Operation Reach is ‘struggling for survival’

26th March 2012   ·   0 Comments

By Jessica Williams
thelensnola.org

A New Orleans nonprofit organization that earned acclaim tutoring students, and which had been rapidly expanding its operations, has drastically cut back its programs, laid off staffers and is the subject of a federal agency’s investigative audit. Disillusioned former employees say the situation is the result of the organization’s lack of financial acumen and the executive director’s extravagant spending.

Further, his handling of an alleged sexual assault involving his brother has drawn criticism from former employees.

The founder and leader of Operation REACH Inc. is Kyshun Webster, who started the work that evolved into the education nonprofit while living in the St. Bernard public housing development and grew it into a $2.3 million operation in three states. At its peak last year, Operation REACH served as many as 10,000 students in three states and employed more than 300 people, and Webster enjoyed an annual salary of $130,000 a year, with thousands more in an executive allowance.

But Webster’s now receiving little or no pay since the organization’s cash flow has dwindled to a trickle and his staff has shrunk to 20. The organization’s near collapse has required slashing programs and closing the offices that had sprung up in Atlanta and Birmingham, Ala.

The chairman of Operation REACH’s board of directors described the organization as “struggling for survival” now.

Webster says the cutbacks stem from his decision to stop taking money from the national service program AmeriCorps, a principal source of money. But former employees, including a woman who was Webster’s second-in-command, say the national organization yanked funding after expressing a variety of concerns. A report from AmeriCorps said the agency had “strong concerns about the financial capacity of Operation Reach,” and a spokeswoman said they were looking into other “irregularities.”

Webster defended his myriad business expenses, detailed in bank statements obtained by The Lens. They include debit card swipes at romantic resorts, clothing stores and jewelry outlets, as well as thousands of dollars in meals, several near vacation destinations.

Webster said the board governing his nonprofit gave him wide latitude in terms of compensation beyond his salary, to make up for the early years when he earned little. Webster pointed to language in his contract that supports his explanation.

However, Operation REACH board chairman Ted Quant, the director of Loyola University’s Twomey Center For Peace Through Justice, said after being presented with the spending that the organization has reconsidered that contractual benefit, given the organization’s current financial situation. He said Webster is now back to working on a mostly volunteer basis, as he did when the organization was in its infancy.

Both Webster and Quant refused to discuss the allegations of sexual misconduct regarding Webster’s brother, Wilfred Wright. Those accusations involve at least one AmeriCorps employee who filed a complaint with Jefferson Parish authorities while working under Wright’s supervision.

Though his critics don’t necessarily begrudge Webster his former $130,000 annual salary, they question checks Webster wrote to himself for an executive allowance, as well as other spending, particularly for what Webster described as a “confidential assistant” that critics say is really his children’s nanny.

This spending raises questions about the organization’s priorities because the spending came at a time when staffers say they were reaching into their own wallets to cover some expenses for the organization, and were filling in for absent teachers.

Webster said the allegations are falsehoods generated by disgruntled former employees.

“At the end of the day to have someone insinuate, you know, ‘He’s stealing money or misusing the funds,’ is a misrepresentation of me, and it’s a misrepresentation of the organization,” he said in a recent interview.

Operation REACH remains the focus of a financial audit by the inspector general for the federal agency that runs AmeriCorps, the Corporation for National and Community Service. That agency provided $400,000 to Operation REACH in 2009, and was one of its chief sources of money and staffing.

Though the inspector general’s office wouldn’t comment on the nature of its Operation REACH review, the audit plan for the office says that this year’s audits “are selectively focusing on high-risk grantees or those that are identified, through our internal raw data collection, as potentially problematic.”

Webster said he believes the OIG is especially concerned about $700,000 federal money for which there is poor documentation: $500,000 of it in payroll records and $200,000 of it in in-kind match expenditure records. But he’s confident that he can produce the information, and that the audit will find no wrongdoing.

Whatever issues the inspector general is exploring, some of Webster’s former employees say one of the organization’s more salient problems has been Webster’s expense account. Operation REACH’s former chief administrative officer and compliance officer, Nicole Payne Jack, said that Webster’s “elaborate spending” has gone on for years.

