Hmong American Partnership faces questions about grant requirements, delayed 401(k) contributions

Jan. 31--When Natalie Bontrager joined Hmong American Partnership as an interim farming coordinator in 2015, she inherited a program in disarray.

The Minnesota Department of Agriculture had authorized HAP's Arcade Street farmers market to accept federal food stamps the year before, and the state advertised the market broadly.

"We found out that WIC (food assistance participants) would show up to the farmers market that HAP was supposed to be hosting, and there would be no farmers and no produce, and no one from HAP to explain what was going on," Bontrager said.

Margaret Hart, a spokeswoman for the Department of Agriculture, confirmed earlier this week that the department sent "secret shoppers" to visit scheduled farmers markets twice in 2014 and twice in 2015, which is customary. They found no vendors present.

The farmers market program soon ended, but former employees say that wasn't the only time one of the nonprofit's grant-funded or state-backed programs failed to live up to requirements.

Former employees say budget challenges in recent years have left the nonprofit scrambling to find new funding sources to plug financial holes. Management has appeared overwhelmed with the bevy of programs that HAP has absorbed to the point of failing to provide services laid out in grant descriptions.

That's led to internal concern over staff turnover and financial controls, including the administration of retirement funds. Now, HAP is scrambling to appease federal regulators.

LATE 401(k) TRANSFERS FOR EMPLOYEES

On Jan. 25, the St. Paul-based nonprofit -- the largest Hmong-American social services organization in the nation -- apologized to employees for persistent mismanagement of their retirement accounts, the latest indication of administrative troubles within the agency.

HAP, in the unsigned letter, informed current and former employees that on 27 occasions from 2016 through 2018, money was taken out of their paychecks but transferred to 401(k) retirement accounts anywhere from 2 to 70 days late. In one instance, funds were deposited one year and three months later than expected.

HAP President and CEO Bao Vang said the letter, drafted by legal counsel, went out to 42 current and former workers without her knowledge. At the time she was out of the country planning an international conference, and she was not familiar with all the details.

Vang noted, however, that the overall financial impact of the delayed deposits was "very, very small," and HAP has deposited a total of $228 into the accounts to make up for lost interest earnings.

"It's not something that is unique to HAP," said Vang, in a wide-ranging interview on Wednesday. "It happens all the time with employers, which is why the Department of Labor set up guidelines for voluntary corrective action."

Vang said the problems were discovered through an audit and there have been no issues since new internal controls -- mainly, a second set of eyes on the accounts -- were set up after 2018.

"I know that the money is 'small' to them, if that is the correct amount," said Brenda Anfinson, who worked for HAP as an English as a Second Language instructor. "It's the principle of the thing. They didn't follow the law, didn't establish internal procedures, didn't remedy the problem immediately, didn't communicate the problem with staff, and didn't take care of their workers in a respectful way."

The first time Anfinson noticed a problem was in April 2017. Her 401(k) statement indicated that HAP had not made a deposit within the previous three months. Her pay stubs, however, showed that HAP withheld retirement contributions from every paycheck.

Anfinson complained to HAP's human resources department by email, but never received what she considers official confirmation.

The problem, which repeated itself consistently over two years, appears to be both widespread and symptomatic of larger management struggles within HAP, which provides job training, homeownership counseling and more than 40 additional social services to the Twin Cities Hmong community.

According to HAP, employees have until Feb. 21 -- which is roughly 30 days from the issuance of HAP's letter -- to share comments or concerns with the U.S. Department of Labor's regional office in Kansas City, Mo.

AN EMPLOYEE LETTER-WRITING CAMPAIGN

Vang said that HAP filed an application with the U.S. Department of Labor's Voluntary Fiduciary Correction Program, which often allows delinquent administrators of retirement plans relief from large civil penalties and unpaid excise taxes if they voluntarily come forward.

A spokesman for the U.S. Department of Labor's Office of Public Affairs in Chicago said the department typically does not confirm or deny the existence of investigations until they are closed.

Unsatisfied, Anfinson and at least six other previous employees interviewed by the Pioneer Press have begun a petition and letter-writing campaign to the U.S. Department of Labor.

"I'm not out any money right now, but if there's a punishment coming, I think that they should face it," Anfinson said. "They knew what they were doing was not right."

They also said a turnover problem at the nonprofit extended to top managers and members of the governing board. In 2018, at least four ranking members of the executive board all resigned within days of each other.

