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OIC board resigns as affiliations end

Agency report says members felt pressure from state to depart

By STEVE SCHULTZE
sschultze@journalsentinel.com

Posted: Jan. 14, 2005

The ailing Opportunities Industrialization Center of Greater Milwaukee took its first big steps to recast itself Friday after a criminal scandal, announcing that its entire board had quit and that several affiliates were being eliminated.

OIC Troubles Related Coverage Editorial: A new board, a new start? Previous Coverage Archive: Previous coverage of troubles at the Opportunities Industrialization Center of Greater Milwaukee

Two new board members also were announced: Milwaukee businessman Fred Jones; and Richard Cox, the former superintendent of the Milwaukee County House of Correction.

Recruiting people to fill the rest of the seven vacant slots on the board of the tainted agency has been difficult because of ongoing news coverage of the agency's woes, according to an OIC progress report delivered to state lawmakers Friday.

The Rev. Fred Crouther, OIC's outgoing board chairman, and the other eight OIC board members agreed to quit at a meeting Wednesday, but OIC announced their departure Friday in a statement that suggested pressure from the state was the cause.

Conversations with the officials at the state Department of Workforce Development made it clear they "desire the resignations of the OIC-GM board of directors" and felt that was necessary to protect OIC's diminished role as a Wisconsin Works contractor, the OIC statement says.

The departing board members "regret that the agency has recently faced a series of misfortunes and setbacks that have impacted its effectiveness and diverted the agency from its mission," the statement says.

The state last month trimmed OICs W-2 contract by about two-thirds, or $23 million, after a kickback scandal resulted in the conviction of former OIC President Carl Gee, further findings of improper spending of taxpayer money and poor performance in helping W-2 participants.

About $500,000 in taxpayer W-2 money from OIC was paid to former state Sen. Gary R. George, according to criminal indictments in the case. George is serving a prison term. Gee's sentencing is Jan. 25.

The agency also has lost its state contract for weatherizing low-income families' homes, which was worth nearly $11 million last year. And OIC has been rocked by two new unsettling disclosures: Its recently resigned chief financial officer spent $45,000 in OIC money for cell phones to be sent to Africa; and OIC came up short $370,000 in its weatherization program.

Accountability necessary

Bill Clingan, who oversees W-2 for Wisconsin, said state officials did not seek the resignation of OIC's board.

"That never came from us," said Clingan, administrator of the state Division of Workforce Solutions. Instead, he said, the state has pushed for quality service to W-2 clients from OIC.

Some lawmakers, however, have called for a new board at OIC. They have warned that and other steps must be taken if the firm wants to keep any state contracts. Lawmakers warned OIC officials during a hearing last month that senior management and board members with any links to the scandals should be purged from the organization.

OIC announced these changes Friday:

The resignations of Crouther, Jim Copeland, Carole Culbreath, the Rev. Clarence Robinson, James Elliott, the Rev. Michael Cousin, Carrie Banty, Linda Stewart and Douglas Brodzik. All except Stewart, a former state official, have sat on the OIC board for a decade or more.

Three of the resigning board members will stay on for six weeks to help in the transition, but those three weren't identified. Mae Bolden, an OIC senior vice president, declined to comment Friday and said Crouther, the board chairman, would have no comment.

None of the resigning board members returned phone calls Friday.

OIC affiliates Opportunities Investments Associates and the Garfield Foundation have begun the process of dissolution, which was required as part of a plea deal in federal court. The affiliates this week agreed to plead guilty to felony charges in connection with OIC payments to George and a falsified document submitted to a federal grand jury.

The Garfield Foundation, which controls $4 million in real estate, "is no longer controlled by OIC-GM," according to a letter to lawmakers. Unspecified properties will be "divested," the letter says, without elaboration.

OIC will close its investment arm and sell its holdings in a corn roasting company and Urban Developers, a development partnership with John Bowles.

Two other affiliates - Inner City Redevelopment Corp. and New Concept Self Development Center - are being spun off as independent companies.

Project Respect will be dissolved as a company but survive as an OIC program.

One affiliate not embroiled in criminal controversy - Learning Opportunities Center Inc. - will remain as OIC's sole subsidiary.

A committee of bankers from three big OIC lenders is helping OIC work out the financial details, the report says. Those lenders are M&I Bank, Legacy Bank and North Milwaukee State Bank. Outgoing OIC board member Stewart is president of North Milwaukee State Bank.

Pared-down operation

"Upon completion of all the dissolution and close-out processes, this will leave a much smaller, simpler organization," the OIC letter to lawmakers says.

Tyrone Dumas, the interim executive director, said in a brief interview Thursday this year's budget was about $18 million. The agency operated on a $65 million budget last year, according to OIC's Web site.

Dumas also has said the agency is several million dollars in the red. He couldn't be reached Friday.

State lawmakers praised OIC for the resignation of its board Friday, but some also had harsh words.

Sen. Lena Taylor (D-Milwaukee) said the board change "shows a commitment to getting back to the mission and getting rid of any appearance of the old way of doing things.

"I don't think the agency needs to disappear," Taylor said. "The good OIC has done surely outweighs the bad."

But Sen. Alberta Darling (R-River Hills) said the board resignations were too little, too late. The state should cut its losses and sever all ties with OIC, Darling said.

"I can't see how they are going to be able to pick up and meet the needs of the clients they have," she said.

State Sen. Robert Cowles (R-Green Bay) also was skeptical.

"I see this as a colossal waste of money," he said of the state's ongoing W-2 pact with OIC. The agency is expected to get about $16 million this year for operating a smaller W-2 caseload.

Cowles said Dumas needs to be empowered to fire top OIC managers linked to Gee, his predecessor.