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D.C. charity paid out $400,000 to rent a tent

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The mission of the D.C. Children & Youth Investment Trust Corp., the nonprofit group at the center of former D.C. Council member Harry Thomas' theft scandal, is to expand and improve services for local children, especially when they are out of school.

But in early 2009, while facing a multimillion-dollar deficit, the group decided to pay more than $400,000 to a Kentucky company to rent a giant heated tent and other equipment for RFK Stadium during the week of President Obama's swearing-in.

Among events held under the tent, which was set up on the stadium field, was a volunteer service gathering attended by incoming first lady Michelle Obama and Vice President Joseph R. Biden.

Why the trust, which is associated with after-school programs for D.C. children, would pay so much money for an inaugural event remains unclear. "The trust is looking into this matter and will respond at the appropriate time," trust spokeswoman Erica Toliver said Thursday.

With the tent rental, the trust paid more money to the Kentucky special-events company than it paid in annual rent for its own office space. What's more, most of the dozens of community groups that have received funding from the trust to provide tutoring, employment training and summer programs throughout the District have received nowhere near the $404,729 paid to the company.

In tax forms, the trust said it paid the money to SR Holdings in Lexington, Ky. State corporation papers list a company in Lexington called SR Holding Co. whose president is Gerald Lundergan, a prominent figure in Kentucky Democratic politics.

There's no mention of the inauguration in forms the trust filed with the Internal Revenue Service that disclose the payment. The IRS filing refers to compensation paid out for "tent and equipment rental," but provides no further details. Nor does the trust make note of its hefty tent and equipment rental in its annual report.

In a phone interview this week, Mr. Lundergan said his company received the money to provide a tent and flooring at RFK Stadium during the inauguration. He said the tent was used for a "bunch of activities" that week.

One well-publicized event was a service day announced by D.C. Mayor Adrian M. Fenty days before Mr. Obama's swearing-in. Under the big heated tent, RFK Stadium hosted thousands of people who lined up to assemble care packages for military troops. At the time, the D.C. government said the event was being privately sponsored.

"The crowd, inside a large tent on the field inside the stadium, turned an assembly line into an impromptu party, cheering for one another, chanting 'Obama' and singing along to music playing in the background," The Washington Times reported in 2009.

Mr. Lundergan said the hiring of his company made sense because it had a local office and worked on the presidential inaugurations of George W. Bush and Bill Clinton, among other special events throughout the Washington area.

As for why his company got paid through a nonprofit D.C.-based youth services organization, which received funding from the D.C. government, Mr. Lundergan added, "That's none of my business. I have no idea."

Mike Burns, a partner at BWB Solutions, a national consulting firm that works with nonprofit groups, said the question officials need to ask is whether allotting more than $400,000 to rent a tent was consistent with the mission of the trust.

In forms submitted to the IRS, the trust describes its mission clearly: "To increase resources and investment in the people, programs and systems that serve children, youth and their families in the District of Columbia."

"They have to figure out how this was in support of their mission, where did it come from and what did they expect to get out of it," Mr. Burns said. "The board needs to find out what happened and try to be as publicly accountable and transparent as possible.

"That's the only way that the public and grantmakers regain faith in an organization," he said.

That faith has been shaken repeatedly in recent months. This week, the trust's former executive director, Millicent D. West, resigned as head of the District's homeland security agency. She was in charge of the trust when Thomas steered city funds from the organization in a $350,000 theft scam. He is awaiting sentencing and faces 37 to 46 months in prison.

Federal prosecutors say the trust paid out $110,000 in February 2009 to fund a "youth-centered inaugural event," but the money actually went to pay for the so-called 51st State Inaugural Ball organized, in part, by Thomas in January 2009.

Prosecutors highlighted that expenditure because they said the ball was a political event, not a program to help youths, and so it was outside the scope of the trust's mission to serve D.C. children.

The Thomas case has raised sharp questions about the city's oversight of taxpayer-funded grants.

"Since a lack of sufficient, appropriate internal controls enabled the embezzlement of $353,500 in District of Columbia funds, we strongly urge the Council to immediately take steps toward restoring public trust," D.C. Auditor Yolanda Branche wrote in a memo last month to council Chairman Kwame R. Brown.

The Thomas scandal isn't the only expenditure under scrutiny. The trust also has paid out grants to entities that lacked nonprofit status or basic incorporation papers. When The Times reported on several such payments this week, trust officials declined to comment on any individual transactions.

Ms. Toliver said the organization has been "inundated with requests for information and has limited resources to respond in as timely a manner as we would like. That said, we are committed to ensuring that all information reported by the trust is reported accurately and certainly will correct any information found to be inaccurate."

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