The Volunteers of America Southwest building in San Diego / Photo by Adriana Heldiz

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This post has been updated.

Volunteers of America Southwest, a prominent San Diego charity dedicated to helping vulnerable people, is under criminal investigation by the Office of the Inspector General.

The investigation follows allegations that the charity’s managers engaged in mismanagement, misuse of public funds, conflicts of interest and potential fraud, revealed by Voice of San Diego last year.  

After the allegations surfaced, VA officials promised a forensic criminal audit into the charity. I sent a Freedom of Information Act request to obtain the audit, but my request was partially denied. I received no forensic audit – and officials did not confirm whether one had ever been performed. I’ve appealed the decision.

“It should be noted that there is an active Office of Inspector General (OIG) criminal review on this matter and there is a concern we have with releasing any report while the case is active,” wrote Gregorio Kishketon, a former FOIA officer who has since transferred to a different department.

A spokeswoman for Volunteers of America initially confirmed the investigation.

“VOASW has been cooperating and all parties are working diligently to resolve this,” wrote Vicki Bendure, a spokeswoman for Volunteers of America, in response to a specific question about an investigation by the Office of Inspector General.

After this story published, Bendure insisted she was talking about a separate review by San Diego County officials. Volunteers of America, she texted, “has no knowledge” of an investigation by federal government officials.

In 2018, two employees within Volunteers of America Southwest’s San Diego office noticed suspicious payments from the nonprofit to three different companies. They discovered the companies were owned by two women who worked for Volunteers of America Southwest, and were also the sisters-in-law of the charity’s chief financial officer.

The companies billed for a wide array of goods and services from skin cleanser to sofas and gym weights. It’s unclear any of those goods or services were ever provided – and some products sold for more than their market rate.

The two whistleblowers raised their concerns to the nonprofit’s Chief Executive Officer Gerald McFadden repeatedly, they said. But no one stopped the alleged double-dealing – and ultimately both whistleblowers lost their jobs.

Volunteers of America Southwest was previously one of San Diego’s largest charities serving marginalized populations. It has run several treatment centers for those struggling with mental illness and addiction, as well veterans and those experiencing homelessness.

One of the largest centers, a 120-bed addiction treatment facility in National City, is now closed.

After the revelations of potential fraud, the VA suspended $2 million in grant payments to Volunteers of America Southwest. McFadden, the charity’s president and CEO, was forced to resign and its volunteer board of directors was disbanded.

Volunteers of America Southwest, a local chapter of a national organization, was subsumed by Volunteers of America’s national office.

I asked a VA spokesman if any forensic audit was ever performed, but he did not respond. The spokesman also did not answer questions about how much money, if any, Volunteers of America Southwest still receives from the VA.

San Diego County officials also audited Volunteers of America Southwest. Auditors found that at least $274,000 went to the companies controlled by the chief financial officer’s sisters-in-law. But they noted that more than $1 million in spending by the nonprofit was either not allowed or did not have proper documentation to back it up.

Officials demanded Volunteers of America Southwest refund the county $6.5 million in payments made to the nonprofit between 2018 and 2020. The county no longer provides any funding to Volunteers of America Southwest.

Volunteers of America Southwest had previously been a large provider of mental health beds for San Diego County.

Officials for the charity did not respond to questions about the current breadth of their operation and how much funding they lost after the alleged fraud was exposed.

McFadden, the former CEO, has sued the charity. He alleges that he has been denied free lifetime health insurance that was promised to him as part of his employment.

I asked Bendure, the spokeswoman, to connect me with Barbara Banaszynki, the new CEO, a woman who was sent from the corporate office to take over after last year’s debacle. I wanted to ask Banaszynki about the state of the organization today and how it is serving San Diego’s most vulnerable citizens. Bendure did not make her available.

Will Huntsberry

Will Huntsberry is a senior investigative reporter at Voice of San Diego.

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1 Comment

  1. Keep after ’em. The somnolent U-T needs your guidance.

    Perhaps nothing was done at all to the miscreants. Indeed, that’s my suspicion.  Any criminal charges? If not, WHY not?

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