×

Maui police investigating nonprofit

County suspended funding for Na Hoaloha over discrepancies in its financial filings

Na Hoaloha, whose offices are shown on Vineyard Street in Wailuku on Friday afternoon, had its county grant suspended about a year ago. The grant was for $272,000 and ran from October 2019 to October 2021. — The Maui News / MATTHEW THAYER photo

Maui police are investigating a Wailuku nonprofit after the Maui County Office on Aging found discrepancies in the organization’s financial documents and suspended its funding.

Na Hoaloha, which had been contracted by the county to provide services to frail elders and people with disabilities, submitted an invoice for more than $18,000 in August 2019 that allegedly contained falsified documents that the current executive director blames on his predecessor.

“Na Hoaloha is a small organization where the executive director is responsible for most of the day-to-day operations,” said King Van Nostrand, who was board president at the time. “In this case, the executive director was solely responsible for submission of these invoices. Na Hoaloha realized, in retrospect, that its process did not include sufficient checks and balances. It has since remedied that situation and now has appropriate systems in place.”

But the ousted executive director says the nonprofit was merely trying to help clients and that the board and Office on Aging were aware of what Na Hoaloha was doing.

“What we were trying to do was make it easier for the clients to receive their benefits,” said former executive director Kea Hokoana-Gormley. “It wasn’t like we were trying to steal money.”

KING VAN NOSTRAND, Blames former director

Na Hoaloha — Maui Interfaith Volunteer Caregivers is a small or with some 378 active volunteers serving 1,042 clients in Maui County, according to a November orientation packet provided to board members. Most of these clients are over 65 years old and live below or near the poverty line.

Na Hoaloha offers programs, such as regular visits and telephone conversations to keep participants company at home, transportation to places like the doctor’s office or grocery store, fall prevention guidance and an in-home respite program that allows family caregivers to hire additional help and get reimbursed care. The in-home respite reimbursement program had been authorized and funded through the Maui County Office on Aging.

Most of Na Hoaloha’s funding from 2016 to 2018 came from foundation grants (53 percent) and government funding (38 percent), which included the Office on Aging, for visits, telephone calls and the in-home respite program, as well as county grant money for volunteer development, according to the orientation packet.

Before the nonprofit lost its county contract, it was expecting its largest single grant to come from the Office on Aging — $272,000 from October 2019 to October 2021.

County concerns

KEA HOKOANA-GORMLEY, Denies claims of fraud

Ludwig Laab, who joined the board of directors in February, said nobody informed him of Na Hoaloha’s status with the county when he first came on board.

“I wasn’t made aware of it, no inkling that there was a problem with the organization,” Laab said.

However, during a meeting in March, Laab learned that Na Hoaloha was trying to send a letter to the Office on Aging. Wanting to understand what the letter was about, he called Van Nostrand and asked what was going on. He said Van Nostrand told him the nonprofit had lost its funding from the county and later sent Laab and the rest of the board a written report on the situation and a series of emails documenting the chain of events.

According to the report, which Laab provided to The Maui News, Deborah Stone-Walls, executive on aging for the Maui County Office on Aging, called one of the directors Sept. 23 with concerns about Na Hoaloha. Van Nostrand phoned Stone-Walls later that night and scheduled a meeting for the next morning.

During the Sept. 24 meeting with Office on Aging officials, Van Nostrand was told that “during an internal audit of our August reimbursement invoice, several irregularities began to surface, and they decided to investigate further.”

Na Hoaloha offers programs such as regular visits and telephone conversations to keep participants company at home, transportation to places like the doctor’s office or grocery store, fall prevention guidance and an in-home respite program that allows family caregivers to hire additional help and get reimbursed care. The in-home respite reimbursement program had been authorized and funded through the Maui County Office on Aging. — The Maui News / MATTHEW THAYER photo

Van Nostrand said he was presented with “falsified reimbursement documents,” including whited-out forms, some matching submissions from previous months with dates changed to August.

“I was shown common signatures on different submitted forms, clearly reflecting the same signer,” Van Nostrand recounted. “Other presented paperwork that was submitted displayed missing backup, missing signatures and false services provided.”

