Closed Children’s Shelter Becomes Costly Monument

In a nondescript San Fernando Valley neighborhood, they built a home for the repair of broken children. They put it, incongruously, between a bagel factory and a housing tract; spent $12 million to build dormitories, a gymnasium and a school. And they gave it a name, the “Children’s Campus.”

But nearly a decade after the much-anticipated project was launched jointly by Los Angeles County, a private developer and a nonprofit company, the facility is empty and largely forgotten.

The closure of the Van Nuys group home seals the loss of at least $1 million in government money. It puts at risk nearly $10 million more, ultimately backed by taxpayers. And it leaves the county, after a decade of struggle, still grasping for appropriate emergency shelter for its most fragile children.

What had been styled as a model for compassionate care instead stands as a monument to good intentions gone awry, to the danger of money driving a humanitarian venture, to the failure of government agencies to communicate adequately.

The troubled life of the Health Care Children’s Campus in Van Nuys came to a crashing halt last October, when state licensing officials ordered the facility closed. The state Social Services Department said it could no longer ensure the safety of the 68 remaining foster children after reports by police and regulators of a “mini-riot,” of illicit sex and drug use and of drunk teenagers running amok.

The closure of the 180-bed campus recently prompted the Los Angeles County Commission on Children and Families to call for an examination of how to best house children taken from their homes in emergency situations.

Any such examination is certain to raise questions about whether institutionalized foster care in large facilities can work.

“We need to look elsewhere for solutions,” said Andrew Bridge, executive director of the Alliance for Children’s Rights, an advocacy group.

It is a lesson that came at a high price. An investigation by The Times found that the home:

* Was launched against the advice of a task force of experts who warned that the facility’s population would be volatile--combining hardened youths with criminal records with innocents who merely had the bad fortune of being born into unstable families. The task force also predicted that financial considerations would drive the placement of children there.

* Opened despite allegations that, at a previous location, the operator failed to protect youths from one another and from the staff, who sometimes physically and sexually abused them.

* Obtained insurance for a $9.9-million start-up loan from one state agency, apparently unaware that another agency had accused the operators of failing to protect children.

* Received a license to treat the acutely mentally ill, despite the fact that the state Department of Mental Health later protested it was not fully aware that the campus also housed an incompatible population of foster youths and petty criminals.

Some Say Money, Not Care, Was Put First

This problematic chain of events occurred, The Times found, when a savvy, politically sophisticated nonprofit company and its development partner came up against a scattered, uncommunicative bureaucracy.

“Everyone did a lot to try to make this place succeed,” said Patricia Curry, a member of the county Commission on Children and Families. “But it had problems from the very beginning.”

By the time the three-acre, beige stucco Children’s Campus finally closed, some employees said it had become preoccupied with bringing in money to stay afloat.

The facility’s attorney, Randall Henderson, denied this. Instead, he said, the group home was largely a victim of circumstance--delayed by the state in receiving adequate funding, pressured to house more clients to make good on its government-backed loan and, all the while, confronted with a difficult clientele.

“In the four years I visited there, I saw a lot of kids who called that place home and were having a small slice of happiness,” Henderson said. “That doesn’t happen if all you are doing is warehousing kids.”

The plan to build a shelter for abused and neglected children was born in 1986, when the Los Angeles County Board of Supervisors demanded a solution to the constant overcrowding at MacLaren Children’s Center. The El Monte shelter is often the first stop for children taken from unfit parents and the last refuge for foster youths removed from other placements.

A nonprofit company called Health Care Delivery Services was selected in 1990 over several competitors to create the emergency shelter in the San Fernando Valley.

But a task force set up to relieve overcrowding at MacLaren opposed the Children’s Campus. The group predicted that there could be undue pressure to fill beds at the facility to cut the county budget and help Health Care Delivery Services recoup its investment.

Despite these warnings, the project seemed to move inexorably toward fruition, driven by the firm and its development partner, Kest Investments. The firm was headed by Sol Kest, a principal in Goldrich & Kest Inc., a powerhouse Culver City-based firm with a history of generous campaign contributions.

Most of the preparations for opening the facility were left, however, with the firm’s president at the time, Gerald G. “Jerry” De Angelis, a gregarious onetime chemist. De Angelis buzzed from the hallways of the state Capitol to the county Hall of Administration for five years to complete his quest.

It began in Sacramento.

The entire concept of the campus was threatened early on when the state Legislature in 1989 moved to sharply reduce payments to foster care group homes. De Angelis argued to Gov. Pete Wilson’s office and the state Health and Welfare Agency that Health Care Delivery Services deserved more money--nearly $46,000 a year per child in the emergency shelter--to recoup its $12 million in building costs.

Just weeks before the reduced rates were imposed on thousands of group homes, De Angelis got his way. The state agency--agreeing that home operators should recoup large capital investments--wrote a four-line regulation that meant up to $2.9 million in added revenue a year to the firm.

