What Happened to Alianza Dominicana? FRAUD....
The six-story building, on 166th Street and St. Nicholas Avenue, is one of the fanciest in the neighborhood.  Its glass exterior reflects the sun; inside, the walls smell new. Yet, it’s empty, desolate. Alianza Dominicana’s $30 million building sits empty two years after its construction....!!!


theuptowner.org - At the entrance, a security guard sits behind the counter, armed with a doughnut.

“Is this Alianza Dominicana?”

In Spanish: “They are not here.”

“Who isn’t?”

“Alianza. The people… They are gone. I can’t tell you.”

“I’m looking for Moisés Pérez. When are they coming back? Is Alianza closed?”

“It is… It isn’t! They will come back when they solve their problems.”

“What problems do they have?”

“I am sorry, sir. I can’t help you. You have to go.”

Alianza Domincana, it turns out, is in tatters, the subject of an investigation by the New York State Attorney General’s Office.  Its former leaders, including co-founder and CEO Moisés Pérez, allegedly mismanaged the organization’s funds, practiced self-dealing and failed to remit workers’ contributions to their pension funds, among other charges in two reports by the city’s Department of Investigation.

Alianza, founded in 1985, was a leading Dominican organization, locally and nationally.  In 2010, with a $15 million budget, it says it served 22,000 families in Washington Heights, providing alcoholism and drug treatment programs, supporting victims of domestic violence and helping elderly residents and schoolchildren with special needs.  It employed more than 350 people and was planning the construction of this building, which cost $30 million.

Two years later, Alianza has collapsed as city and state investigations, and a series of New York Post stories, led to government grants being withheld, intensifying the organization’s financial crises.  Though in recent months, public officials and local leaders and charities have discussed trying to revive it, and debated whether that’s possible, for now Allianza remains moribund.

When a New York non-profit receives a public contract entailing a considerable sum, the City’s Department of Investigation produces a report on the organization’s finances and management and passes it to the Mayor’s Office of Contracts.

In February 2010, Alianza sought more than $40,000 from the city, so the DOI produced two reports, in August that year and the following July. It considered its findings serious enough to submit to the state Attorney General.

The first report detailed what the Department of Investigations called “self-dealing.”

In January 2007, it found, Pérez and two other members of Alianza’s executive board, Walid Michelen and Nasry Michelen, “invested personal funds in a ‘loan fund’ investment created and promoted by Moorland.” Alianza had outsourced its financial operations to Moorland LLC, a company with no previous experience in running nonprofit financial operations. Alianza Board member Leving Soriano owned and operated Moorland.

The fund was created to make short-term loans to non-profits, including Alianza. According to the DOI, all three investors “understood that Alianza would be one of the entities to whom the fund would make loans.” They acknowledged, the report continues, “that this was self-dealing and/or a conflict.” The interest they made on their personal investments “was ultimately paid for with City funds to Alianza.” Pérez invested $150,000 and earned $5,878.40  from Moorland.

“DOI’s investigation has determined that prior to the return of Pérez’s $150,000 from Moorland, Alianza secured from Chase Bank a $225,000 line of credit,” for which Pérez signed all the paperwork, the report continued. “On April 19, 2007, and also with Pérez’s knowledge, Alianza transferred $222,364.81” to Moorland in repayment of the loans Moorland had made to Alianza, including the interest and fees.

That is, just a day after receiving the wire transfer from Alianza, Moorland returned Pérez the interest on his investment.

In an interview in Spanish at the Washington Heights restaurant El Presidente in mid-December, Pérez denounced these accusations as “pendejadas” (bullshit) and said he would have “made more profit putting that money in any bank” than the 3.91 percent  he earned from Moorland.

Rafael Lantigua, one of Alianza’s co-founders, was the only board member who felt lending money to Moorland and making interest was unethical, and perhaps illegal, the report states.

“The deal,” Lantigua told the Uptowner in a phone interview conducted in Spanish, “was you lend money to Moorland, Moorland lends to Alianza, and then we make interest that Alianza should make.” Alianza was experiencing major financial problems and “couldn’t pay its workers” at the time, Lantigua said, so he refused to take part and tried to convince other board members to at least consult a lawyer before proceeding with the investment scheme.

“They took me for a fool,” he said. “They said that’s how things are done in New York.”

Hearing Lantigua’s remarks made Pérez laugh. “Amnesia,” he said. “He must have amnesia.” But he did not deny that Lantigua tried to stop the Moorland investments.

The city reports also allege mismanagement.

Even the outsourcing of Alianza’s finances to Moorland appears controversial, according to the DOI. From 2001 through 2008, the years leading to Moorland’s appointment, Alianza failed several times to meet its payroll. The reports quote Pérez as saying it had “major cash flow problems.”

