Misappropriation Scandal Rocks West Philadelphia Nonprofit, Community Council Health Systems

Millions of dollars drained from the accounts of Community Council Health Systems in West Philadelphia, as executives used company American Express cards for golf, art, travel, and gift cards

Community Council Health Systems, a long-standing nonprofit in West Philadelphia’s Mill Creek neighborhood, has been embroiled in a scandal involving the alleged misappropriation of millions of dollars by its top executives. The nonprofit, which provides mental health care and drug treatment to low-income adults and youths, was systematically plundered for years, according to an internal investigation. The executives reportedly used company American Express cards for extravagant purchases, including golf, art, travel, and even 76ers tickets. Additionally, the executives created a real estate holding company and quietly sold off a community tennis center built on donated public land. Despite signs of financial distress and potential fraud, no action was taken by the board members, city funders, or state licensing authorities. This article delves into the details of the scandal, the lack of oversight, and the potential impact on the community.

A Decade of Disarray

The disarray at Community Council Health Systems can be traced back more than a decade when the previous chief executive, James V. Nixon Jr., took over the organization. Nixon, who had a history of financial misconduct, took advantage of the nonprofit’s lack of financial controls. Over nine years, Nixon allegedly put more than $1 million on his company American Express card, making extravagant purchases such as art, meals, limos, hotels, travel, and golf. Alongside two other executives, Nixon also started a for-profit company called Salveo LLC, which received over $2 million from Community Council. A lawsuit filed on behalf of the nonprofit claims that Salveo existed solely to extract money from Community Council. Additionally, Nixon and his colleagues set up a nonprofit called Olympia Real Estate, which purchased a community education and tennis center built on donated public land. The property was later sold to a developer for a significant profit, despite being restricted for civic use.

Missed Warnings and Lack of Oversight

Signs of trouble at Community Council Health Systems were evident in publicly filed financial records, court dockets, and state inspection reports. A routine audit in 2017 found significant irregularities in the nonprofit’s financial records, including a lack of reconciliation of accounts and the same individual handling spending decisions and financial oversight. The Pennsylvania Department of Labor and Industry filed numerous liens against the nonprofit for unpaid unemployment taxes. The nonprofit’s tax returns also showed a dwindling board, with only three or four independent members remaining. The tax returns further revealed annual losses of over $1 million. Despite these warning signs, no action was taken by the board members, city funders, or state licensing authorities.

Lack of Accountability and Cover-Up Allegations

Even when the nonprofit’s chief executive, Joseph Watkins, commissioned an investigation and reported the concerns to the Pennsylvania Attorney General’s Office, no one was held accountable. Watkins urged the attorney general to remove the remaining board members, but instead, the board fired him. The board members then reached an agreement with the attorney general’s office, in which they were alleged to have violated the law by failing to prevent $2.7 million in improper spending but were not held liable. Watkins’ lawyer alleges that this was a cover-up of a corruption scandal, and the board members have attempted to sell off Community Council to bury the investigation. Watkins refused to go along with the sale, leading to his termination.

Impact on the Community and Questions of Oversight

The extravagant spending at Community Council Health Systems raises larger questions about the oversight of mental health and drug treatment nonprofits in Philadelphia. These organizations, including Community Council, receive over $1 billion in federal healthcare funding annually. The allegations against Community Council bear striking parallels to a previous embezzlement scheme involving another mental health clinic funded by Community Behavioral Health. Experts argue that multiple layers of oversight failed, including the board’s failure to commission and approve annual audits and closer scrutiny by Community Behavioral Health. The potential impact on the underserved neighborhood served by Community Council is a cause for concern, as disruptions or cancellations of mental health services could occur.

Conclusion:

The misappropriation scandal at Community Council Health Systems has exposed a lack of oversight and accountability within the organization. For years, top executives allegedly used company funds for extravagant purchases, while the board members, city funders, and state licensing authorities failed to take action. The impact on the community, particularly the potential disruption of mental health services, is a cause for concern. The scandal also raises broader questions about the oversight of mental health and drug treatment nonprofits in Philadelphia. Moving forward, it is crucial that measures are put in place to prevent such abuses and ensure the continued provision of essential services to those in need.