December 8th, 2011 | by NIGEL JAQUISS News | Posted In: Multnomah County, Politics, City Hall, Activism

Oregon Department of Justice Looking at Urban League

news1_marcusmundyMarcus Mundy - Image courtesy of The Portland Observer

The Oregon Department of Justice has requested audit documents and supporting materials from Multnomah County regarding the Urban League of Portland.

"DOJ has called this morning asking to review our records on the Urban League," says County spokesman David Austin.  

As WW reported on Wednesday, Multnomah County, which provides more than 20 percent of the League's $1 million annual budget has threatened to cut off funding if the League cannot provide an acceptable plan in the next week to fix the League's financial controls.

A county auditor has dogged the League through two fiscal reviews dating back to the middle of 2009 about lax controls, most notably League President Marcus C. Mundy's credit card use. Over that period, according to county and outside auditors, Mundy has racked up $44,000 in charges with no documented business purpose.

The Department of Justice's charitable activities section polices non-profits, such as the 66-year-old League, which depends on a mixture of private donations and government support for its revenues. 

"We have been made aware of the Urban League issue and have requested documents from Multnomah County," DOJ spokesman Tony Green says.

Although Green said he could not comment on what specifically DOJ might be looking at, an explicit warning in the League's most recent outside audit provides a potential avenue of inquiry.

"There was no documentation for the business purpose of these [Mundy's credit card] charges in most cases," the accounting firm Gary McGee & Co. wrote in a June 14, 2011 management letter to the Urban League's board.

"The organization should understand the potential tax ramifications of unsupported expenses to members of management and the board. At a recent nonprofit governance panel discussion, an IRS official indicated that the IRS is paying significant attention to 'automatic' excess benefit transactions that will result in 'intermediate sanctions.'"

The upshot, McGee went on to explain, is that Mundy and could be liable for taxes on the undocumented expenses. (The League's 2010 tax return shows that Mundy repaid $2,022 for "excess benefit" transactions for that year. That number is a small percentage of the figure the McGee firm and county auditors have indentified as "undocumented.")

As the DOJ begins examining the Urban League situation, at least one other funder is reviewing whether the League accounted for public money properly.

Between 2008 and September 2011, the City of Portland provided the Urban League $320,000 for a workforce development grant. In light of the county's audit findings, city officials are now examining the reporting for that project.

Urban League Board Chairman Lolenzo Poe did not immediately return a call seeking comment.

 
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