Foster Unit Misspent $500,000, Audit Finds

A politically connected foster care agency under whose care two children died within three months last year spent nearly $500,000 in public funds inappropriately, including making payments to a finance company for the car of its executive director, a former county official, according to an audit released Tuesday.

The county audit is billed as the last of a multiyear series of critical reports on Grace Home for Waiting Children, which county and state officials moved to shut down last summer after years of financial and safety problems at the agency.

In June, the county removed all the children it had assigned to Grace Home foster parents, and the state Department of Social Services moved to revoke the licenses allowing both the institution and its top managers to oversee the care of foster children. That action has been challenged by attorneys for Grace’s administrators and is scheduled to be heard by an administrative law judge next month.

The deaths at Grace last spring sparked formation of a county commission to study the state of foster care, which led to a blistering report delivered to the Board of Supervisors last week. The study found that the county’s foster care system is in such disarray that it cannot guarantee the safety of children in its care.

The questionable expenses detailed by auditors in the latest report, which covers July 1998 through June 1999, include $250,000 in foster care funds spent to defend against a sexual harassment suit; $6,725 listed as paid for Toys R Us gift certificates without a receipt for the items; a $1,550 retroactive pay raise for Grace’s executive director, former Los Angeles Department of Children and Family Services official Saundra Turner-Settle; and $3,747 in payments to GMAC for Turner-Settle’s car, though no lease agreement was provided to auditors.

Other questionable payments that auditors listed included more than $4,000 to Turner-Settle that did not go through normal payroll procedures that would have withheld state and federal taxes, and $130,000 paid to an unidentified member of the board of directors over two years.

Auditors said they were unable to reach Grace because the agency has apparently gone out of business. Efforts by The Times to reach Grace management Tuesday were unsuccessful.

Grace was founded in the early 1990s by the Black Employees Assn.--an organization of government workers--and Girma Zaid, a former children’s department official who was given a leave of absence to start the foster care agency by then-children’s department Director Peter Digre. Grace’s founders said it was intended to link black foster children with black foster parents.

Zaid ran the agency until 1995, when a scathing county audit questioned how he spent the millions of dollars in foster care funds that Grace received from the children’s department. Among other things, auditors found that Zaid paid for a subscription to Travel & Leisure magazine with foster care funds, as well as for trips to Atlanta and Washington, D.C., and a six-week visit to Africa.

The county review also found dozens of safety violations, including failures by Grace employees to check foster homes. Those findings were echoed by voluminous state reports detailing problems in Grace foster homes.

Zaid was replaced by two more former children’s department administrators, Turner-Settle and Debra Redding. Then, in 1998, an infant was shaken so hard by a foster parent that the child went into a coma. In April 1999 a foster child was killed while riding in a car driven by the narcoleptic brother of his foster mother, and a third child was allegedly beaten to death in June by her foster mother, who had had two other infants in her care suffer broken bones while being monitored by Grace.

Digre left county employ June 30. On his last day at work he ordered the department to remove its foster children from Grace Home.