Misuse of Funds by NAAAED Raises Accountability Concerns

News Summary

An audit by the Louisiana Legislative Auditor revealed that the National Association for African American Economic Development misused nearly $200,000 intended for workforce development. The funds were improperly redirected to support bingo activities without necessary permissions. Issues with documentation and tax compliance were also highlighted, prompting recommendations for legal consultation and financial reforms. The findings have been referred to prosecutors for further evaluation, raising serious implications for nonprofit accountability.

New Orleans, Louisiana – An audit by the Louisiana Legislative Auditor’s Office has revealed that the National Association for African American Economic Development (NAAAED) misused nearly $200,000 in state funds originally allocated for workforce development initiatives, leading to significant concerns about financial accountability and legal compliance.

The NAAAED received $400,000 through a Cooperative Endeavor Agreement (CEA) in March 2024, with designated purposes including occupational training, job placement, and eviction prevention within House District 99, located in New Orleans East. However, the audit found that approximately $199,568 of the funding was improperly redirected to support bingo and other charitable gaming activities, which were conducted without the necessary permissions.

The organization initiated bingo events in May and continued until at least November 2024, incurring considerable operational costs such as renting space for the events—costing up to $1,000 per day—making necessary electrical upgrades, and establishing multiple bank accounts specific to gaming operations.

NAAAED’s management distributed around $185,000 to six subrecipients, which included churches and other community organizations. However, the auditing team found that the organization did not adequately document the services rendered by these subrecipients. A notable example involved one subrecipient that received $115,000 to create a movie and offer job training, with auditors finding no concrete evidence of any training being conducted.

The executives of NAAAED—including CEO Myron Lee and board member Ernest Johnson—claimed that the bingo events were intended to support workforce development goals. Nevertheless, they admitted to low attendance and insufficient revenue generated from these activities. Additionally, it was indicated that the organization failed to submit any required quarterly progress or cost reports by March 2025, one year following the receipt of the funds. At that point, NAAAED’s bank accounts were reported to have dwindled to just $938.

The audit has also disclosed issues regarding tax compliance, revealing that NAAAED did not issue required 1099 forms to at least 29 individuals who were compensated over $600 in 2024. Furthermore, the nonprofit neglected to file necessary charitable gaming reports for the latter half of the same year.

In light of the findings, the Legislative Auditor’s Office has recommended that NAAAED consult legal advisors to discuss the repayment of the misappropriated funds and to improve internal financial controls. Following the audit, CEO Myron Lee announced intentions to reform financial practices, including plans to hire a certified public accountant (CPA) to address the organization’s fiscal management issues.

The situation has led to the referral of the audit findings to prosecutors in both Orleans and East Baton Rouge parishes for further evaluation and potential legal action.

This development raises serious implications for nonprofit accountability and the management of public funds meant for community upliftment initiatives. As investigations continue, stakeholders await the organization’s response to enhance its governance and restore trust within the community.

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