The president of the Urban League of Portland is under scrutiny by county auditors for more than $44,000 of questionable spending.
Over the past 2½ years, Urban League President Marcus C. Mundy has used the organization's credit card for what auditors say are expenditures with no clear relationship to the nonprofit's mission, according to documents obtained by WW under the state's public records law.
The records show that since 2009, auditors have been pushing Mundy and the Urban League to explain his spending.
Long after auditors requested explanations, Mundy provided receipts for grocery purchases at Costco, Safeway and Fred Meyer; clothes at Target; his children's cellphone bills and fundraisers at their private school.
He also submitted receipts for a March 2009 trip to Beijing, a $108 receipt dated May 2009 for âhuman hair,â and many other puzzling expenses.
Mundy acknowledges he has made mistakes.
"I did not spend enough time on administrative and operational issues," he says. "But I absolutely did not use the Urban League [credit] card for personal expenses."
His attempts to provide documentation has not satisfied the county nor the Urban League's own independent auditors.
"There was no documentation for the business purpose of these charges in most cases," the Urban League's auditors wrote six months ago.
One county report, dated Nov. 7, 2011, said the records Mundy recently provided were so incomplete as to be "not auditable."
Records show the Urban League's board approved most of Mundy's spending after the fact—but only after county reviews raised serious questions. And it did so despite the organization's independent auditor warning that the president's credit-card use could invite an investigation by the Internal Revenue Service.
Urban League Board Treasurer Charles Wilhoite, who says he's speaking for the board, acknowledges that the organization's record-keeping has been sloppy. He says the board is pushing hard for an improved administrative performance from Mundy.
Wilhoite also says the Urban League's financial health is sound, and the board still supports Mundy.
"Everybody has total confidence in his ability to continue to lead the League," Wilhoite says.
Urban League chairman Lolenzo Poe recently went on the offensive against the county's efforts to hold the organization's board accountable.
"We regret that you concluded that deficiencies remained at the time of your audit," Poe wrote the county Oct. 6. "But the existence of those deficiencies is not appropriately attributed to any failure or inattention by the Urban League of Portland Board." (Poe did not return WW's calls seeking comment.)
Multnomah County officials say they have run out of patience and may cut off funding to the Urban League as early as next week unless it comes up with an oversight plan.
"Multnomah County takes its role as the steward of taxpayer dollars very seriously," says county spokesman Dave Austin.
In Portland, the Urban League, whose local chapter was founded in 1945, provides social services for African-American seniors and runs after-school programs for low-income kids.
The county has paid the Urban League $729,000 over the past three years under a contract to provide services. County money accounts for more than 20 percent of the League's $1 million annual budget.
The Urban League of Portland has encountered financial problems before. In the late 1980s, financial irregularities at the League led to a crushing $400,000 debt and organizational turmoil. Auditors blamed the League's board for failure to monitor the spending of then-CEO Herb Cawthorne.
In 1999, the League again nearly went bust after financial mismanagement by then-CEO Lawrence Dark. Under pressure from Multnomah County and other funders, the board ousted Dark.
Mundy, 53, a Los Angeles native, moved to Portland in 2000 when his late wife took a job at Nike. He worked in risk management for the accounting firm KPMG and later became a vice president and regional compliance officer for Kaiser Permanente. He is a graduate of Howard University and the University of Oregon's executive MBA program.
Shortly after arriving in Portland, Mundy joined the Urban League board. After Dark's successors restored the Urban League's financial health, a 2006 county fiscal review gave the League its highest rating—1 out of a possible 4.
Mundy took over as president and CEO in 2006, and now earns $91,000 annually, records show. Despite Mundy's background, however, the League's financial controls broke down under his leadership.
The first official warnings about financial irregularities came from Colleen Yoshihara, a county auditor assigned to conduct a routine fiscal review in 2009. Records show Yoshihara, in a Sept. 2, 2009, report to the Urban League and its board, identified five findings about the organization's lack of financial controls.
Mundy's credit-card use topped her list.
"The League's president has not submitted supporting documentation for charges on the organization-issued credit card for the past year," Yoshihara wrote.
Yoshihara lowered the Urban League's score of financial health to 3 out of 4, and asked the League to respond to her review within 30 days, which is county policy.
It took Mundy 147 days to provide an official response. On Jan. 27, 2010, he wrote Yoshihara in an email that they might want to schedule a "brief meeting (45 minutes or less) sometime in the next four to six weeks.â
For the next three months, records show, Yoshihara tried without success to get documentation of Mundy's spending.
Finally, on April 27, 2010, Wilhoite told the county the board took the findings "very seriously" and "effective April 5, 2010, suspended the use of company-issued credit cards.â
Wilhoite also pledged "the CEO's expense report will be reviewed and authorized by the board chair."
But when Yoshihara reviewed the Urban League's books in May of this year, she found Mundy was once again using the Urban League credit card without oversight. And the organization's financial controls had weakened.
"The League's CEO continues to use the organization's credit card without providing timely substantiating documentation as to the business purpose of expenses," Yoshihara wrote Aug. 9, 2011. "The League's Board has been unable or unwilling to follow through with [promised procedures] resulting in a lack of reasonable oversight of League management.â
The Urban League hired operations director Derrick Moten after the 2009 review to beef up accountability. When he got Yoshihara's 2011 fiscal review, Moten's response was succinct:
"I am dead!!" he wrote to Yoshihara on Aug. 10, 2011.
Meanwhile, the Urban League's own independent auditor, Gary McGee & Co., echoed the county's warnings, citing "material weaknesses" in the League's internal controls.
"Charges to the President's credit card were not adequately supported or documented," reads a June 14, 2011, draft management letter from the McGee firm.
"For example, of the $41,512 in total credit card charges made during the year [ending] June 30, 2010, $11,605 were not supported by receipts or other contemporaneous documentation," the auditors wrote. "[I]n addition, there was no documentation for the business purpose of these charges in most cases."
The outside auditor expressed nearly identical concerns a year earlier. This year, the McGee firm wrote that the IRS could view Mundy's undocumented expenditures as compensation—and that could trigger sanctions from the IRS.
At the same time the Urban League's fiscal controls went awry, Mundy suffered personal financial setbacks.
Property records show Mundy made heavy personal investments in Portland real estate, with disastrous consequences.
In recent years, Mundy bought condos on Northeast Broadway, in the Pearl District and in South Waterfront, while living in a million-dollar Irvington home. Records show he sold the Broadway property for a small loss. The South Waterfront condo went into foreclosure in 2008; the Pearl District property went into foreclosure in 2009.
The strain of those investments left him overextended.
Records show the state of Oregon filed a $26,000 lien against Mundy for unpaid income taxes in 2009, and the IRS filed a $42,000 federal lien against him the same year.
Even Multnomah County, got into the act, suing him in 2009 for $2,472 in unpaid county income taxes.
In 2010, after his home also went into foreclosure, Mundy sold it and used some of the proceeds to clear his tax liens and pay the county.
But his troubles did not end there. Records show that in October, a Multnomah County judge ordered Mundy's car towed because of $302 in unpaid parking tickets.
Mundy denies there is any connection between his financial troubles and his use of the League credit card.
âOne thing had nothing to do with the other,â Mundy says.