Looking hurt and defeated –“What else can I do to defend myself,” he wondered aloud – Pérez now attributes these problems to the City’s lack of diligence in paying Alianza’s contracts. “They owed us millions of dollars,” Perez said, though he acknowledged he has no way to document that and doesn’t remember exact amounts.

The report also quotes Pérez saying that Alianza “was disallowed certain payments and reimbursements,” which investigators described as “double billing” and attributed to incompetence.  Alianza, the DOI goes on, failed to report to the city the full scope of its problem, thus gaining lucrative contracts it didn’t deserve.

Pérez and other board members blamed those problems on the inability of Orlando Acevedo, then Alianza’s chief financial officer, to keep up with the organization’s growth and “the increased complexity of its financial operations” from 2001 on. Pérez and the rest of the board failed to take prompt action and didn’t dismiss Acevedo, long a loyal member of the organization, until 2006, the report said.

The alleged self-dealing took place a few months after Moorland succeeded Acevedo.

The DOI questioned Moorland’s suitability as a manager of Alianza’s finances. For instance, it highlights the outsourcing of some services to the Dominican Republic, including the preparation of all city invoices. Such outsourcing, done with Pérez’s approval, made it “impossible” to examine Alianza’s finances, the report said, citing “lack of records” and the difficulty of determining what was done in the Dominican Republic.

In mid-2007, when Alianza terminated its agreement with Moorland, it had spent $127,616 for its financial services. Alianza then chose to employ BTQ Financial and Fiscal Management Associates, two organizations that did have significant previous experience with non-profits. “BTQ and FMA,” the report reads, “inherited a neglected financial operation rife with problems going back many years, resulting in substantial additional costs to Alianza – and therefore the City.” In 2009 alone, for example, “BTQ’s services in connection with unraveling the financial mess cost Alianza and the City over $650,000.”

“There was a lack of managerial vision; the organization expanded too fast,” said Lantigua. Alianza’s new building, a pet project of Pérez’s, “was a great mistake and in part contributed to the abyss that the organization fell into. We went into too many fights, with the university, the city, the state,“ Lantigua said, referring to Columbia University, which previously owned the land on which Alianza’s new building stands. “It really damaged us.”

Pérez, a tall, fit man wearing a green tie with a checked shirt and a trimmed moustache, appeared personally hurt by Lantigua’s remarks. He accused him of doing “very little” for the organization during his 25 years on its executive board.

“The building was great business for Alianza,” Perez contended. “The spaces we rented out to businesses and the cultural center in it were going to pay for it.” He added that, of the building’s $30 million cost, the remaining debt is “only” about $6 million.

Pressed about the decision to employ Moorland, he said that although he “may have made some mistakes, nothing justifies the accusations made in the reports."

As Alianza’s CEO, Pérez also had to complete the yearly so-called VENDEX Vendor Questionnaire required by the city. The DOI pointed out that Pérez lied twice on these forms: In March 2010, he said neither Alianza nor any of its members had been investigated by any federal, state or local regulatory agencies, though the city investigation was  already underway.

Moreover, the DOI stated, Pérez should have mentioned the fact that his wife was on the Columbia University payroll  –she worked as a community liaison there from 2000 through 2008 – and was also an Alianza employee while Columbia had a subcontract agreement with Alianza. Pérez signed the questionnaire, stating that none of his relatives were in such a situation.

Pérez said those reports were merely bureaucratic, and that the city already knew he and Alianza were being investigated – since it was the city itself investigating. He said he didn’t see any conflict of interest, either, since everyone — including the city and Columbia –  knew of his wife’s relationship with Alianza. “

We founded the organization together,” he said, angrily, “and she worked for it from the beginning, first as a volunteer and later on payroll.”

But other problems arose. In its second report on Alianza, in July 2011, the DOI examined a complicated pension scheme Alianza launched in 2004.  The report quotes an anonymous worker explaining that the organization offered him and other employees participation in a pension plan.

Alianza would deduct $25 from their salaries, which would go into a pension fund operated by the insurance company AXA. The contribution later rose to $50. AXA sent representatives to encourage workers to sign up, and about 113 agreed to the plan.

But, the report shows, some of that money never went into AXA’s fund. Arthur Klein, the AXA employee who managed the fund, told investigators he repeatedly approached Pérez about contributions not flowing into the fund as stipulated.

Klein said he heard all sorts of “excuses,” but that Pérez promised to personally take care of the matter as early as 2004. The problem continued, however, which made Klein believe “that it was being done on purpose.”

