A Connecticut lawmaker is pressing for accountability report cards on nonprofits that receive state grants, one week after Attorney General George Jepsen appointed an independent receiver to reorganize the management of the state flagship Amistad.
"The report card would to ask three data-based questions: How much did you do? How well did you do it? Is anyone better off?," said State Rep. Diana Urban, D-North Stonington, who for eight years has prodded state officials to scrutinize the finances of the Amistad. "Don't give me a narrative, give me data."
Last week, Jepsen appointed New Haven, Conn., attorney Katharine Sacks to turn around Amistad America Inc.'s finances after four years of late audits triggered more questions than answers. Connecticut has frozen payments on Amistad's $359,000 annual subsidy pending a review of the audits. According to one state official, the nonprofit has defaulted on "hundreds of thousands of dollars of debt."
Ocean Classroom Foundation Inc. of Maine, which Amistad America hired to operate and insure the schooner for the last two years, plans to close at the end of the month.
Urban, whose district borders Rhode Island, likens the fiasco to that of the failed 38 Studios video-game company in the Ocean State, though the dollar amount is far smaller. Rhode Island taxpayers are on the hook for roughly $100 million through moral-obligation bond debt.
"The Amistad is our Rhode Island," said Urban, a seven-term eastern Connecticut shoreline lawmaker and an economics professor.
Sacks will work with state officials to restructure Amistad's finances and governance.
The audits, which CohnReznick LLP conducted, chronicled a spiraling financial collapse by the nonprofit even as the state pumped in grant money between 2009 and 2011. The Internal Revenue Service revoked Amistad America's tax-exempt status in 2013, citing failure to fill out Forms 990.
Urban said she noticed red flags as early as 2006 while studying a local funds report issued by the state DECD. It showed a $755,000 operating deficit for fiscal 2006-07. According to Urban, the following biennial fiscal year showed that Amistad America had spent its endowments. Meanwhile, she said, fundraising was minimal and financial statements were "cut and pasted year to year."
Another misstep, she said, was allowing the ship to sail to Puerto Rico during peak hurricane season in 2013 for use in the NBC miniseries "Crossbones." Though Connecticut received $250,000 for rental as a pirate ship, Urban wants to know how much the state actually netted, factoring in insurance and maintenance costs.
She accused the state Department of Economic and Community Development of indifference over several years. "Nobody was saying anything," she said. A message seeking comment was left Monday with a DECD press officer.
"What's needed are people steeped in finances, who could bring in people from Wall Street or maybe even [Steven] Spielberg, the way Spielberg did with his money," said Urban. Spielberg produced the 1997 film "Amistad," that chronicled how African slaves revolted aboard the namesake ship before their arrest and imprisonment in New Haven. In a landmark ruling at the time, the U.S. Supreme Court freed the slaves.
Current executive director Hanifah Washington is a former cook on the boat whose degree is in anthropology.
Sen. Len Fasano, R-North Haven, wonders if more Amistads lurk statewide. "How many other Amistad-like operations have we funded for which we lack the proper audits?," he said. "I find that troubling."
