Latino Nonprofit Agency Indicted Over Use of Funds

A nonprofit Latino organization was indicted in Los Angeles Thursday by a federal grand jury on six counts of defrauding the government.

The grand jury alleges that Hermandad Mexicana National Legal Center failed to account for millions of dollars in U.S. Department of Education funds and about $140,000 of Federal Emergency Management Agency funds, authorities said.

The Legal Center is part of Hermandad, one of the oldest Latino immigrant rights groups in the nation. No one from Hermandad could be reached for comment.

Between 1995 and 1998, Hermandad received about $6 million in Department of Education grant funds. Only about half of the funds were used for “approved purposes,” said Assistant U.S. Atty. Lee Arian. About $140,000 in FEMA funds granted after the 1994 Northridge earthquake also were not accounted for.

If convicted of all six counts in the indictment, Hermandad could be sentenced to pay fines of up to $3 million and ordered to pay full restitution.

Hermandad had agreed to use the federal grant funds to provide adult education, including English as a second language and citizenship classes.

The organization is suspected of “making false statements in the jurisdiction of a federal agency. . . ,” according to a statement issued by the U.S. attorney. “The . . . counts . . . allege that Hermandad significantly misrepresented the number of hours students attended classes that it was teaching and the amount of program-related expenditures.”

Hermandad spent several million dollars in funds, according to the U.S. attorney’s statement, “on other organization activities” that were not delineated by the grant.

The grand jury also alleged that after the Northridge earthquake, Hermandad submitted false time sheets “relating to a grant it had received to do crisis counseling and community outreach,” according to the statement. “Hermandad allegedly submitted time sheets of individuals who had nothing to do with counseling or outreach activities, or, for that matter, the contract related to the earthquake.”

Three of the six counts in the indictment are related to the FEMA funds and the other counts are for allegedly misusing U.S. Department of Education funds.

The federal education funds were administered by the California Department of Education.

The federal indictment follows a separate civil lawsuit filed in May by the state’s Department of Education against Hermandad over the funds. That case is pending.

Doug Stone, the state education department’s spokesman, said the grand jury findings bolster his department’s contention that Hermandad did not properly account for how the money was used.

Former employees of the state Department of Education have accused the agency of ignoring earlier warnings about problems at Hermandad and other community organizations that received the adult education grants.

In the late 1990s, Robert Cervantes, a former assistant supervisor in charge of adult education programs for the state, filed a whistle-blower lawsuit alleging that the department demoted him after he told them of alleged financial irregularities. The department continued to fund Hermandad and the other groups until 1998.

Cervantes’ federal lawsuit is pending and under seal. He could not be reached for comment Thursday.