At that point, Stone-Walls informed Van Nostrand that Na Hoaloha’s contract had been suspended and would not be renewed for October 2019-21.

A report was also filed with the Maui Police Department against Na Hoaloha for submitting falsified documents and fraud, and an investigation was opened. The county also planned to call all participants from August to see if Na Hoaloha provided those services.

Following his meeting with county officials, Van Nostrand and the board “immediately terminated Kea without reason as per our duly signed contract dated July 2019” and asked for all keys, bank cards and company electronic devices, according to a Sept. 28 email to the board. They asked Hokoana-Gormley not to enter Na Hoaloha property or contact the Office on Aging, Na Hoaloha participants, volunteers, vendors, grantors or office staff.

Van Nostrand confirmed to The Maui News that the “Maui County Office on Aging (MCOA) discovered discrepancies in our August 2019 reimbursement invoice for In-Home Respite and Homemaker Programs, which was submitted for $18,482.62.”

He said the county eventually paid Na Hoaloha a total of $11,231.25 for those services that month.

However, Van Nostrand, who has been on the board since May 2017 and president since 2018, said that he was not involved in day-to-day operations and that the executive director “had full control of operations, as is typical for most nonprofit organizations.”

Director dismissed

Hokoana-Gormley, meanwhile, denied forms had been falsified, saying the nonprofit had been trying to work with clients to get them their benefits.

“What the county does is they have these clients that they refer to Na Hoaloha for these services,” she said. “So they call us and we do their intake forms on the phone, and then we mail them out the packet. And when I saw that not all the participants were getting their entitlements, we called and started asking the clients, why do you not participate when you can?”

Hokoana-Gormley, who was hired in April 2019, said she started to notice this problem around late June or early July. Some clients didn’t understand how to fill out the forms, while others couldn’t mail them in time or sent in forms with illegible handwriting.

“They would call and cry and beg us for the money because they don’t have it, and it’s heartbreaking,” she said. “We talked about it, and the board was on board with doing everything on the phone so we could get the forms in on time so they could receive their benefits.”

Hokoana-Gormley said that Na Hoaloha would ask clients what services they’d received and double check the clients’ calculations to make sure they were being reimbursed correctly. The staff member going over the form on the phone would sign at the bottom of the form after tallying the numbers, which Hokoana-Gormley said was “one of our checks and balances,” along with making sure everyone on the invoice matched the nonprofit’s bookkeeping records.

Hokoana-Gormley said they never whited out any forms, only crossed out incorrect numbers and attached a copy of their own calculations, which she said was common practice before she arrived.

“The calculations were always stapled to the form even if it wasn’t incorrect,” she said.

Hokoana-Gormley said Na Hoaloha only started doing reporting over the phone with clients for the August invoice and that both the board and the Office on Aging grant monitor assigned to Na Hoaloha were aware of this.

So, she said, “it felt like an ambush” when county officials called her and another staff member to the Office on Aging to tell them they couldn’t write on the forms and that the county wasn’t going to reimburse Na Hoaloha for the people they’d done telephone reporting for.

Hokoana-Gormley said she put together a list of her concerns about the program that she planned to discuss with Van Nostrand.

“I knew there were discrepancies, and that’s why I wanted to talk to them, because the county was upset that we were doing the phone thing,” she said.

But when she met with Van Nostrand, he read her a letter informing her of her dismissal, asked her to turn in her company keys and credit cards and told her not to talk to the Office on Aging. She said Na Hoaloha would not give her a reason for her dismissal, and she called it “highly suspect” that Van Nostrand took over as executive director in the wake of her departure.

Van Nostrand served as interim head from Sept. 24 to Dec. 31. He said the Board of Directors spent 45 days searching for a replacement through Indeed.com and Craigslist, but after only coming up with three applicants worth interviewing, Van Nostrand decided to apply for the job. He was interviewed and hired by the board as the full-time executive director.

“This was certainly not a conflict of interest,” he said. “I worked three months retooling our processes and procedures. I continued to work in the day-to-day operations of Na Hoaloha, supporting Maui County’s kupuna. There was no person more capable and understanding of Na Hoaloha, the needs of our seniors and possessing a business mind, than me.”