A longtime Operation REACH employee who was with Webster in the early years of the organization, Jack said she tried to raise the issue with Webster.

“I was told to mind my business, that he had legal papers and he knew what he was doing,” Jack said.

Jack also led the internal probe into sexual allegations against Wright, and she tried to fire him after an independent investigation was finished. However, she said, Webster made sure his brother continued working for Operation REACH.

Jack is only the most vocal of Webster’s critics. Two others have also been willing to speak on the record. Other former employees expressed identical or similar concerns but said they did not want to be quoted directly for fear of repercussions.

A history of service

Operation REACH has a proud record of service to under-resourced communities, in the form of tutoring, mentoring, college counseling and other programs for children.

Webster enjoys a strong reputation and has been featured several times in local and national news media, telling the story of the tutoring program he started in his parents’ St. Bernard housing complex home at age 11 and later ran from their garage after the family moved to the 9th Ward. Founded in 1999, Operation REACH had grown by 2010 into a multi-million dollar non-profit. Webster, 35, poured himself into the organization’s success, along with help from longtime associates, such as Jack and Quant.

Quant, a well-respected activist who’s worked on social-justice initiatives for the past 40 years, has long guided Webster and is one of the organization’s founding members. He said he was impressed early on by Webster when Quant was working as a counselor and trainer with the 21st Century Youth Leadership Movement, a mentoring program.

“When I first met Kyshun, other kids that I was working with … said, ‘This is the kid that tutors kids in his garage. He should be a part of the group. Go get him.’ And that’s how we first hooked up,” Quant said in a recent interview.

Webster said his desire to help his peers at such a young age stemmed from his own feelings of rejection after being held back in the first grade. From then on, he threw himself into his studies, becoming a straight-A student, and eventually earning a doctorate. He said he wanted to help others who were facing similar challenges growing up in impoverished neighborhoods.

“We didn’t have any summer camps, or tutorial programs or stuff like that to help kids in the neighborhood. We just kind of played in the street,” he said. “So I guess early on I had a calling in my life to teach and become a teacher, and just kind of stayed with that throughout my career.”

His program, then titled Home for Homework, received its first grant in 1999, what Webster calls a “measly” $3,000 from the Greater New Orleans Foundation.

“I don’t mean that negatively,” he quickly added.

Back then, the organization largely counted on the efforts of volunteer college students. The partnerships with students from Xavier and other universities were meant to show students an educational path beyond high school. Though the program started small, it drew the attention – and financial support – of foundations intrigued by participants’ improving grades and standardized-test scores.

That financial growth is evident in 10 years worth of the non-profit’s IRS filings. In 2000, the organization received just more than $17,000 in grants, according an Operation REACH return. In 2005, the organization pulled in close to $380,000. After Hurricane Katrina, Operation REACH’s revenues skyrocketed. It filed reports showing it drew more than $650,000 in 2006 and hit the million-dollar mark in 2007.

Its most recent federal filing, from 2010, shows Operation REACH brought in more than $2.3 million. By this time, it also had expanded its operations regionally, with offices in Birmingham, and Atlanta as well as New Orleans, where the non-profit bought an office building as its headquarters.

That rich history of success made Jack initially reluctant to come forward with accusations that could be detrimental to the organization. She, too, can recall a time when Webster and a few other founding staffers worked largely as volunteers and got great results with the few kids they were able to reach.

“I’ve been there since before there was an anything, which is why it’s so disheartening,” she said.

In hindsight, purchase of the organization’s finely appointed headquarters, at the corner of Carondelet and Josephine streets, was a sign that the organization’s priorities might be straying, Jack said. Operation REACH paid more than $580,000 for the building in 2008, according to the city’s assessor’s office. The cost was mitigated by leasing some of the space to other groups.

“We really did good work, for years. But when the organization got more and more money….one million, and then two million, and this big beautiful building, I think he got big-headed,” Jack said of Webster.

Jack, who ran the organization’s Atlanta office, was laid off in August, along with at least six others, Webster said. She’s now running her own nonprofit in Atlanta. As the former point of contact for AmeriCorps and other funders, Jack said that before she left in August, she provided AmeriCorps and the inspector general’s office with everything they asked her for.

