Following an audit of those two years, Department of Education officials found $808,000 in “financial irregularities.”
Karla Randall Ministries requested $225,000 more in state reimbursements than it actually spent, the audit concluded.
The organization awarded $85,000 in unapproved bonuses, including $47,000 that went to CEO/Treasurer Karla Randall and her sons who sat on the charity’s paid board, Matt and Ben Randall. It paid $2,600 in child support payments for Ben Randall, state records show.
The charity also spent $169,000 to renovate and outfit its Irwin Street headquarters with a commercial-grade kitchen and purchase delivery trucks which state officials said is against program rules that forbid spending the money on construction and vehicles. Some workers, including the Randalls, also received vacation pay on top of their regular hours in the same week.
State officials, citing “false or fraudulent claims” in the reporting of the number of meals served, and otherwise citing missing documentation, ordered the charity to repay $84,000 for reimbursements it received for meals served in February 2011, records show.
Jennifer Spears, assistant legal counsel for the Ohio Department of Education, said Karla Randall Ministries is under investigation by the inspector general for the U.S. Department of Agriculture, which oversees the free meals program. Karla Randall and Becky Spreng, her former financial secretary, are both banned from administering ODE programs.
“The investigation was prompted by USDA based on the egregiousness of the inappropriate costs as explained in fiscal claims,” Spears said.
Those inappropriate costs included money paid by the ministry to Ben Randall while he was incarcerated, Spears said.
Ben Randall was in and out of jail during his time as a paid board member of KRM, court records show. Randall spent 107 days in jail in 2008 on aggravated burglary and domestic violence charges, according to Montgomery County Common Pleas Court records. Karla Randall Ministries paid Benjamin Randall $98,200 that year, according to a March 31, 2010, court filing in which he declared bankruptcy.
Contacted for this story, Karla Randall denied wrongdoing. Formerly a minister with Living Word Church in Vandalia when she began her charitable works to inner-city youth in the late 1990s, Randall said she is now struggling to make ends meet, making $8.50 an hour performing manual labor. She blamed the $892,000 finding on a series of paperwork errors and misunderstandings about the program’s complicated regulations.
“We’ve been devastated is all I can tell you,” Randall said. “We’ve lost everything and now we have personal debt because we had to feed these children. But we didn’t misspend those dollars. I would never do that. Every dollar went to feed those kids.”
Randall said her son oversaw the charity’s kitchen but denied that he received a paycheck while incarcerated.
“When he was not employed there he didn’t get a paycheck. But we did allow him to come back,” she said.
When asked if the charity reduced her son’s salary to reflect time he spent behind bars, Randall said she didn’t remember.
As for the child support payments, Randall said her son first gave money to the charity; the charity then cut checks to the state Child Support Payment Central.
Of the roughly $3 million the charity received in 2009 and 2010, KRM reported to the IRS spending about $952,000 on food and food delivery. The other $2 million was spent on salaries and benefits, taxes, travel and other overhead costs. Randall reported receiving $82,300 in 2010. Matt Randall made $91,600 and Ben Randall made $71,400 that year, according to tax filings.
Asked about the overhead costs and board salaries, Randall said she and her staff worked long hours and earned the money they made. She said she ran an efficient and logistically complicated operation that helped needy children.
“I don’t apologize for any money that I paid anybody who worked for me,” she said. “Everybody did their best. We bent over backwards and worked for hours and hours. ... This was a labor of love. And after we started working as hard as we did, for the first time ever in my ministry career I began to receive a salary that was to me was a tremendous blessing from the Lord. I finally was being blessed after so many years of making so little money.”
‘Angel of Mercy’
Before it closed, Karla Randall Ministries delivered meals under two USDA programs that deliver food to low-income children and adults: the Summer Food Service Program, which serves meals to children during the summer months, and the Child and Adult Care Food Program, which is year-round and serves food to children and functionary impaired, institutionalized adults or adults over 60 years old.
Nationwide, SFSP agencies in 2011 reported serving 137.4 million meals at a cost of $373 million, while CACFP agencies reported serving 1.9 billion meals at a cost of $2.7 billion, according to USDA data.
Karla Randall Ministries first received USDA funding to deliver meals in 2005. Randall had been ministering for several years at that point, but learned from Spreng, her secretary, about the possibility of receiving state funding to help pay for that work. A July 2008 Dayton Daily News article about KRM’s summer feeding program at the public housing complex DeSoto Bass Courts described Randall as “an angel of mercy” who at that time served 3,200 meals each day in some of Dayton’s most impoverished neighborhoods. Under the rules of the food program, KRM received a flat reimbursement from the state per meal served.
The operation expanded after the charity purchased a 20,000 square-foot building at 515 N. Irwin St. in Dayton for $250,000 in June 2009. The charity’s volume swelled to a reported 600,000 meals served that year.
“We thought, ‘Now we have room to grow. We can impact the city more greatly and help these children.’ That’s what our hopes and dreams were,” Randall said.
