AIDS Group Probed for Possible Fund Misuse

State health officials said Friday that the San Diego AIDS Project will be investigated concerning allegations of mishandling of finances, including whether former executive director Hal Frank may have diverted AIDS Project money to buy drugs.

Department of Health Services spokesman William Ihle said the agency’s Audit and Investigations Unit would look into charges that some of the $235,000 in state money given to the organization this year for counseling and education of patients with acquired immune deficiency syndrome was misused.

“We will be looking at all areas where state taxpayers’ funds may have been misused,” Ihle said. “This is not a witch hunt and we are not pointing fingers, but if we find an inappropriate use of state funds, this would be very serious and we would take appropriate actions.”

Frank, who founded the group in 1983, resigned as executive director Thursday at a board of directors meeting, citing a chemical dependency on drugs that compromised his work at the project, according to board president Dr. James Stoddart.

The resignation came a week after the board ordered its own investigation of the project’s finances focusing on the questionable expenditure of thousands of dollars made by Frank since 1984.

Board member Nicole Murray, in a Dec. 19 letter, questioned 14 unauthorized checks written by Frank, unauthorized Christmas bonuses that Frank wrote to himself, and nearly $3,500 in undocumented operational expenses.

Stoddart would not comment on details of the board’s investigation, but said that there was “some hint that the two--drugs and finances--are intermingled, that funds were misused to buy drugs.” Ihle said that state was aware of allegations that Frank had misappropriated funds to buy drugs and said that the state investigation would seek to “answer all allegations with regard to misuse of state funds.”

“The state considers the whole topic of AIDS an important issue, and the misuse of AIDS funds a serious matter,” Ihle said.

Stoddart said the board had not been informed of the state investigation but said “given what is going on I don’t find it surprising. Anybody in the state’s position would want to know what is going on down here.”

Frank could not be reached for comment Friday. Stoddart said that Frank had entered a “therapeutic drug program to deal with his chemical dependency.” Stoddart would not say what drugs were involved.

Frank will be retained as a consultant for the project until Jan. 30 and will assist in the board’s financial investigation, to “track and verify expenditures,” said interim acting director Tom Jefferson.

Frank, 49, is a San Diego psychotherapist whose practice has been mainly in the gay community. He has worked with Elizabeth Kubler-Ross, author of “On Death And Dying,” and was employed by the San Diego County Department of Health Services from 1974-79, working in the now-defunct Department of Substance Abuse.

The San Diego AIDS Project has been a main source for referrals, counseling and education about the deadly disease. Frank had been the executive director since the group’s inception in 1983. Until two months ago, he also was chairman of the board, before being replaced by Stoddart.