OIG ISSUES SPECIAL REPORT CRITICIZING SETTLEMENT OF CORPORATION CLAIMS AGAINST ST. HOPE ACADEMY,
KEVIN JOHNSON, AND DANA GONZALEZ

On Wednesday May 6, 2009, the Office of Inspector General delivered a Special Report to the Acting Chief Executive Officer of the Corporation for National and Community Service in which it criticized the settlement of the Corporation’s claims against St. HOPE Academy, Kevin Johnson, and Dana Gonzalez. As explained in greater detail in the Report, which is posted below, OIG does not believe the settlement to be in the best interests of the United States because, among other reasons, it does not protect the Government’s rights to receive payments under the Settlement Agreement: It imposes the obligation to make the payment of $35,000 for each of the next ten years only on St. HOPE Academy, which is effectively insolvent, and no security is provided to secure those payments, while no obligation to pay any money to the Corporation is undertaken by either Johnson or Gonzalez.

The Special Report was issued pursuant to, among other statutory provisions, section 5(d) of the Inspector General Act of 1978, as amended, which provides the Corporation seven calendar days to transmit the Report and “a report . . . containing any comments” it deems appropriate to Congress. Instead of transmitting any comments, though, the Corporation pointed to a complaint by the Acting United States Attorney for the Eastern District of California against this Office, stating that it would only provide its comments when the complaint is resolved, whenever that is.

We have seen the Acting United States Attorney’s letter, dated April 29, 2009, and believe his complaint to be without merit. Moreover, while we will seek the prompt resolution of that complaint, we do not believe that it provides the Corporation with a good reason for postponing its response indefinitely. We have encouraged Congress to direct the Corporation to submit its comments as section 5(d) warrants, at this time, so that Congress can determine if the Corporation has any legitimate basis for entering into this settlement.

Thus, to date, we have not received any substantive comments. When we do, we will post them as an addendum to this posting of this Special Report.

Special Report in PDF Below:

Special Report To Congress From The Office Of Inspector General Of The Corporation For National And Community Service

Corporation Letter

OIG Letter To Congress

Corporation Letter to Congress

List of Exhibits

Exhibit 1

Exhibit 2

Exhibit 3