Laurel officials remain concerned about the state of the Laurel Boys and Girls Club following an intensive special work session Thursday with the club’s current president.
The meeting, held at the Laurel Municipal Center, was called by the council to address allegations of misconduct regarding the operations of the club, and specifically focused on the club’s relationship with the Laurel Prep Academy – an affiliated institution started in 2013 and registered within the state as a school that operates a basketball program out of the club.
A report aired by NBC 4 Washington led Laurel Mayor Craig Moe to send a letter to Maryland Comptroller Peter Franchot requesting the club and the academy be investigated for: “alleged misuse of club funds, corruption, tax fraud, questionable practices, Laurel zoning and code violations, and inadequate building maintenance to include public restrooms.”
The comptroller’s office has not yet responded to the request, according to an office spokesman, but that hasn’t stopped city officials from seeking their own answers.
At the work session, the five-member City Council met with club president Nancy Lilly, who took over in April for longtime president Levet Brown.
Councilman Mike Lezscz said the meeting brought “more information to the table,” but that it is clear there are some issues.
“They are operating in the red, and you can’t run a business like that,” Lezscz said of the club.
Council President Fred Smalls said he thought the meeting served its purpose, which he said was to gather information about the club from its leadership. He added that the council expects to continue to meet with club officials regularly.
“This was a step in the right direction,” Smalls said. “I think this helps set the stage for where we are going to go.”
Moe, who viewed the meeting as a spectator, said he thought it raised more questions about the club, and added that the organization is in “a deep hole.” He said the meeting did not effect the status of his request to the comptroller.
“I think there should be some kind of check and balance to see if there are any discrepancies or anything that is out of the ordinary,” Moe said of his request to the comptroller’s office. “People should be held accountable.”
This is not the first time the city has taken an interest in the club. Last year, the city formed a task force of business professionals that reviewed the club’s finances and operations and presented a series of recommendations. The report noted the club’s financial difficulties, and identified the 115-year-old Phelps Center, which the club owns and operates, as a drain on the club’s finances.
The meeting touched on a wide range of topics, but the council was initially focused on the relationship between the club and Laurel Prep and, specifically, if the club was improperly funding the academy.
During the meeting, Lilly maintained her stance that there has been no improper conduct between the club and the academy, of which Brown is a co-founder.
She told the council that the academy — although registered with the Maryland Department of Education as an official school until the status was withdrawn earlier this week — was not operated as a traditional school, and instead was operated as an after-school basketball program through the club.
She said club funds, some of which came from state grants, were used to fund the program – an alternative, high-school level, travel basketball team – but that, because it is a club program, it was not inappropriate.
She said she was grateful for the opportunity to come before the council and “set the record straight” regarding the NBC 4 reports broadcast last month.
“Laurel Prep Academy: looking at it as a school and not a program within the club, that's a big discrepancy,” Lilly said. “Misappropriations of funds, that never happened. ... Today was a great forum for clarification of all that.”
She reiterated several statements made in an interview with The Laurel Leader earlier this week, saying that the academy was originally intended to be operated as a traditional school by Liberty International Ministries, an Odenton-based church. Church leaders filed to have Laurel Prep recognized as a non-accredited church-exempt school by the Maryland Department of Education, but Lilly said that plans for the school “never took off,” and that it has been operated as a free, supplemental after-school program for teens enrolled in other schools.
Earlier this week, the church sent a letter to the Department of Education withdrawing the filing, making it no longer a state-recognized school.
Lilly told the council that the club did not charge a fee for the program, but paid more than $1,000 in licenses for online classes for the participants.
She also said the club funded the academy’s basketball program which, according to the academy website, includes more than 20 games in Maryland, New York, New Jersey and Pennsylvania.
The council also asked about the club’s finances and outstanding code violations. According to Lilly, the club operates at a annual deficit of nearly $156,000, which Councilman Ed Ricks said he found “shocking.”
“Does that sound like a good business decision to you?” Ricks asked Lilly about operating a nearly $13,000 deficit.
Lilly responded: “No, it’s not a viable business. No, we can not continue running that way. Yes, we need to put things in place to make it viable.”
Lilly said the finances have improved since she came on board in April. She said when she assumed the role of president the club had a water bill in excess of $30,000. Lilly said she’s been able to dwindle the debt down to $6,000, but that it is a work in progress.
“I have some outstanding bills I have not paid yet, so yeah, I do have financial problems,” she said.
Council members said they were also surprised to discover that, despite being no longer involved in club leadership, Brown continues to be the only person controlling the club's bank account.
When council members questioned why Brown retained all the financial power, Lilly said it was because the club had not gotten around to changing it since she came on board three months ago.
“The transition period for the banking piece has not occurred yet,” Lilly said.
Lilly said the club plans to transfer the bank account to the next president, who is likely to be elected by the new board of directors in the coming weeks, once he or she is elected.
At the work session, City Fire Marshal Dave Cope delivered a report on the existing conditions of the Phelps Center, the historic building that the club owns. Cope said the building, which is listed on the National Register of Historic Places, has numerous outstanding code violations, and needs major repairs.
“Every time I go there, there are problems with the building,” Cope said.
Cope said that, despite failing multiple inspections, the club continues to operate programs without obtaining necessary permits and approvals, singling out the club’s summer camp.
“This program has not been approved, but they continue to run the program,” he said.
Cope said the club has tried to fix the problems, but that they have told him they are financially hamstrung. “This all costs money,” he said.
In addition, Cope confirmed to the council that he has, on three occasions, found people living in the building’s annex. Lilly said she discovered seven people living in a building annex in May, and reported it to the city, which then evicted them. Lilly said five of the squatters were students at Laurel Prep, and that they were living there because they were homeless.
The board, which will not include Lilly, who did not run, has not yet been put in place or elected a new president and other officers.
“I think they have an opportunity with new leadership,” Moe said. “I think that's what is needed.”