Next, De Angelis turned his attention to securing a construction loan. He asked another state agency, the Cal-Mortgage Loan Insurance Division, to guarantee $770,000 a year in mortgage payments to a private bank.

In pursuing the loan, the firm had strong allies in Los Angeles County Supervisors Mike Antonovich and Deane Dana and in Peter Digre, the director of the county Department of Children’s Services. Each wrote a letter to the loan agency backing what Digre called a “special and very needed program.”

The 1992 endorsements came despite the fact that, shortly before and afterward, employees at the firm’s Sepulveda Boulevard home were accused of using excessive force on children and of allowing unsupervised residents to smoke marijuana, drink beer and have sex. In one instance, a staff member was accused of sexually abusing a resident.

Those were all allegations that the home either denied or claimed were overblown.

Even though his agency regulates group homes, Digre said in a recent interview that he was unaware of the allegations against Health Care Delivery Services at the time. “I was operating under the assumption that they were basically performing within the range of an acceptable program.”

Dana and a deputy for Antonovich said that the supervisors did not know about the facility’s problems, either. They noted that the project had the backing of Children’s Services Department administrators. While Kest and his allies gave $6,500 to Dana and nearly $5,000 to Antonovich during the years the project was coming to fruition, both said the contributions played no part in their support for the project.

Officials at Cal-Mortgage said they, too, were unaware of the serious problems confronting the firm. The loan guarantee agency approved insurance that assured the company would build a facility to care for even more children. Top agency administrators later said they never would have approved the loan had they known the severity of the reports linked to Health Care Delivery Services.

Hurdles Cleared, but More Surface

But executives at the firm soon were successful in overcoming those accusations, too. Just three months after they leveled the string of charges, state licensing officials settled the case, allowing the firm to close the Sepulveda Boulevard home and to reopen on the new campus, under the name Pride House. Conditions were imposed--including minimum staffing levels and the segregation of younger children from teenagers--in an effort to prevent problems from resurfacing.

“We are not trying to punish operators for past behavior,” said Steven A. Shaffer, the state Department of Social Services attorney who handled the case. “Notwithstanding problems in the past, if they can show us in a reliable way they can provide services to children, we will enter a settlement.”

In his frequent conversations and letters to the bureaucracy, De Angelis suggested it was his connections, particularly to Gov. Wilson’s office, that had helped him clear some of those many hurdles. Records show that developer Kest and his associates gave nearly $23,000 to Wilson’s campaigns while the firm’s proposal was wending its way through the government. But the governor’s office denied favoritism, saying De Angelis’ demands were routed, pro forma, to the appropriate bureaucracies.

So finally, in 1993--with its higher compensation in place, its state-guaranteed loan locked in and with its previous allegations of neglect swept aside--Health Care Delivery Services was ready to open its new Children’s Campus.

But when the firm finally moved in, it was far behind schedule. Immediately, it faced “significant pressure” to generate income at the campus, Henderson said.

So the company confounded its regulators again, shucking off the 5-year-old plan to make half the campus into an emergency shelter. Instead, the firm tried to convert half the facility into a home for people with acute mental illnesses.

But the psychiatric facility flopped. Its approval from a private accreditation agency was delayed and it never got enough referrals from health maintenance organizations, Henderson said.

By the time the firm decided in 1994 to revert to its original emergency shelter program, called Lion’s Gate, county officials no longer wanted to house children in large congregate facilities. De Angelis protested that millions of dollars had been invested. Developer Kest--still awaiting $2.75 million owed him for building the campus--urged county and state officials to admit children, said Dennis Fenwick, a top Cal-Mortgage official.

Children’s Services chief Digre balked. But he agreed to use the shelter, he said, after the county’s lawyers said that the department was legally liable to do so. The county took the unprecedented step of placing some of its own employees on the Van Nuys campus to assure children’s safety.

But that wasn’t enough, either. Before the end of 1995, the county department had removed its children from Lion’s Gate, citing a now-familiar list of allegations involving poorly supervised children.

After the years of struggle and altered plans, the organization had lost its focus and became preoccupied with filling the campus with income-generating placements, often cutting staffing and programs, several former employees said in recent interviews.

“They would not get rid of some kids, no matter how they acted up,” said one former Pride House caseworker. “I can’t prove what the motive was, but at some point it does seem there was more of an emphasis on money than on the care provided to children.”

Attorney Henderson denied there were cutbacks and current President Clemente Sainten said some of those who complained were simply malcontents.

Today, with a $9.9-million loan in default, Cal-Mortgage officials are pushing to reopen the site for some useful, rent-generating purpose. Some members of the county Commission on Children and Families have suggested that the Children’s Campus might house a smaller, more manageable population, perhaps mentally ill foster children or pregnant girls in foster care.