In an audit of the North Shore Child & Family Guidance Center, Nassau County Comptroller Howard Weitzman claims to have uncovered "fraud, theft and lack of oversight" at the nonprofit children's mental health agency that resulted in a loss of nearly $71,000.

The center's executive director and CEO Andrew Malekoff, however, said the fraud and theft were uncovered internally and not as a result of the comptroller's audit, which covered periods January 2003 through June 2005 and was carried out through October 2007. Malekoff said the manner in which Weitzman presented the audit was "outrageous, misleading and, perhaps most all, could be damaging to the half-century-old social service agency.

"We take the Nassau County comptroller's report very seriously, but the ... report was overblown, inaccurate and unfair to an organization with a spectacular 50-year record of service to children and families in Nassau County," Malekoff, who was appointed to the agency's helm in January 2007, said. "The headline of Weitzman's press release stated that the comptroller's office 'uncovered fraud and theft.' That is not the case. The way [the audit release] was written and presented is outrageous."

The comptroller, in a press release on the audit, states that employees of Roslyn-based North Shore Child & Family Guidance Center, which also operates centers in Manhasset and Westbury, worked in an environment of "no oversight, no review by management and sloppy bookkeeping" that led to thefts by two former employees. "It was the perfect storm for fraud," said the comptroller, who also said that that crimes committed by the employees were "never reported to the appropriate authorities."

"While these agencies may be good at delivering services to those in need, they need to better protect taxpayer dollars and understand their obligation with respect to reporting illegal acts," said Weitzman, adding that the failure to report theft and fraud was similar to what occurred in the Roslyn School District.

According to Malekoff, the thefts the comptroller refers to were uncovered and addressed by the agency prior to the audit. He also told Anton Community Newspapers that proper legal action was immediately taken. "We ourselves uncovered it and took the steps to bring these people to justice," Malekoff said, adding that former payroll clerk Annette Rahman and former accounting support specialist Sheila James, both of Queens, stole $70,825 in a payroll scheme that occurred in late 2003 and were fired in January and February 2004, respectively. Rahman pleaded guilty and served five months probation. James went to trial, served jail time and was put on probation.

For Malekoff, who has worked at North Shore Child & Family Guidance since 1977, mentioning the Roslyn school scandal in the same sentence as the guidance center is a "gross misrepresentation" of the agency. "There is no comparison between the two," he said, adding that in the case of the agency, "there was a major theft and fraud during an atypical time. Through our own controls we were able to detect this fraud and theft and bring these individuals to justice. Nothing has happened prior or since."

Additionally, the stolen money was recovered by the agency's insurance as well as through restitution, resulting in no financial loss or affect on programs and services, a factor, said Malekoff, the comptroller fails to mention. "The comptroller, in his report, never makes it clear that the money was recovered. By doing that, he takes the truth out."

During a press conference last Thursday regarding the audit, Weitzman said he is implementing stricter financial controls to prevent internal fraud and theft from reoccurring at the guidance center and at other social service agencies throughout the county. In 2008, agencies will have the option of completing an eight-page questionnaire signed by both the CEO and board chair. In 2009, the questionnaire will be mandatory.

"I believe these new financial control measures, with the cooperation of the not-for-profit community, will compel these agencies to act as good stewards of public funds," said the comptroller. "These controls will go a long way in bringing improprieties and other misuse of taxpayer funds to light."

Malekoff said that the agency, prior to the issuing of the audit report and on its own volition, "instituted tighter controls and sought the counsel of outside experts to ensure that this is never repeated."

The comptroller also reported that his auditing team uncovered that, in addition to the nearly $71,000, some $12,000 in documented deposits to the agency never made it to the bank. "The missing deposits occurred during the same time period as the frauds, but were never investigated or recovered and were ultimately written off," said Weitzman.

While the agency takes any monetary loss seriously, Malekoff said the $12,000 should be put into the proper context when dealing with a $9 million budget. "While we do take it seriously, it has to be put in the proper context. No one likes to take write-offs, but they are an inevitable part of running an organization," Malekoff said, adding that the guidance center has been investigating the missing funds.

Currently, North Shore Child and Family Guidance Center receives about 50 percent of funding from the government in the form of state, county and local grants; a little more than 12 percent comes from private donors; and about 36 percent is raised through service/program fees.

The comptroller also charges that the agency failed to conduct employee background checks, therefore creating an unsafe environment for the children it serves. Weitzman said that seven of the center's employees who worked directly with children did not undergo state-mandated background checks. "Putting children at risk with improper screening of employees, along with the lack of financial controls uncovered at the center, speaks volumes about the dire need for new rules and procedures," said the comptroller.

According to Malekoff, the comptroller's allegations are misleading and may lead others to believe that background checks were not conducted on any of the agency's 140 employees when, in actuality, it was five. "To imply that employees working with children never received background checks leaves one to draw the conclusion that no one had. That is not the case. In actuality, 135 had been checked [and] all subsequent background checks found unblemished records," he said.

Malekoff said that the manner in which Weitzman presented the audit "sullies the representation of the organization" and has the "potential to negatively impact the families and children who have benefited from the exemplary services the center has provided for over a half-century."

"We subscribe to the highest standards of ethics and honesty," said the executive director. "The children and families we serve are our most precious asset."