State auditing nonprofit overseen by Conway alderman

LITTLE ROCK, Ark. (AP) — A state agency is conducting an audit of a nonprofit run by a Conway alderman amid concerns about accounting practices used while administering a $450,000 substance-abuse prevention grant.

The Quality of Life Council administers the grant. The group's president and chief executive, Conway alderman Jim Rhodes, acknowledges there has been sloppy bookkeeping but says he has not embezzled public money.

According to Arkansas Democrat-Gazette interviews, copies of public documents and recordings of public meetings, state officials have questioned whether Rhodes' bookkeeping practices broke state laws.

"There's no doubt mistakes were made," said Rhodes, who is cooperating with state auditors. "I am apologetic. I am very disappointed with myself."

Even before the audit conducted by the Arkansas Department of Human Services is completed, the state's Alcohol and Drug Abuse Coordinating Council has severed ties with the nonprofit. That's resulted in a temporary cut in funding for substance-abuse programs in Faulkner and Perry counties. And a group in Stone County had to pull out of the program.

The Quality of Life Council served as the fiscal agent for substance-abuse prevention coalitions in the three counties.

The state Office of Alcohol and Drug Abuse Prevention coordinates the distribution of federal grant money received by the state for use in fighting alcohol and drug abuse. The Quality of Life Council had collected about $445,000 in federal grant money, said Jill Cox, who oversees the statewide grant program.

Fiscal agents may collect $15,000 annually for administrative costs and use some additional grant money for salaries. Cox said Rhodes collected $20,415 in salary and the council also had paid employees working in the counties.

The grant works on a reimbursement basis, which means that the fiscal agent needs enough money up front to cover the expenses of the coalitions. Rhodes said the council started with less than $15,000, which wasn't enough.

He also said he didn't keep adequate financial records, using only checking account statements. He said he should have used an accountant.

"Basically, it became more than we could handle," Rhodes said. "I got in over my head."

In an Oct. 7 memo, the state Office of Alcohol and Drug Abuse Prevention listed 21 irregularities found in the council's bookkeeping practices, including not submitting to three required audits, despite collecting $2,000 in grant money to conduct them; not paying a vendor after collecting $5,416 in grant money to do so; collecting $10,000 in grant money for a media campaign that never took place and using $1,123 in grant money for a trip to San Francisco that was not related to the program.

The memo also said the council overdrafted its bank account, passed checks with only one signature and paid employees late.

"It's very inappropriate, very questionable and maybe even illegal," Cox said during an Oct. 15 meeting, according to an audio recording. "We don't know where the money is going that we reimburse this fiscal agent. Our only assumption is that the money is being pocketed by the fiscal agent."