“It was natural for me to communicate with AmeriCorps because my role as compliance officer was to focus solely on AmeriCorps. When he appointed me as the point of contact, I don’t think he really understood what that meant,” she said, again referring to Webster.

Jack says that returning to Operation REACH in any capacity is “not an option” for her.

Present struggles

In addition to layoffs, the organization also no longer serves students in Birmingham or Atlanta because it’s no longer funded by the Corporation for National and Community Service, the governmental entity that oversees the national AmeriCorps program. The staffing to run those offices came primarily from AmeriCorps-paid employees, Webster said. The organization is down to just 20 employees because most AmeriCorps employees completed their service terms last year.

AmeriCorps has funded Operation REACH for at least the past four years, either directly or through state-level AmeriCorps programs, according to state audit reports.

Quant, the board chairman, said AmeriCorps funding was the organization’s lifeline.

“The grants are gone,” Quant said. “We were tremendously dependent on AmeriCorps.”

A spokeswoman said that AmeriCorps severed ties with the organization after it found “irregularities” during a normal site evaluation.

“We do regular monitoring, and during the third year of their national three-year grant, we found irregularities,” spokeswoman Aoife McCarthy said. “Based on that, we decided to do a review. There were enough concerns with that that we froze the accounts after we found irregularities in the operation of the program.”

McCarthy wouldn’t detail those irregularities, but a December 2010 site-visit description from the agency sheds light on its reasoning: Operation REACH staffers’ time was not being properly recorded on the organization’s payroll sheets, the grants officer noted.

Webster said that the payroll issues were resolved with the help of a new system, which “rolled staff time up into the accounting system in real-time, whereas before, it was done manually.”

The corporation’s site visitor, Susan Rice, agreed that the organization had worked towards resolving this and other issues by getting a new payroll system. But the most current information submitted is “still insufficient to close this report without concerns,” despite the corporation’s best efforts to help Operation Reach resolve the issue. Over a seven-month span, the corporation had requested additional information, gave the organization extensions on the submission of those requests, hosted webinars, conference calls, and sent numerous emails.

“As a result of the issues noted…the Corporation has strong concerns about the financial capacity of Operation Reach to adequately operate the AmeriCorps program according to the governing regulations and provisions,” the letter reads.

Rather than try to get back in AmeriCorps’ good graces, Webster said Operation REACH decided to end its relationship with the government agency and undertake a financial “retrenchment,” for several reasons.

In a recent interview with The Lens and our partners at FOX8, Webster maintains that the organization, not AmeriCorps, severed the grant relationship because of what he calls the “uncertainty” of federal funding.

“Given that we’d undergone a strategic planning process and we’ve looked at the organization and … the costs involved in operating programs, and just some politically uncertain times that we are seeing in Congress, we made a prudent decision to minimize the amount of federal funds that we would take,” Webster said.

He said that in the time that the organization has worked with AmeriCorps, Operation REACH has been able to help rebuild many city programs post-Katrina, and that the work was coming to its “natural end.”

Later in the interview, he said AmeriCorps’ policy of requiring grant recipients to match a percentage of the government funding – 24 percent – with money from other sources was too taxing on the organization’s finances. Such matching money is required by many foundations as a way to assure that a funding recipient has auxiliary support and is not overly dependent on a single sponsor.

Webster and Quant said a further complication of Operation REACH’s relationship with AmeriCorps was the government’s practice of requiring the non-profit to front payroll costs and then apply for AmeriCorps reimbursement.

Whatever the reasoning for the parting of ways, the lack of AmeriCorps funding leaves just 16 employees who primarily work with the daycare and four other administrative employees, including Webster. That’s a tiny fraction of the 300 once on the payroll, most of them AmeriCorps workers, some deployed to jobs that Operation REACH had lined up with other non-profits doing youth-oriented work.

The national agency’s investigation by its inspector general is scheduled to be complete this year. A spokesman for the inspector general’s office declined to discuss the matter.

Webster says the auditor’s concerns are largely because of a dual timekeeping system that Operation REACH used, in which some timesheets were kept on paper and others were computed into a system. About $500,000 in payroll expenditures are in question because of that system. Another $200,000 is in question because of issues with recording the valuation of in-kind matching money. This refers to figuring out the dollar value of non-cash community support in the organization received, such as donations of space or time, Webster said.