Pérez denied telling Klein he would personally handle the issue, and during the interview with The Uptowner, attributed the missing funds to a “mistake.”

But he did not deny that the money wasn’t remitted to the pension fund, accusing the city of causing financial difficulties that forced Alianza to divert workers’ pension contributions.  That money, he said, was used for “paying the workers” and he refused further comment. “It was very little money anyway,” he said.

As of 2010, city investigators found, the difference between the money subtracted from workers’  salaries and the amount entering their pension fund was $95,007.08.

AXA did not want to comment, but it told The Uptowner that it had “fully collaborated” with an Attorney General’s investigation on Alianza. The Attorney General’s office wouldn’t comment, but other sources, including Lantigua, AXA and Rep. Charlie Rangel  confirmed there was a state investigation.

Pérez’s line of defense is clear: “If these allegations are true, and so serious,” he said, “why hasn’t anybody brought any charges against me?”

He was “forced” to leave Alianza, because if he didn’t resign,  “the city threatened with cutting funding,” he said. “They murdered Alianza. What they’ve done is a crime.” He accused the city, the Department of Investigation and the Mayor’s Office of Contract Services of “going after” him and the organization.

Although Pérez didn’t deny most of the findings in the two reports, he said they‘d been given a “twisted, intentional” misinterpretation and that Alianza sent the DOI a “correction,” which it ignored.

“They know everything about me,” he said. “My finances, my life and my family have been investigated, and they have found nothing, no corruption. I started these organization from nothing and I haven’t become richer in the three decades I ran it.”

The DOI didn’t respond to Pérez’s accusations of bias, but spokesperson Diane Struzzi said the reports “are factual and speak for themselves.”

The Attorney General’s office, which has the legal authority to charge Pérez with crimes, also refused to comment. A court order from March 2011 ruled that Pérez had to leave Alianza permanently – he had already taken a leave of absence after the 2010 report – but the state has brought no charges against him.

“You would think that if the allegations were true, there would be a series of indictments,” said Rangel. “Nobody has been charged.”

Rangel, whom Pérez once called “a father to me,” hired Pérez shortly after his resignation from Alianza to run his successful campaign against State Sen Adriano Espaillat in the July Democratic primary.

Pérez was the fifth biggest contributor to Rangel’s reelection campaign in 2011-2012, and the $34,333 he gave made him Rangel’s largest individual donor.

Rangel, in a phone interview from his Washington office, accused the New York Post, which ran a series of stories in 2010 and 2011 discussing his ties with Alianza, of “bringing down” both Pérez and Alianza for no reason.

However, told about the DOI reports that found self-dealing, mismanagement and missing pension money, Rangel paused for a moment, sounding shocked. “I have been on this for years,” he said, “and they told me there was nothing.” The city and the Attorney General’s office made it “really clear” to him, Rangel said, that there was no ongoing investigation of Alianza.

“I’ve talked with the Department of Investigation and they tell me that they referred it to the AG, and they tell me that they turned back to the city.”

To Rangel, the allegations were “very serious” and “as a result of it, the city and state ended contracts, and the organization started to fall apart.”

He asked The Uptowner to email him the DOI reports, which are public documents, and said he would call back with further responses. He has not.

The past few months have seen efforts to resuscitate Alianza . Several sources, including Rangel and Lantigua, confirmed that in October, shortly before Hurricane Sandy, city and state officials met with Dominican leaders, representatives from Catholic charities, Espaillat and Rangel to discuss reviving the organization.

The meeting went well, recalled Lantigua, who attended, but political attention soon shifted to storm recovery, and little progress has been made since.

“We agreed to meet again and revive the organization,” Lantigua said. Those present decided to present a plan to the governor and the mayor to pay Allianza’s debts – it owes former employees more than $1.5 million, Lantigua says — and renegotiate its mortgage.

“We need to bring in a new group of people who commit to working with the organization and managing its finances, a board of advisers and a new executive director,” Lantigua said. “We need people who are well known and respected at a city and state level.” Lantigua is willing to be part of that group, though he said it’s time for new people.

Rangel agrees. “What is needed is, of course, money,” he said. “But mostly leadership.”  Alianza  currently has no executive board.

“There is no infrastructure to substitute for this institution, which had very crucial programs, serving the elderly and the young,” said Lantigua. “The community can’t afford to lose it; that would be a disgrace. But I’m optimistic.  It can be saved.”

Pérez disagreed. “Alianza is dead,” he said. “They have killed it.”


Dominican Watchdog Note | Business as usual, it's a typical Dominican hit and run scam.....


Go back | Date: 20 Dec 2012
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