Nate Monroe: Last-minute request for COVID cash from nonprofit run by City Council member needs scrutiny

COMMENTARY | The Jacksonville City Council on Tuesday is set to consider providing $500,000 in federal COVID-19 relief money to a nonprofit run by one of its own members, City Councilman Reginald Gaffney, purportedly to help the organization recover from pandemic-related economic harm.

In one respect, the city says the potential grant to Gaffney's nonprofit, Community Rehabilitation Center Inc., is unremarkable: Every nonprofit that has asked for federal relief money has received a grant, provided those groups were able to navigate the paperwork process.

But most nonprofits that approach the city don't claim a well-connected City Council member as its leader, and there are few organizations and public officials in Jacksonville viewed as closely tied to one another as Gaffney and CRC — a pair that has a spotty, controversial history dating back to Gaffney's founding of the organization, which helps people with mental illnesses and drug addictions, almost 30 years ago.

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The inclusion of Community Rehabilitation Center in the list of groups set to receive money came at the last minute: It was part of substitute legislation Mayor Lenny Curry's administration submitted to the council's finance committee on Tuesday spelling out how the city wanted to spend $141 million in federal COVID-19 funding. CRC's presence on the list was so recent the administration hadn't yet been able to provide a copy of the contract Gaffney would have to sign in order to receive the payout.

There is no paper trail to explain the genesis of this request, nor is there any documentation demonstrating $500,000 represents the true economic loss suffered by Gaffney's nonprofit (Gaffney must sign a contract attesting to the truthfulness of his grant application before CRC can get the money). And while many nonprofits have received federal money through City Hall since the pandemic began, far fewer have gotten money in both 2020 and 2021 solely for economic hardship; other nonprofits set to receive a slice of the $141 million are dedicating the money to projects, like affordable housing.

Still, the finance committee, led by Councilman Ron Salem, had no questions about CRC's late-hour inclusion and unanimously approved the new list of recipients. The full council will take up the legislation Tuesday.

Gaffney, reached Friday afternoon, told me he knew nothing about the grant request, which was handled by someone else on staff. He said he deliberately stays out of funding requests that involve the city and was unaware of the potential $500,000 until the finance committee met. That contradicts a statement a city attorney made in an email last week, ahead of Tuesday's finance committee meeting, to a CRC administrator referencing a separate meeting she had with Gaffney on Sept. 17 about the $500,000 request.

"I can assure you none of it's going to my pocket...assuming they [CRC] get it," Gaffney said (a CRC administrator told a city lawyer in an email last week none of the money would be used to pay Gaffney's salary). 

Gaffney said his nonprofit is "no different" than several others with ties to council members that receive city money for public services and said it's "unfortunate" some people will draw conclusions about CRC.

The city's Office of General Counsel, and not the city's Ethics Office, handled the ethical analysis about CRC receiving funding, though it's not clear why. OGC told one of Gaffney's employees in an email to "build a wall" around him to ensure he is "not involved with the oversight or administration of this contract."

Despite its claimed economic hardship, CRC appears to have landed more COVID grant money this year — including a $4 million grant from the federal government — than it has claimed in total annual revenue and net assets in the years leading up to the pandemic, according to CRC's most recently available financial documents and federal and local COVID-19 grant data.

In total, CRC has received a little more than $5 million from the U.S. Department of Health and Human Services in 2021, which is substantially more than the department has awarded the organization in any single year dating back to 1999, according to government data.

CRC's total annual budget in recent years has been about $3 million.

CRC also received a $331,000 relief grant from City Hall last year, funded by a previous federal pandemic program from the Trump administration, and nabbed two forgivable paycheck protection loans — one last year and one this year — from the Small Business Administration totaling nearly $660,000 (it's not clear if those loans will be or have been forgiven). The federal loans were intended to help pandemic-battered organizations keep people employed, and the payouts are forgivable if the borrower was able to meet certain employment benchmarks.

Community Rehabilitation Center has faced numerous controversies dating back to the mid-1990s: Concerns from state officials about nepotism in its hiring practices, favoritism shown toward it by powerful Jacksonville elected officials, and past allegations of overbilling Medicaid from 2008-2011 that CRC settled with a six-figure payment after Jacksonville's two state senators intervened on Gaffney's behalf with state officials.