Webster says he’s confident he can answer the OIG’s questions.

“There’s been nothing of fiscal misconduct alleged, or criminal activities. But there are some things that they would like us to further justify, and we are pretty confident that we can do that.”

Despite the IG’s audit and the lack of federal funding, Operation REACH has attracted other big-name supporters, such as the Kellogg Foundation, and local donors, such as Webster’s first funder, the Greater New Orleans Foundation. The Kellogg Foundation has given the organization a total of more than $1.2 million in the past three years, according to the foundation’s online database.

Kellogg does evaluations towards the end of a grant’s shelf life and has had no issues with the way Operation REACH spends its cash, Kellogg spokeswoman Joanne Krell said.

“We know that when we made the grant, the organization’s goals and mission were in line with our own,” Krell said. She added that the foundation takes “a serious posture about the use of its grant funds.”

Although The Greater New Orleans Foundation awarded Operation REACH $23,000 in its round of 2010 IMPACT grants, Operation REACH did not win funding for 2011, program officer Flint Mitchell confirmed.

“We have billions of dollars worth of requests. It limits the number of grants that we can make,” he said. “We have to choose based on alignment of our goals, and they didn’t fall in line with our goals for that particular year.”

Webster said that in the absence of government funding, his organization’s future depends on private funders, such as the Greater New Orleans Foundation and Kellogg, as well as fee-for-service revenues generated by Operation REACH.

Spending allegations

Bank statements over the past three years obtained by The Lens provide some insight into what Jack described as extravagant spending. Thousands of dollars in restaurant expenses are found in the organization’s debit logs, as well as thousands in purchases at high-end apparel stores. The statements also reveal debit card swipes at or near several vacation destinations, among them Florida’s Disney World and resorts in the Pocono Mountains of Pennsylvania.

Former staffers say a few purchases look like they might have benefitted Webster’s for-profit cupcake business, Cupcakes and Company on Poydras Street. Scrutiny has also been drawn to several checks that Webster wrote to himself or to a woman that employees allege is his children’s nanny.

The Lens was able to obtain bank statements for Operation REACH’s main operating account, but they cover only two or three months in each of three years and do nor itemize purchases made with the organization’s credit card or cards. Overall, the statements show that organization spent $15,488 at stores, and $4,765 at restaurants in the seven bank statements obtained by The Lens.

• In July, September and October 2009, the organization spent more than $2,200 at restaurants, ranging from high-end eateries such as Ruth’s Chris Steak House to fast-food outlets such as Popeyes. Five restaurant purchases in October were made in Florida in or around Disney World and Universal Studios resorts.

• In the same timeframe, the organization spent nearly $5,000 at stores, including the Village Tailor Women’s boutique and the Hinton & Hinton Men’s Clothing Store in Oxford, Miss.

• Two July 2009 purchases totaling $319 were made at the Paradise Stream and the Cove Haven resorts in Pennsylvania. Records also show a $160 charge at an Enterprise Rent-A-Car office in Allentown, Pa., 30 miles south of the resorts.

• In February and October of 2010, the organization spent $1,200 at restaurants and $6,300 at stores, including Porter Stevens Menswear, Soul Train Suits, jeweler Mignon Faget, and CNS Men’s Wear.

• In January and February 2011 it spent more than $1,200 at restaurants, and more than $5,600 at stores. .

• A $50 January purchase was made at the Millcreek Country Store, an online store that specializes in cupcake supplies, and a $228 January purchase was made at BigKitchen.com, an online store that sells kitchen supplies. A third January purchase, totaling $1,700, was made at Playtime RVs, a Gretna outlet for recreational and service vehicles. Staffers said this purchase involved the delivery vehicle that can be seen parked at Cupcakes and Company.

• Webster wrote three checks totaling $7,300 to himself or to his consulting company, The Webster Group, in October and November 2010, and in February 2011. He wrote another four checks totaling $800 to Joy Howell, for “professional services.” Jack contends Howell is he Webster family’s nanny.

