Operator of Group Homes Wins Suit

A jury in Los Angeles has found that the county improperly shut down a chain of group homes for neglected children, awarding the man who ran it nearly $500,000 in damages.

The county child welfare department did not allow Fred’s Group Homes to properly respond to embezzlement charges before removing the troubled boys placed in its four facilities, the jury concluded Tuesday.

Lawyers for Fred Baker said the decision was a vindication and opened the door to others who had been shut down under similar circumstances. County officials, however, said the decision was a narrow one that they might appeal.

The Department of Children and Family Services stopped using Fred Baker’s facilities in South-Central Los Angeles, Compton and Lancaster in 1996 after its auditors determined that he embezzled $128,000 while failing to provide the children enough food, clothing or counseling services. The county paid $53,000 a year for each child.

They contended that Baker and his wife used public money for vacations, parking tickets and mortgage payments. The Bakers admitted using the money for personal expenses, but consistently argued that the amount was more than offset by loans Fred Baker had made to the company and the salaries that he and his wife did not collect for about two years when the operation suffered financial difficulties.

But Fred Baker refused to submit to a review by the county auditor-controller, and the county pulled out the children.

Baker, who ran group homes for two decades, sued the county in federal court in 1996, alleging civil rights violations because he was not allowed to appeal his case to a disinterested party. The county would allow him to appeal decisions only within the child welfare department and to the Board of Supervisors.

The county in turn sued Baker in state court, charging fraud, breach of contract and theft. The cases were consolidated in state court and went to trial in November.

On Tuesday, the jury sided with Baker.

It did not find fraud or civil rights violations. It decided that both sides violated the contract, but that the county’s due process violations mitigated Baker’s actions.

Jurors decided the county owes Baker $450,940, which his lawyers said adds up roughly to the net income of Baker’s nonprofit business in its last year, multiplied by the three years left in its contract with the county.

County officials would not discuss the facts of the case Wednesday but said they may appeal.

“We are very disappointed in the verdict and we are discussing all our post-trial options,” said Roger Granbo, principal deputy county counsel.

So are Baker’s lawyers, who had asked the jury for $5 million.

“They are left with nothing but a moral victory,” said Santa Ana-based lawyer William D. Chapman. “At least they feel that they have their good name back and are vindicated.”

Baker will ask Superior Court Judge Helen Bendix to either allow a retrial or amend the jury’s verdict.

“Their lives have been destroyed from this,” Chapman said. “They were humiliated and embarrassed.”

After the homes were shut down, Baker moved in with relatives in North Carolina and worked part time as a truck driver while his wife worked in telemarketing and at a Kmart, his attorneys said.

The county’s allegations that the children did not receive enough food or clothing was based on statements to auditors by some of the children, none of whom were ever identified or subsequently interviewed, Chapman said.

He said the Bakers had hoped the jury verdict would be enough to start another nonprofit group home, but that the award will be swallowed up by debts and other necessities.