In 2002, prosecutors prepared to charge CRC with Medicaid provider fraud, according to court records, but the state attorney ultimately allowed Gaffney to settle the case with a $55,000 payment (CRC denied wrongdoing in the settlement agreement). 

Gaffney founded the group as a three-person startup in 1993 and today claims it employs more than 60 people.

Something else about CRC makes it more notable than many of the nonprofits that receive money from City Hall: CRC is financially entangled with separate organizations, including for-profit companies, that Gaffney also oversees, and which can make it hard to discern the full profile of work CRC actually does.

Some of those groups appear to have considerably different goals than CRC.

One of those groups is something called Total Beauty Institute Inc., where Gaffney serves as president and which received $65,000 from CRC in 2019, according to a CRC audit report from that year. The group's website says the organization is dedicated to "transforming lives for quality education within the world of beauty." 

Another one of those groups, Community Rehabilitation Center Transportation LLC, a for-profit affiliate of CRC, received two federal paycheck protection loans last year and this year: A $350,364 payout in April 2020, which was forgiven earlier this summer, and a $238,981 loan from February of this year.

Gaffney was paid $74,000 to lead CRC, according to his latest financial disclosure form filed with the state, but he doesn't list any income from these affiliated organizations. He only lists $60,000 in assets stemming from "closely held businesses."

Political connections

Gaffney, a Republican-turned-Democrat, has long been a minor Jacksonville political player with ties to ex-U.S. Rep. Corrine Brown and many well-monied Republican donors. For years, CRC paid Brown’s daughter for lobbying services, and the nonprofit found support for millions in Congressional earmarks from Brown herself.

Gaffney told my colleagues and me several years ago, for a profile we wrote about him, that he has at times used CRC's clients, whom he refers to as "consumers," to help put out campaign signs and pass out political fliers.

Prosecutors in 2016 subpoenaed numerous records from CRC in the runup to Brown's federal trial on fraud and tax crimes the following year (she was convicted; an appeals court later ordered a retrial). Neither CRC nor Gaffney were ever accused of wrongdoing, but the federal government presented evidence Gaffney and his groups were a source of cash for the former congresswoman (he said he gave Brown money because she was like a mother to him).

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Both prosecutors and Brown listed Gaffney as a potential witness, but neither side ended up calling him to the stand. “This is my prayer: Once people read my side of the story, they’ll make their own opinions — but they’ll see I’m innocent as can be ... I hope this will clear me and any thoughts about what the nonprofit has been doing for the last 25 years," Gaffney told us at the time.

Today, Gaffney is running to replace term-limited state Sen. Audrey Gibson, and he is using his considerable ties to Republican business leaders to finance his campaign. A political committee he controls has raised $220,000 in donations, including a $25,000 donation from the Jacksonville Jaguars.

One other donor stands out: $5,000 from CRC Transportation, one of the for-profit groups enmeshed with Gaffney's nonprofit, and which received two paycheck protection loans last year and this year.

Conflicts and bad optics

Several council members have ties to nonprofits that more regularly receive money from City Hall than CRC, but Gaffney's request illustrates an ongoing and larger problem that the council's current practice — council members with those ties only need to recuse themselves from voting on those line items — fails to address.

Merely recusing oneself from a vote doesn't actually satisfy the clear conflict of interest at play: It's obvious council members are uncomfortable questioning, much less denying funding to, their colleagues, all of whom often refer to one another as friends.

Another example: Pending before the council is a $100,000 grant to the Clara White Mission, run by another one of its members, Ju'Coby Pittman. The city has a long history of supporting Clara White, a nonprofit dedicated to reducing homelessness, but last month, five executive board members resigned, citing a "lack of transparency" from Pittman and other issues with her leadership.

"We all have a fiduciary responsibility and manage the CEO, who manages the organization," a statement from the board members said. "The lack of transparency. … from the CEO made our work a constant struggle."

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Pittman has denied the allegations, but it was nonetheless a startling story and remains an unresolved controversy swirling around the nonprofit and Pittman.

Yet her council colleagues have had little to ask or to say about it, even as they are set to vote on the $100,000 grant.

The council needs to adopt new policies to address these common situations. Deafening silence isn't working.

Nate Monroe's City column appears every Thursday and Sunday.

nmonroe@jacksonville.com