When The Lens and our partners at FOX8 presented Webster with the bank statements in an initial interview, he declined to comment, saying that he wouldn’t go on the defensive against former employees trying to exploit the organization. Two staffers swiftly ended the interview and showed reporters to the headquarters’ exit.

Webster later agreed to give The Lens explanations for the expenses, but declined to be further interviewed on camera. He detailed most of his expenses in a two-page statement. He offered one receipt to support his explanation that the October 2010 Soul Train Suits purchase was to provide uniforms for its AmeriCorps employees. An AmeriCorps member confirmed that they were provided outfits.

Webster’s other explanations:

• The Mississippi men’s and women’s boutique purchases were gifts from the organization for a staffer’s wedding. The purchase from jeweler Mignon Faget was also a gift for a speaker at one of the organization’s events.

• The expenses in Florida were related to the publication of Webster’s book, Parents Left Behind, that was intended to advance the organization’s ideals. The time in Florida included meetings with the book’s publishers and editors, he said. Two purchases made in Florida, totaling $1,386, are to Universal Publishers, the company that eventually published the book.

• If an executive staffer is having a meeting over lunch, it’s customary for the organization to pay for it, Webster said in explanation of some restaurant charges. The entire staff also occasionally was treated to lunch meetings. When a reporter pointed out that there were fast-food restaurant purchases where it seemed like only one person ate – such as a $6.09 January 2011 purchase to Church’s Chicken – he said staffers can elect to split the bill with others.

• Webster said the kitchen supplies purchases were for the kitchen in Operation’s REACH’s daycare, The Knowledge Garden. The cupcake supply store purchase was to make cupcakes that were given to students and parents at the daycare center. Webster said he’s never used the Operation REACH cash to fund his cupcake business.

• He also stressed that he was not the only Operation REACH staffer with access to the nonprofit’s debit card.

A follow-up interview offered more insight into the organization’s reasoning. Prior to January of this year, Webster’s contract afforded him a monthly allowance, separate from his $130,000 annual salary, to use for personal expenses. This allowance is part of what the contract calls “founder’s privileges,” which are intended to make up for the time he served as volunteer CEO.

“(Operation REACH)…may grant certain rights and privileges that are unique to the relationship as founder’s privileges…(because) the incorporating founder has incurred a loss in wages in the formative years, since he worked without any formal compensation package comparable to the effort exerted in sustaining the organization up until the date of this agreement,” Webster said, reading aloud from his contract.

He declined to give a copy of the contract to The Lens, saying that it was personal and confidential, but he allowed a reporter to briefly page through it.

The contract is dated January 2008, and is signed by Quant, the board chairman. The amount of Webster’s allowance is not clear. An older contract for Webster obtained by The Lens gave Webster a $1,200 allowance for 2006. Quant maintains Webster is currently getting little or no compensation, given the organization’s financial situation.

Webster said the $1,700 purchase, in January, at Playtime RVs was part of his executive allowance, but he declined to say what it was for. He would say only that it was not for his cupcake business. A purchase at CNS Men’s Wear was also part of his executive allowance – he bought a tuxedo to wear to a company event, he said.

Although the reasoning for the Pocono Mountains trip is not on the statement that he gave The Lens, he said that the trip was a “writing retreat” intended to help him put his thoughts to paper for an upcoming book deal.

“It’s a return on investment,” he explained. “When I’m going out and I’m writing these books and I’m bringing it back into the organization, and using the book to position the organization (in) getting contracts, that’s fee for service.”

He said that such trips are not charged against grants; rather they are paid for with revenues generated by renting out its office space, fundraisers, and the non-profit’s bio-diesel business.

Jack said that Webster’s 2009 Poconos trip was for his wedding anniversary.

“We all knew, because he went to the Poconos for his honeymoon,” she said.

An August 2004 marriage announcement in The Times-Picayune for Webster and his wife, Taralyn, confirms that the couple wed in July 2004, and honeymooned in the Poconos. Jack pointed out that the writing retreat coincided with the Websters’ fifth anniversary.

She also said that while Webster’s book-editing trip to Florida may have included Operation REACH business, he brought along his wife, children and his brother for a vacation. The charges in Florida include several purchases at restaurants at the Disney World resort in Lake Buena Vista, and another at a restaurant three miles from Universal Studios in Orlando. Four of the five restaurant purchases made in Florida totaled more than $90, with the most expensive purchase hitting $170. The other restaurant purchase was just under $50.

