MENTAL HEALTH CENTER AUDITED COUNTY FINDS MILLIONS IN QUESTIONABLE CHARGES AT LOS ANGELES CLINIC.

Byline: Troy Anderson Staff Writer

A Los Angeles-based mental health center that provides services to thousands of children and adults misspent $1.4 million in taxpayer funds, including payments for the former president's 1998 Land Rover and 1993 Cadillac Allante, according to a new county audit.

Auditors also found some employees rang up charges at taxpayer expense for theater tickets, restaurant meals and $17,702 in credit card charges for trips to Las Vegas, New Orleans, Georgia, Washington, D.C., and London.

Los Angeles County auditors began their investigation of Kedren Community Mental Health Center in 1998 after allegations were made by the agency's former chief financial officer that Kedren's former president and chief executive officer had fraudulently inflated program costs and transferred mental health funds to a for-profit subsidiary company that does not provide mental health services.

``We noted serious deficiencies in Kedren's use of and accounting for mental health funds,'' auditors wrote. ``We were also able to substantiate two of the key allegations made by the former (chief financial officer).''

Officials at Kedren, which contracts with the county's Department of Mental Health to provide inpatient, outpatient and day treatment programs to mentally ill children and adults, could not be reached for comment. The center's president was said to be out of town, and others were unwilling to comment.

In 1999-2000, the agency received $16 million from the mental health department for services it provided.

Auditors identified $1.4 million in inappropriate or unallowable transfers of funds to non-mental health accounts, including $285,611 transferred from mental health accounts to Kedren's corporate accounts and $281,723 transferred to Kimsco, Kedren's for-profit biomedical supplies firm.

In addition, $490,585 in mental health funds were used to pay for corporate loans and lines of credit.

The remaining $354,768 consists of unsupported and inadequately supported payroll expenditures, vehicle and travel-related costs and a number of credit card purchases that appear to be personal in nature, auditors wrote.

Auditors identified $219,190 in unsupported and unallowable payroll costs, including $170,000 in salary paid to Kedren's former chief executive officer in 2000. The officer performed duties for both Kedren and Kimsco. However, her timecards indicated she worked exclusively for Kedren.

Auditors also identified $97,034 in unsupported vehicle costs, including $41,058 for gas, oil and vehicle repairs that auditors could not locate receipts for, and $54,276 in payments for the former president's 1998 Land Rover and 1993 Cadillac Allante, which did not include mileage logs.

``If Kedren is ultimately able to provide documentation supporting vehicle usage, the (mental health department) will need to further evaluate the reasonableness of these expenses, since both the Cadillac and Land Rover are luxury vehicles whose cost may be excessive,'' auditors wrote.

In May 1994, Kedren's medical director was given an expense account of $1,300 per month in addition to his salary. The agency could only provide documentation to support how $193 was spent. The rest of the money was spent on theater tickets and restaurant meals, mileage reimbursements and insurance-related costs.

Auditors identified $22,767 in miscellaneous costs that were unallowable or unsupported, including $17,702 in credit card charges made on behalf of Kimsco for trips to Las Vegas, New Orleans, Georgia, Washington, D.C., and London, $600 for two gift certificates purchased as a wedding gift for a Kedren doctor and $4,465 in credit card payments for flowers, a car repair for the president's personal vehicle and truck rentals.

Troy Anderson, [phone]

troy.anderson(at)dailynews.com