Near-insolvency forces ProCAP board to file for receivershipDecember 14th, 2011 at 9:40 am by Ted Nesi under Nesi's Notes, On the Main Site
Update: All the newest details here.
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – The Providence Community Action Program’s board of directors voted to file for receivership, the state-law equivalent of bankruptcy, at an emergency meeting Wednesday morning.
An attorney for the taxpayer-funded nonprofit will seek to appear before a Superior Court judge on Wednesday to seek approval for the move, which would put ProCAP in the hands of a court-appointed receiver, spokesman Bill Fischer said.
The board voted 10-0 “to seek the protection of the courts through receivership” as the agency faced a severe cash shortage, Fischer said. ProCAP’s board has 15 members in total, five of whom are appointed by the mayor.
The case is set to go before Superior Court Judge Michael Silverstein on Wednesday morning.
Fischer said a swift resolution to ProCAP’s financial woes through receivership could help the agency deliver heating subsidies as winter arrives. The agency’s new management has discussed its plans with state and local officials, he said.
Prior management was taking weatherization money and using it to cover payroll as its cash got tight, according to Fischer. “The staff levels are too high,” he said.
ProCAP, one of eight community action programs in Rhode Island, first made headlines in October when WPRI.com revealed growing concerns about its financial practices. City Council President Michael Solomon, the agency’s board chairman, downplayed the problems at the time but said he’d ordered an independent audit.
On Nov. 15, Providence Mayor Angel Taveras replaced three ProCAP board members after the audit’s initial findings revealed what he described as “staggering mismanagement” at the agency. The state has threatened to withhold millions in funding from ProCAP, which Solomon says jeopardizes its survival.
The agency’s payroll has dropped from 120 employees last year to 58 as of early this month, according to Fischer. Its longtime executive director, Frank Corbishley, was suspended without pay by the board in November. He was replaced on an interim basis by Frank Shea, the Olneyville Housing Corporation’s executive director.
ProCAP was founded in 1964 and provides low-income city residents with social services such as heating-oil subsidies and housing assistance. The agency got 96% of its $16.4 million in revenue from taxpayers in 2009-10, according to its most recent tax return.
More coverage of the Providence Community Action Program scandal on WPRI.com:
- ProCAP gave deal on home to exec Corbishley’s ally Vileno (Dec. 6)
- Troubled ProCAP’s spending exploded after Obama stimulus (Dec. 1)
- Cicilline dismisses Loughlin’s call for probe of city finances (Nov. 28)
- Poor-people elections and more ProCAP board mysteries (Nov. 23)
- Mayor Taveras replaces Narducci, two more at ProCAP (Nov. 15)
- Nonprofit tied to Providence’s political leaders probed (Oct. 24)