HOUSTON (CN) – In a federal RICO complaint, a former staff attorney claims the director of the NAACP’s Houston branch misused grant money so blatantly that the office’s funding was cut off, and that the NAACP national office condoned the mismanagement by reinstating the director even after it learned she was juggling the books.
In her federal complaint, attorney Tracie Jackson claims NAACP Houston director Yolanda Smith hired her in 2010, and that her job was “entirely funded by the Basic Civil Legal Services grant provided by the Texas nonprofit organization, Texas Access to Justice Foundation.”
Smith has worked as director of the NAACP’s Houston branch for the past 11 years, despite the national office’s recommendation that she be fired in 2006 after auditing her activities, according to the complaint.
The audit found “the branch maintained inadequate controls over cash receipts, the branch failed to adhere to IRS disclosure mandates, the branch via Executive Director Smith, engaged in several related party transactions with family members, the branch via Smith misused the Association’s credit card, the branch via Smith, violated the association’s personnel procedures, the branch via Smith misclassified workers as independent contractors, the branch via Smith, misused grant funds for Branch operations, and the branch submitted erroneous budgets to grant funders,” the complaint states. “As a result of the audit, the national office recommended the termination of Smith.”
The complaint continues: “In September 2006, a committee of the Houston Branch’s Executive Committee responded to the National Office’s report, in essence disagreeing with some of the findings in the report and agreeing to admonish the actions of Executive Director Smith, but failed to terminate her employment.”
Jackson says that Smith informed her staff on June 14, 2010 “that payroll could not be met.” Jackson claims: “In a meeting, Smith informed the staff that the branch was suffering from financial difficulties and she offered to pay each employee $500 from her ‘housing construction’ fund. Defendant Smith informed the staff that all grant monies were ‘pooled’ together and used to pay the expenses of the branch and when that money was exhausted, the monies from the Freedom Fund fundraiser was [sic] used to cover branch expenses.”
Jackson says the Smith and the Houston office’s Personnel Committee decided in August 2010 that “Due to its dire financial condition, the branch would notify all grant-funded employees that their employment would terminate at the expiration of each employee’s grant, making re-application necessary.”
Jackson says she reapplied and interviewed for her job in November 2010, and was not rehired. She claims the executive committee of the NAACP’s Houston branch finally had enough of Smith and terminated her on May 26 this year “for removing the hard drive of the computer provided for her use as the executive director.”
Jackson adds that on June 20 this year, the Texas Access to Justice Foundation “suspended the final disbursements of the BCLS [undefined] and IOLTA grants, which totaled in excess of $250,000.”
“Specifically, the foundation found there were no funds to meet payroll, there were no internal financial/audit controls, there was a concealment of financial records, the branch records were not consistent with those submitted to the foundation, and the deliberate falsification of financial entries by the bookkeeper at the direction of defendant Smith,” according to the complaint.
The Houston branch’s executive committee provided the NAACP national office with the foundation’s letter outlining its grant suspension, and other information on Smith’s management, the complaint states.
But “On or about June 27, 2011, the national office reinstated defendant Smith to her position of executive director of the Houston branch,” Jackson says.
Jackson claims Smith’s management of the office constituted “a pattern of racketeering activity,” which was “known of and condoned by the NAACP National Office and the NAACP Houston Branch, making these defendants joint tortfeasors.”
Jackson seeks reinstatement, lost wages, and punitive damages for RICO violations, tortious interference with contract, emotional pain, damage to reputation, breach of fiduciary duties and negligent retention and hiring.
She is represented by Jeremy Brown with Frye & Associates.