COSTA MESA — Hermandad Mexicana Nacional will not receive a $2.1-million federal grant to teach English and citizenship classes for immigrants because the embattled Latino rights group failed to submit an audit proving it is financially sound, state education officials said Wednesday.
"They're not eligible" to receive the money, said Gabriel Cortina, deputy superintendent of the state Department of Education, which distributes the federal funds. "They have not submitted a required federal audit showing financial stability and soundness."
Ted Zimmerman, who oversees the state's adult education division, added: "Our obligation to the federal government is to shut them off."
Bert Corona, executive director of Hermandad, agreed with the state that the required audit has not been submitted. But he said the group is owed at least $1 million because it has taught English language and citizenship classes since July and has been assured repeatedly that it would be paid as soon as its audit was submitted.
"If they want to shut us off, we can prevent it," Corona said. "We can fight back. We can go to court. We can go to the state Legislature. . . . We need the money and we're entitled to it and we're going to fight for it."
The state's action comes just two months after it completed a review of finances at Hermandad's Santa Ana and North Hollywood offices, concluding that the organization was heavily in debt.
Roger Blanco, the state auditor who performed the examination, said he found that workers in the North Hollywood office had not been paid for months, that Hermandad owed hundreds of thousands of dollars in federal taxes and state unemployment benefit repayments, and that it was liable for huge loan repayments.
Corona said he had not been notified of the state's decision to withhold the funds; state officials said there is no need for them to notify Hermandad because its application was never completed. In addition, Corona blamed the decision in part on the publicity surrounding a criminal investigation by the Orange County district attorney's office and the secretary of state.
Investigators are trying to determine if Hermandad illegally helped with voter registration of 227 noncitizen students in its Santa Ana classes last year, some of whom then cast ballots in November's election. State education officials said the denial of funds was not related to the criminal investigation.
Hermandad applied in May for the $2.1-million grant to finance classes during the 1996-97 fiscal year. Corona said an average of 2,500 students a month are being taught at 70 sites across Southern California.
Corona acknowledged that the organization is in debt, owes back federal taxes and is behind on various loan payments. The organization needs the federal grant money to pay its bills, Corona said, but he said Hermandad's situation is not unusual.
"We've been after that money since December," he said. "The state keeps the money. They pay us late after we provide the services. So of course we accumulated other debts. This is the plight of the nonprofits."
Cortina, the deputy superintendent of education, said Hermandad failed to submit an independent audit that was due to the state nine months ago and failed to address other concerns about its finances in writing. Cortina said even if Hermandad produced the audit immediately, it is "highly implausible" that it would receive funds for this year.
Times staff writers Dexter Filkins and John Gonzales contributed to this report.