She said her organization was recognized for its success and that she was flown to speak at a national conference for food charities.
“We thought this was just the perfect partnership. Things were flowing perfectly.”
State cracks down
KDM’s fortunes changed in March 2011, when ODE officials during a site visit found discrepancies between what the charity reported to the state and what they saw in the field.
Records show that state officials visited Dayton’s DeSoto Bass Courts, where KRM reported it was serving snacks and offering educational programming.
“The state agency arrived to observe the meal, however, it was identified that there is not a CACFP (Child Adult Care Food Program) snack provided at this address per DeSoto Bass staff,” the report reads. “No children were in attendance and the activities identified on the application ... were not being offered.”
Officials subsequently found a second site that was empty. At a third, Randall reported serving lunch and dinner meals. However, the World Youth Center’s site director told state officials the site only received dinner.
None of the sites kept records of meals served, instead using attendance sheets to track the numbers.
State officials ruled KRM claimed $89,000 in undocumented and “false or fraudulent” meal reimbursements. The Ohio Department of Education ordered the charity to repay that amount, and suspended it from running the program. But following appeals, ODE hearing officers in July 2011 reduced that amount to $84,800, and reinstated the charity. The hearing officer ruled that the agency failed to keep adequate records, but that state officials hadn’t shown it intentionally defrauded the government.
The state’s investigation continued, expanding to a complete review of KRM’s 2009 and 2010 expenses. Investigators uncovered more irregularities and poor record keeping.
State education auditors compared KRM’s reimbursements sought from the state with its internal financial records. They found that the charity billed for $225,000 more than it actually spent, according to a report documenting the investigation. Auditors also found KRM spent $100,000 more on payroll than it was budgeted to spend, in violation of program rules. Auditors also found several employees one week were paid for both working regular hours and for being on vacation at the same time. Auditors also flagged $85,000 in bonuses, including $47,000 split among Karla, Ben and Matt Randall both years.
Auditors flagged $2,600 in child support payments billed to taxpayers for Ben Randall’s son. They also found KRM spent $169,000 on improvements to the building on Irwin Street and vehicles, in violation of program rules. Another $190,000 in transactions didn’t have enough documentation for state auditors to determine whether they were legitimate or not. That included a $16,900 transaction labeled only as “withdrawal” and $2,000 in withdrawals by Spreng for “petty cash,” according to state records.
Investigators also found severe accounting errors with the charity’s books, which weakened its internal financial controls.
Randall said she thinks Spreng became overwhelmed as the charity’s complexity increased. She fired Spreng in March 2011 after learning of the state’s investigation.
Spreng, in a telephone interview, said she had no control over KRM’s finances, only submitting the reimbursements she received. She said her role in KRM was solely to make recommendations. The Randalls were the final decision makers, she said.
“I never handled any money or signed checks. She (Karla Randall) was the only check signer on the account,” Spreng said. “There was no cash involved, nothing like that. I never touched a dollar.”
In September 2011, another local charity for which Spreng worked was booted from the summer lunch program for claiming suspected fraudulent reimbursements. ODE said that decision was not connected to the KRM investigation.
In an Oct. 25, 2011, letter, ODE officials ordered the Mustard Seed Foundation Inc. of Trotwood, where Spreng served as a program coordinator, to repay about $63,500. That amount was to make up for reimbursed meals that either weren’t served or documented. In one instance, Mustard Seed reported serving meals at a Dayton charter school for the entire month of July 2011. School employees there told state officials the school closed on July 8 that year.
Sponsor Administrator Shondale Atkinson, Site Manager Wendy Wiggins, and Program Coordinator Becky Spreng were all disqualified from future participation in SFSP programs.
Atkinson said in a brief interview that Spreng and Wiggins were entirely responsible for the program, and that the money was completely paid back. Wiggins is no longer with the Mustard Seed, and was unavailable for comment.
Out of business
Statewide, KRM and Mustard Seed were the only two agencies disqualified from the summer food program in 2011. In 2010, three were disqualified, all in Columbus, for failure to keep accurate records of meals served, according to records.
Spreng disavowed any responsibility with the financial issues in either Mustard Seed or KRM. She said she just processed the information she received, having no way of knowing whether or not it was correct.
“I will never in my life be involved in any program that has anything to do with government money ever again,” Spreng said.
Randall said she, too, likely is done administering government money. She said she is barred from administering any government program for seven years, and then still must pay back the $892,000 the state says she owes.
Randall doubts she’ll ever pay it back.
“KRM owes that money, and we spent that money on food and fed kids with it,” Randall said. “Karla Randall Ministries is out of business. They put us out of business ... I don’t see how we can. If my husband and I liquidated everything we have, we don’t have that kind of money. We’re just ordinary people. Just regular, everyday people.”
Contact these reporters at (937) 225-2494 and (937) 225-2140 or andrew.tobias@coxinc.com and william.mckelvey @coxinc.com. Staff Writer Josh Sweigart contributed to this story
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