Former employees accuse Raleigh group that helps the homeless of mismanaging money | News & Observer

All five employees have recently quit their jobs at an organization that gained national attention four years ago for its role in helping change the way homeless people are served in Raleigh.

At least two of the employees have accused the leaders of Love Wins Community Engagement Center of mismanaging money.

The Raleigh Police Department started investigating Love Wins Ministries for suspected fraud on April 20, according to an incident report. Laura Foley, former director of operations for the group, filed the report.

Foley and four other staff members of the Love Wins Community Engagement Center quit their jobs in the last two weeks. Foley and Michael Raburn, former director of communications for the center, say leadership misused money, withheld information about the group’s nonprofit status and did not pay employee taxes despite withholding the money from paychecks.

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The center opened last year on North Bloodworth Street near downtown to provide food, clothing and toiletries for about 75 people in need every week. Homeless people can sleep at the center.

Foley and Raburn posted a video to the organization’s Facebook page April 18 detailing their concerns. The video was later removed.

“The Love Wins Community Engagement Center has not been ethical stewards of the monetary donations it has received,” Foley said in the video.

In a statement posted online, the board of directors of Love Wins Community Engagement Center called some of the allegations “false and harmful to all involved.” Hugh Hollowell, executive director of the group, declined to comment. The board’s other three members have not returned requests for comment.

“All money received has been tracked, and distributed, under the guidance of the Boards of Directors of Love Wins Ministries and Love Wins Community Engagement Center,” the board wrote in the statement. “Suggestions otherwise are simply not true.”

Love Wins Ministries, led by Hollowell, became a nonprofit in 2010, a status that allows organizations to become exempt from some taxes. But the Internal Revenue Service revoked the status in 2013 because the group had not filed the necessary paperwork.

Love Wins Community Engagement Center is a separate organization, but the groups are linked financially. They depend on donations, which are tax-deductible.

Foley said employees were instructed to say the Love Wins Community Engagement Center was expecting to get 501(c)(3) nonprofit status at any time “so that people would feel comfortable to go ahead and donate.”

They also said employees’ taxes were taken out of their paychecks, but the money was never paid to the government. They said they received emails from the IRS warning them that taxes had not been paid.

The board said in the statement that some employees’ tax withholdings had not been paid in the past but that the 2016 taxes had been paid and payments for the first quarter of 2017 would be paid by the end of April.

A former staff member who oversaw payroll and was responsible for handling tax withholdings “was not a good fit for the role,” the board said.

“Going forward, Hugh will personally ensure that these remittances are made on time. Sometimes, when you trust people, they let you down. That’s what happened here,” the board said. “Thankfully, this was a simple fix.”

The board also said Hollowell had “not acted unethically or enriched himself personally through his work at Love Wins.”

Laura Hourigan, a spokeswoman for Raleigh police, said she could not comment on the case because the investigation is ongoing.

‘Biscuitgate’

Love Wins Ministries gained national attention in 2013 when the organization and other charities said they were threatened with arrest for handing out food to the homeless in Moore Square.

The issue, dubbed “Biscuitgate,” sparked discussions about how and where to feed Raleigh’s homeless. Hollowell was outspoken about the need to care for the city’s less fortunate, fielding calls from national media outlets.

That year, he told The News & Observer that Love Wins Ministries had an annual budget of $140,000.

In a blog posted in December, Hollowell praised the Raleigh City Council for approving the purchase of a building on South Wilmington Street to house the Oak City Outreach Center, which will allow people to take showers, do laundry and eat meals.

“This is a victory for those who are experiencing homelessness, making it easier for them to have access to food and services and a place to be,” Hollowell wrote.