Burning Down the House

After the closing of an apartment building for AIDS victims in Fort Lauderdale, the city's ability to oversee a multimillion-dollar, federally funded program is called into question

On February 8, 1999, Kathryn Malie traveled to Fort Lauderdale City Hall to clear her name. The 14-year veteran bureaucrat was armed with a three-volume, 200-page-plus report, complete with receipts, city memos, and intraoffice e-mails. Also in tow was her lawyer. Her audience in the sterile conference room was Pete Witschen, the assistant city manager, and Faye Outlaw, director of Fort Lauderdale's housing and community development office -- a job title Malie once claimed as her own. An attorney hired by the city was also present. For two and a half hours, Malie laid out, in mind-numbing detail, her case for innocence. The only interruption was an occasional "OK" from Witschen.

Malie was facing serious charges. She'd been accused of mishandling funds that were funneled through the federal government's Housing Opportunities For Persons With AIDS (HOPWA) program. A stinging review of the program had been written by the city auditor months earlier, and on November 12, 1998, Malie was put on paid administrative leave. According to Malie, the passwords on her city computer were changed, and her fellow employees were told not to associate with her.

At the core of the auditor's report is the Sunshine Health Center, a nonprofit group based in Pompano Beach. For four years more than a million dollars in federal grants was given to Sunshine to purchase and renovate a 32-unit housing facility and two single-family homes for people with AIDS. But by late 1998 the buildings were in disrepair and Sunshine was in financial disarray. The city audit had been prompted by an FBI investigation of the nonprofit group that continues to this day, according to one source familiar with the federal inquiry. (The FBI would not comment on the investigation.) The city auditor, Allyson Love, concluded that Sunshine's situation was indicative of widespread problems caused by a lack of oversight of the HOPWA program.

As Malie sees it, she was being set up to take the fall for the boondoggle. At one point during the February hearing, Witschen noted that the city would need time to make a decision about how to proceed. "We probably will not make a response today," he said. It's not clear from the transcript of the meeting if he was trying to be funny. The city's response, it turns out, took much longer than a day -- five months longer.

During that time Malie was not contacted by the city. Its only acknowledgment of her existence, she claims, were her paychecks, which total $56,181 a year. Malie had already been on paid leave for three months, so the next five months would add up to the equivalent of $40,000 worth of taxpayer-bankrolled vacation pay. But the leave, for Malie, was no vacation. She didn't know whether she'd ever get her job back, and during the leave her long-time boyfriend died of Hodgkin's lymphoma. "It was not a fun time," she recalls, "but it did give me time to be with him."

Finally on Friday, July 9, Witschen rang Malie with news: She was to report back to work on Monday morning. He also told her a letter of reprimand would be placed in her personnel file.

But in attempting to saddle Malie with blame for the mismanaged funds, the city did not count on one possibility: that the soft-spoken, 50-year-old bureaucrat would continue to fight back. Malie returned to work, but she steadfastly contends that she did nothing wrong, that she was unfairly required to work the equivalent of two jobs for a year and a half, and that the city audit is seriously flawed. Among the flaws: Malie (who is not mentioned by name in the 18-page audit) was never questioned by Love about the Sunshine funds. So getting her job back is not enough. Malie wants the letter of reprimand removed from her file, corrections made to the city audit, and reimbursement for the fees she had to pay a lawyer to assist in her defense.

"I'm not asking the city to do anything but fix what they did," she says. "They've been very careful to keep my name out of it, but it doesn't matter. It's a small town. Everyone knows I was in charge of the program."

For that same reason, Malie shares at least some of the blame for allowing Sunshine Health Center to squander more than $1 million in government funds. But she is not alone. Since the HOPWA program began, county and city officials have allowed the program to falter, and at the root of the most egregious problems is the Sunshine organization itself. Even after several investigations and a brush with financial death, the 35-year-old nonprofit group continues to operate a health clinic in Pompano Beach. It is also under investigation once again -- this time for Medicaid fraud.

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Paul Demko
Contact: Paul Demko