"I think the 401(k) situation is really indicative of how business is conducted there and how employees are treated," said Kris Klas, an English as a Second Language instructor who taught at HAP for nearly nine years before resigning a year ago. "I have a hard time believing that only came out to $228."

'CIVICS GRANTS'

Alex Riley, who was employed by HAP for 10 months from 2016 to 2017, said administrators had at least four adult education instructors sign work certifications showing they had spent 30 percent of their work hours on a job preparation program funded by the Minnesota Department of Education.

In reality, only one or two staff participated in the "Civics Grant." Riley eventually alerted the Department of Education that about 50 students were involved in the program, roughly half as many as HAP had initially led them to believe, and the program soon ended.

"As the education manager, I knew very well that my staff were not working on some of the grants they were asked to sign for," Riley said. "Just another example of less than forthright financial practices. As staff we never felt that leadership was transparent with finances."

Vang, the HAP CEO, said the funding for the Civics Grant was competitive. "Once it ends, you have to resubmit and re-compete for it," she said.

Riley said she also was called upon to teach a commercial driver's license class after an instructor quit, one of a number of times that teachers were moved around between programs to keep grant reporting requirements from lagging.

"I do not have a CDL or experience bus driving," Riley said.

Klas said she was also tapped to teach the commercial driver's license class. "But I had never driven a truck or gotten a CDL," she said.

A FARMERS MARKET WITH NO VENDORS

Bontrager, who served as HAP's farming program coordinator on an interim contract basis for four months in early 2015, said she and her supervisor had tough conversations with the Minnesota Department of Agriculture, which had begun advertising HAP's farmers markets at its Arcade Street location the year before.

While HAP received no funding from the department for the markets, the nonprofit participated in federal Women, Infants, Children and Senior Farmers Market Nutrition programs, which the department administers.

"I was trying to get that program moving forward again, and the Department of Ag was like 'you guys really screwed this up,' and was hesitant to let that program continue," Bontrager said.

Vang, the HAP CEO, said she had no knowledge of any problems with the farmers markets. "How come we're not aware of that, if they sent out secret shoppers? We've never had any call from (the Minnesota Department of Agriculture)."

Mai Moua, a former chief operating officer for HAP who now serves as a contracted business consultant, said the farmers market program ended when its grant ended.

"We get two to three site visits a month from government and foundation funders," Moua said, "and I've never heard of funders saying, 'Hey, why can't I talk to the program manager?'"

Other problems abounded, Bontrager said. A sustainable farming program required HAP to pay churches for the land participants used to grow vegetables. Bontrager recalled being told "our funders 'hadn't paid us yet' so we weren't able to pay the churches. I remember that being a big deal at the time."

A COMPLICATED FINANCIAL PICTURE

Founded in 1990, HAP is led by a board of up to 10 members. Vang received a base salary of $243,000 in 2017, according to the latest tax forms publicly available from GuideStar.org, a database of nonprofit financial information.

In 2017, HAP received $7.1 million in grants and contributions, on top of roughly $4.5 million in program revenue. The total revenue -- $11.4 million -- failed to catch up to expenses of $12.3 million, for a net loss of nearly $919,000. In 2016, HAP's total reported loss was $77,500.

Vang on Thursday said the Internal Revenue Service 990 forms from 2016 and 2017 include expenses but not revenues incurred by Hmong National Development, a HAP subsidiary that hosts an international conference every other year for the Hmong community.

HND revenues were listed in a supplemental IRS form, she said, as was revenue from transferring ownership of two Hmong charter schools. Those revenues helped boost HAP to a $696,000 surplus in 2017, according to materials provided by HAP's finance director.

In 2015, HAP reported that revenue surpassed expenses by nearly $95,000. In 2014, HAP reported positive net earnings of $104,000.

Vang emphasized that when she joined HAP in 2007, there were 22 Hmong-American organizations that provided refugee social services in Minnesota.

Now only HAP remains, and the nonprofit finds itself turning down invitations from potential funders to launch and run new programs.

While the Hmong community's Twin Cities roots date back more than 40 years, HAP also provides "wrap-around" support services -- from language instruction and emergency housing assistance to small business loans -- to 18 other ethnic groups, from Somali to Karen refugees.

"We are it," Vang said. "We are it for Hmong refugees and emerging new communities."

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