‘Nothing else has changed’

The Maui County Office on Aging denied The Maui News’ request for information on Na Hoaloha under the Uniform Information Practices Act on the grounds that the “matter is pending investigation with the Maui Police Department.” The Maui News had sought details on county funds provided to Na Hoaloha over the last two fiscal years, a monthly breakdown of financial reimbursements requested by the nonprofit in the months leading up to August 2019 and reasons for termination of funding to Na Hoaloha.

When pressed for more information, the county responded that the pandemic and the temporary suspension of government disclosure rules and the Sunshine Law prevented it from responding in a timely manner.

“The county does not presently have the time and resources due to COVID-related responsibilities to fulfill your request,” Stone-Walls said via email. “At such time as resources become available, the county will provide the documents that would not interfere with the investigation.”

The Maui Police Department could not provide on-the-record details of the investigation, though Maui County Prosecuting Attorney Don Guzman said that MPD was doing an investigation on first-degree theft.

The Office of Council Services also did not have information on funding provided to Na Hoaloha, and the council had not received any official notification of termination of funding for the nonprofit, said supervising legislative analyst David Raatz. He explained that some grants are earmarked by council for specific uses within the budget; other grants are given out at county departments’ discretion within the funding they’re allocated by council.

In a Nov. 6 letter to Na Hoaloha participants, Stone-Walls did confirm that Homemaker and/or In-Home Respite services “have been suspended until further notice.” She said the county had worked with Na Hoaloha for years and considered them “an excellent partner.”

“Despite the favorable history between our two agencies, we are obligated, as stewards of taxpayer dollars, to follow a prescribed set of policies and procedures,” Stone-Walls said.

According to a Nov. 14 email between Stone-Walls and Van Nostrand, the letter was sent to about 150 people.

Van Nostrand told The Maui News that Na Hoaloha’s final invoice to the county for September 2019 was “for $21,282.50, which was paid in full by MCOA as last payment of our contract.” He said Na Hoaloha is not currently receiving any government funding.

He also said there have been many changes to prevent a similar incident from happening again.

“After changing the accountability and procedures with invoicing, we modified data input, volunteer reporting and reinforced with staff the importance for Na Hoaloha to continue interrupted operations with our kupuna and volunteers,” he said.

Prior to losing its contract with the county, Na Hoaloha had been anticipating a total revenue of $485,135, according to a budget prepared by Van Nostrand in September and provided to Laab when he joined the board. Of those funds, $272,049 was expected to come from the Office on Aging, while $165,000 was expected from grants and county subsidies and $48,086 from fundraising.

After the events of last fall, Na Hoaloha has been seeking out other funding sources. Van Nostrand said that since the beginning of the pandemic, the nonprofit has recruited 60 new volunteers and gained 29 new clients, and added more grants and fundraising programs.

“Na Hoaloha has worked incredibly hard to reassure MCOA that our organization is trustworthy,” Van Nostrand said. “I have had numerous conversations with MCOA, and the message I have received from MCOA has been 1. MCOA believes that Na Hoaloha has corrected the problem; 2. MCOA believes that Na Hoaloha continues to provide extremely important services to Maui County’s seniors and persons with disabilities; and 3. Be patient; MCOA would like to find a way to resume using Na Hoaloha’s services in the future.”

Laab resigned from the board in July, frustrated with a lack of repercussions for what happened last year. He said that board members receive a profit-and-loss statement and a copy of the balance sheet at their monthly meetings, and that they should have been in close contact with the executive director and staff and known what was going on.

“It happened on their watch,” Laab said. “To me it’s endemic. It’s ingrained. It’s in the culture of this little organization.”

He thinks it’s obvious why the county hasn’t restored Na Hoaloha’s funding yet — the same people are still in charge.

“Instead of looking for a new executive director to bring new leadership into this, he took the position,” Laab said of Van Nostrand.

“Nothing else has changed.”

* Colleen Uechi can be reached at cuechi@mauinews.com.

NEWSLETTER

Today's breaking news and more in your inbox

I'm interested in (please check all that apply)