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Red Cross Chapter Plans Layoffs, End of Transit Program

October 21, 2002|Jessica Garrison | Times Staff Writer

Dogged by scandal and a criminal investigation, the San Diego chapter of the Red Cross has announced that it will lay off half of its employees and get out of the business of providing transportation to the region's elderly and disabled.

The charity, which was fired Thursday by the region's biggest transit agency, also admitted that it had altered records to earn bonuses for on-time service that it was not entitled to receive.

It was yet another blow to an organization that has been reeling from controversies in which elected officials have publicly accused the charity of fraud and mismanagement. The San Diego County district attorney is also investigating whether officials broke the law.

"I think what's so disappointing is that these things continue to happen," said Ron Roberts, chairman of the county Board of Supervisors. "Instead of cleaning up the problems, they're covering up the problems, still."

He added that while public confidence in the Red Cross is not irreparably shattered, "it's getting very close to that point."

Red Cross officials said Friday that they are determined to turn the organization around.

They said that they will cooperate fully with investigators, and that the agency is returning to its basic mission of providing disaster services, safety education and military communications. Other agencies will provide transportation, officials said.

"It's heart-wrenching," interim Chief Executive Carter Taylor said of laying off 260 employees who were involved in transportation services.

Taylor was brought in this summer to clean up the chapter after the National Red Cross took the unusual step of replacing the previous chief executive and board of directors. Getting out of transportation services "is the right thing to do for this organization, and we will refocus on our core mission," he said.

San Diego's Red Cross has provided bus services to the elderly and disabled across the region for two decades, contracting with 12 agencies and making an average of 2,000 trips a day over the last few years, Taylor said. Funding came from local government agencies.

But earlier this year, the Metropolitan Transit Development board, the region's largest transit agency, began to receive complaints about impossibly long waits.

"Very poor service was being provided," said Roberts, who also sits on the transit development board.

Meanwhile, allegations surfaced that Red Cross staff had altered records to make it appear that drivers showed up on time more often than they did.

In early October, the district attorney's office launched a probe into the altered records, Dist. Atty. Paul Pfingst said.

"What we're concerned about is whether or not the county is overbilled for services, and whether or not the overbilling is tied into the executive compensation packages," Pfingst said.

After their internal investigation, Red Cross officials admitted that on-time records had been altered. They subsequently decided to get out of the transportation business.

The agency will phase out gradually, officials said, to give other agencies time to pick up the contracts. The charity also promised to return any money it had been paid improperly and to help laid off employees find work.

But the move may not be enough for elected officials.

"I thought when the Red Cross came in and eliminated the local board, that might be the beginning of the turnaround, but it hasn't," said Supervisor Diane Jacob, an outspoken critic of the agency.

"I'm real disappointed. I don't know how deep the fraud is, but in my opinion, this organization needs a thorough housecleaning."

Jacob's disillusionment began after the Alpine fire, which burned five homes and displaced 500 residents in January 2001.

The Red Cross responded immediately, setting up a disaster center for evacuees, and donations flooded in from people who watched the flames on their televisions. The Red Cross said it received about $344,000.

But days after the fire, Jacob said she began to get calls from residents who had been denied services from the Red Cross.

"And then to add insult to injury, the Red Cross used the fire victims to solicit donations," she said. Her office said one woman was denied counseling services, only to find her picture on a Red Cross Web site urging donors to send money to help fire victims.

Jacob complained to the National Red Cross, and an audit of the Alpine fire funds was launched. The chapter released an abbreviated version of the audit, which did not contain the Alpine fire, Jacob said.

But when the supervisor got her hands on the original audit, she said it was stinging in its criticism.

Red Cross spokeswoman Sue Irey said the agency had not intended to cover up the audit, but had merely sent its board of directors a shortened version. She said the agency has paid out more than $270,000 to families affected by the fire and is continuing to work with the community to use the rest of the money for disaster prevention.

"The Red Cross is saying, 'OK, we have some management problems, and we are working hard to make corrections,' " Irey said. But she said things are going to improve, and that the agency should be commended for correcting its mistakes.

"We need an organization like the Red Cross," Supervisor Roberts said. "And all of us, deep down inside, would like to see things get turned around.... My hope is that they will go through everything with a fine-toothed comb and clear the air."

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