Walden House accused of fiscal mismanagement

San Francisco Chronicle, Mar. 25, 2003
http://www.sfgate.com/
Phillip Matier, Andrew Ross

San Francisco — The apparent suicide of Walden House CEO Alfonso Acampora came as his leadership at the nationally renowned drug and alcohol rehabilitation program was under threat from a state attorney general’s investigation into alleged financial irregularities.

The criminal probe, which has been under way for six months, was prompted by a whistleblower complaint from a former Walden House board member who has alleged widespread fiscal mismanagement at the nonprofit. The complaint included allegations that Acampora padded the payroll with family members, doled out business to members of the Walden House board and billed the agency for his own questionable and sometimes lavish perks.

State Attorney General Bill Lockyer has sent a 10-member team of accountants and lawyers to try to get to the bottom of Walden House’s finances.

“It’s a matter of looking at thousands and thousands of pages of documents, ” said one insider at the attorney general’s office.

Acampora, whose career at Walden House dated back some 30 years, denied any wrongdoing during a interview with us three weeks ago. Just days afterward, Acampora assembled 70 staffers to alert them of our possible story and — in what may have been a prelude of things to come — tearfully told them, according to one attendee, “that he would sooner die than turn over Walden House to anybody else.”

As he left the stage, the attendee said, the sound system in the Walden House auditorium erupted with the Sister Sledge tune “We Are Family.”

A DISSIDENT GROUP

But if there was a family atmosphere at Walden, sources tell us it was fast being shattered by employee complaints of low pay and allegations by a dissident group from the Walden House Foundation, an independent auxiliary that was formed a couple of years ago to help bolster the nonprofit’s $54 million annual budget.

In a pair of confidential letters to Lockyer — first in September and in a detailed follow-up in February — former foundation and board member Kimberlie Cerrone outlined “grave concerns” about Walden House management.

Among them:

– That Acampora billed Walden House for perks including first-class airfare and stays in four-star hotels.

– That Acampora, who at one time weighed 425 pounds, had spent Walden House money for “multiple two- or three-week trips” to a North Carolina fat farm.

– That Acampora doled out Walden House business to board members. For instance, Pierce Welch, the board’s longtime president and owner of a small firm called CPW Enterprises, was paid to help put on an international treatment conference hosted by Walden House in September 2001 — an event that proved to be a financial bust for the organization.

– That Acampora — who records show was paid a salary of $188,123, plus another $150,073 in benefits and deferred compensation — had padded the Walden House payroll with family members. They included his former wife and daughter, son, son-in-law and other relatives.

– And that Welch’s brother-in-law is one of Walden House’s highest-paid executives.

“In addition,” Cerrone wrote to the attorney general, “several relatives of various insiders are receiving, or have received, services and housing from Walden House.”

Cerrone also alleged that Walden House’s finances had deteriorated to the point that it had to borrow $350,000 from the foundation to make payroll in June, and shortly thereafter secured a $1 million loan (at 10 percent interest) from board Vice President Nello Santacroce.

Cerrone said she resigned from the Walden House board two years ago after attending a party at Acampora’s new home in the Oakland hills, where she saw “expensive stone facing on his home and a big-screen TV in his living room.”

Cerrone said she had been told by several Walden House employees and others that the flagstone had been donated to Walden House for one of its facilities and that the TV had been donated for an adolescent facility run by the agency.

“When I inquired about it, Pierce Welch and Alfonso Acampora both told me (separately) that Pierce had ‘on behalf of the board, approved Al taking it,’ ” Cerrone wrote.

Walden House representatives said Welch was not available for comment Monday, but in an interview with us in February from the office of his newly hired public relations agent, Rick Rice, Acampora denied having pilfered any of the agency’s property. He also refuted some, but not all, of Cerrone’s other allegations.

ANSWERING ALLEGATIONS

For example, he acknowledged that a number of his relatives either were on or had been on the Walden House payroll, and that Walden House had paid for four trips he took to the Duke University-affiliated Structures House to participate in a weight-reduction program. (However, Rice told us this week that Walden records showed Cerrone had voted to approve at least one of those trips — and that her psychiatrist husband, Dr. Kim Norman, wrote a doctor’s note to the board urging it.)

Acampora also acknowledged the $1 million bridge loan from board member Santacroce, but said it was being paid back in $80,000 monthly installments.

As for Welch’s involvement in a treatment conference sponsored by Walden House, Acampora and Rice — after checking Walden House records — said he had been paid $65,560 to supply gifts to conference participants, not the $300,000 Cerrone alleged. A Walden House spokeswoman said Monday that Welch had won the contract through a competitive bid.

The conference did, nonetheless, wind up $265,000 in the red.

Overall, Acampora had called Cerrone’s allegations “untrue” and “outrageous” and insisted Walden House was solvent.

“Walden House is not planning to sell any of its real estate, and has not engaged in financial mismanagement or wrongdoing,” Acampora said in a letter to the attorney general last month.

He also blamed Cerrone for all the troubles.

“Ms. Cerrone has made no secret of either her very personal campaign against certain Walden House executives or her desire to drive Walden House into either bankruptcy or an embarrassing public crisis,” he said.

Whatever the case, soon after we began looking into the accusations, Walden House brought in an attorney from San Francisco’s high-powered Pillsbury Winthrop law firm to try to get a handle on the situation.

Within days, sources say, the Pillsbury lawyer fired off a memo to Walden staff reminding them that everyone — including Acampora — was prohibited from using company credit cards for personal expenses and booking Walden House- related travel independently.

Meanwhile, city officials, who last year alone provided Walden House with $9.6 million in contracts for substance abuse programs, are also taking a closer look at the organization’s finances.

A CITY AUDIT

In recent weeks, following a city audit, the San Francisco Health Commission put Walden House on notice that it expected better financial accountability — even demanding the agency’s bank statements to support its solvency claims.

The nonprofit responded with a 93-page stack of documents that, among other things, outlined “corrective actions” needed to fix its finances, including a proposal for a $10 million bond refinancing.

Incidentally, shortly after our interview with Acampora, we received an unsolicited letter from one of his supporters, Berkeley lawyer William Campisi Jr., challenging some of our questions and calling us “envious people’s gutter snipes.”

“Al Acampora, I don’t think, ever graduated from high school,” Campisi wrote. “He spent five years in Leavenworth because of a drug addiction. By the time he was 30 years old he had been addicted to heroin for 15 years. From a such disastrous first 30 years, he has wrought a miracle, not only in his own life, but in the lives of thousands of people.”

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