dismas Charities' spending, this is what Crit Luallen had to say, “I believe it's excessive. And I believe in this environment, with people out here who are struggling to make ends meet every day and to put food on the table for their families and worried about their own job security, they need to know that government is holding accountable those who are performing public services on contracts with the state.”

We talked to Dismas Communications Vice President Bob Yates about that in September. “Our balance still comes out as a non-profit, yes. A lot of people are saying this doesn't pass the smell test. I disagree with it to the point that we are extremely good stewards of our money. We’ve done nothing wrong. We have walked very tightly within the lines of the law,” said Yates.

Luallen also cited high salaries in her report, including the charity president's salary and benefits of more than $600,000 and compensation of nearly a dozen vice presidents at compensation of up to nearly half a million dollars each.

Luallen said those salaries were in the top 10 percent of those for all transitional care programs nationwide.

Dismas Charities also said in its statement that it is glad the audit is completed and that it plans to implement some of the more than 30 recommendations in the document.