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'Amazing Grace' Hits Rough Waters : Social services: The executive director of the Westminster Neighborhood Assn. faces questions about spending habits and possible conflict of interest.


At an age when most people look to retire, 54-year-old E. Grace Payne quit her job as manager of an import company to run a struggling poverty program in Watts.

The Westminster Neighborhood Assn. was so short of funds, Payne said, that she used $4,000 of her own money to meet her first payroll. That was in 1972.

Today, Payne, a Bradley Administration appointee to the Los Angeles Harbor Commission, has built Westminster into one of the largest poverty agencies in Los Angeles. With a $1.6-million annual operating budget and 70 employees, her organization serves troubled schoolchildren, unwed teen-age mothers, unemployed youths and the homeless. Other Westminster projects include the Tom Bradley Teen Center, now under construction and made possible by a $1-million gift from junk-bond king and convicted felon Michael Milken.

"They call her 'Amazing Grace,' " attorney Johnnie B. Cochran Jr. said.

Recently, however, Payne has encountered a series of setbacks:

* Last fall, the harbor commissioner was chastised by City Council members for taking a lead role in approving a $2.4-million deal that benefited a businessman who served as a fund-raiser for Westminster.

* In August, United Way placed Westminster on probation and ordered an audit of its books. Concerns about Payne's spending of poverty funds, including her purchase of a new Lincoln Continental, prompted the actions.

* United Way officials have questioned the propriety of Payne providing about $60,000 in Westminster funds to architect Carl Kinsey, a longtime member of the agency's board of directors. Kinsey also received up to $50,000 in fees through a city-financed Westminster project, even though his past work "revealed a number of serious problems," according to a city memo. The state attorney general's office said it plans to look into Kinsey's contracts for possible conflict of interest.

Records also show that Payne utilized Westminster personnel and resources to help the campaigns of Bradley and Councilwoman Joan Milke Flores, although political activity is prohibited at nonprofit agencies.

Payne said in an interview that she has done nothing improper. The $52,000-a-year executive director criticized United Way for overreacting to allegations by two "disgruntled" former employees.

"I know that I haven't done anything wrong . . . but the implication is there," she said. "I'm 72 years old. I've given my life to this. For me to be defending myself after 15 years of volunteering for United Way annoys the hell out of me."

An energetic, bubbly administrator, Payne makes fund-raising trips nearly every Sunday to Presbyterian churches around the country. In 1975, Payne said, she solicited more than $500,000 to build Westminster's headquarters on Century Boulevard.

The agency has received $1.6 million in private donations, $1.4 million in city grants and $475,513 in United Way contributions since 1988.

In March, the agency unveiled Westminster Park Plaza, the largest complex of low-income housing built in Watts since the 1965 riots. The 130-unit project was financed by $10 million in city and private loans.

None of the agency's social and housing programs would be possible without Payne, said city and Westminster officials.

"Grace Payne is a dynamic, dedicated and respected community leader," Bradley said in a statement when contacted by The Times. She "proves day in and day out her commitment to the people of Los Angeles."

Said Westminster chairman Clinton Minnis: "Our existance is based on the goodwill and good reputation of the agency. We have been successful on the basis of the cleanliness of Dr. Payne politically, religiously and socially."

Ella Grace Payne grew up in the small Texas town of Gilmer, according to resumes at Westminster and the mayor's office, before earning impressive credentials--a BA in education from Texas College, an MBA from UCLA and an LL.D. (doctor of laws) from Pepperdine University. She never practiced law, but for years has used the title "Dr. Payne," and "LL.D." has appeared next to her name on city stationery.

But academic records show that Payne received none of these degrees.

Officials at Texas College said that Payne attended school there in 1938 and 1939 but did not graduate. UCLA and Pepperdine have no record that Payne was ever enrolled, although Pepperdine in 1983 awarded her a "distinguished diploma of honor" for community service in Watts.

Payne acknowledged in an interview that she did not attend UCLA's business school and erred by referring to the Pepperdine community service award as a doctorate. She said she earned her BA but could not provide proof.

She denied exaggerating her academic record to benefit herself. "I raised money long before I was a doctor and it had nothing to do with my being appointed a commissioner."

Payne listed her "MBA" on a resume submitted to Bradley, who appointed her to the Harbor Commission in 1984. The mayor last week declined to discuss Payne's resume.

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