Webster said that while on business travel, its common for restaurant expenses to be paid for by the organization.

Webster’s executive allowance permits him to write out checks to himself, he said.

Webster declined to confirm the allegation that Joy Howell, the recipient of at least $800 in 2010, is his children’s nanny. In a written explanation he described her as a confidential assistant, adding that she is “consulted and paid on an as-needed basis.” He declined to give any further explanation in a follow-up interview.

When reached by phone, Howell declined to comment and hung up on a reporter.

Other allegations

Two other former employees, who primarily did on-the-ground work at two of the organization’s tutoring programs, said they were surprised to learn about such spending because they thought the organization was struggling for money.

Both employees were AmeriCorps workers at the organization for the 2010-2011 program year.

Emily Williams said she frequently spent her own cash on supplies and snacks.

“We fed them snacks every day which we paid for with our money. AmeriCorps people make $11,000 a year,” Williams said. Williams also said she spent $100 on pens, pencils, and notebooks on several different occasions, and she was never reimbursed.

Natalie Yahr, another employee who worked with the organization’s test-prep program, College Bound, said that at least twice when students showed up for classes on the first days of the sessions, there were no instructors.

“They didn’t have instructors. They didn’t have books to start studying. It was our job to entertain these students in one way or another because the instructors didn’t show up,” said Yahr, who helped administer the program. Yahr also said that the program’s annual college tour for students was repeatedly postponed, though it eventually took place.

Webster said he never heard that College Bound students had to wait for instructors. He also said that he left a petty cash account for AmeriCorps employees after he heard complaints, and that employees shouldn’t have had to pay for anything themselves.

“There was a process for their managers and site supervisors to follow through on to get anything they needed,” he said. “Sometimes, those things take a little longer to get because it has to go through process, but … we would give the credit card to the site manager and … they could run and grab it really quick with that,” he said.

He said that while he isn’t sure why the College Bound tour was postponed, it was likely because the organization was working with funds from a Community Development Block Grant — another federal funding source —and that the having to front the money and then wait for reimbursement after expenses were incurred strained the non-profit’s finances.

Williams and Yahr both confirm that Webster provided them with a petty cash account, but Williams said the cash—$100 provided in February—quickly ran out.

Organization’s future

Webster is confident that Operation REACH has a future.

He said weaning the organization from AmeriCorps funding was a positive step that allows Operation REACH “to go back to basics.” Quant agreed, saying the change lets Operation REACH focus on the things it does best.

But the financial picture remains problematic, given how important the federal funding had been.

In a follow-up phone interview, Quant said that controls on spending will have to be tighter and that Webster’s executive allowance might need modification.

“That’s what was written at a time when we had good income, we were raising money, and it was reasonable within the context of available funding,” Quant said with reference to Webster’s contract.

Later the same day as the phone interview, Quant followed up with an email in which he cited various studies in support of his contention that Webster’s $130,000 salary plus allowance was on par with salaries of the top administrators of comparably sized nonprofits. But Quant conceded that Operation REACH was now “struggling for survival.”

The email also stated that Webster had gone off salary and was now working largely as a volunteer – a fact Webster had not mentioned during several conversations in which he defended some purchases as a permissible part of his compensation package.

In an interview the day after the email revelation, Quant offered more detail about Webster’s pay.

“Since January, he has not been getting paid a full compensation. There might have been a few small checks given to him from one point to another, but he hasn’t been paid his salary.” When asked how much Webster received, Quant estimated the figure at $1,000 to $1,500, but then reiterated that now Webster is getting nothing.

Webster holds fast to his statement that all accusations by Jack, Williams, Yahr and any other former employee are baseless.

“When people don’t know, they will make stuff up,” he said.

He said that this is the first time he’s had to deal with these sorts of accusations, but that he’s taking it in stride.

“If you’ve done great work, or had an inkling of success at anything that you’re trying to do,” he said, “you will have people trying to assassinate your character.”

This article was originally published in the March 26, 2012 print edition of The Louisiana Weekly newspaper