Denver Bilked Out Of Almost $700K By Program For Disabled, Auditor Finds

December 17, 2015

A nonprofit that works with the disabled overcharged the City of Denver hundreds of thousands of dollars, according Denver City Auditor Timothy O'Brien.

He called the actions of Rocky Mountain Health Services, also known as Denver Options, “shameful.”  In just 18 months it overcharged the city by nearly $700,000  in administrative expenses. Tens of thousands of dollars were spent on employee perks, among other things.

RMHS's former CEO Stephen Block, and its chief financial officer, were fired last year. At the time, Block's half-million-dollar salary was more than double that for similar nonprofit leaders. But the auditor also faulted the city for not keeping closer tabs on the organization. 

Chart: Cost per Employee RMHS
The cost for lunches an estimate based on a 2014 figure from the audit. 

“Unfortunately, our audit found a pattern of abuse of taxpayer funds by RMHS,” O’Brien said Thursday.  “Overall fiscal mismanagement was severe enough to result in the termination of the organization’s Chief Executive Officer and Chief Financial Officer.  When individuals with intellectual and developmental disabilities are not getting all the services they need to begin with, it is heartbreaking to see this level of improper expenditures by RMHS.”

Among the auditor's findings:

  • RMHS was spending more than 15 percent of its revenue derived from property taxes on administration, "in violation of its contract with the Denver Department of Human Services." Between January 2014 and June 2015, "RMHS overcharged the City for administrative expenses by almost $680,000."
  • RMHS extended its work beyond Denver, also a violation of its contract. Taxpayer funds were spent on "fundraising, rent and clinician scholarships for recipients as far away as the Pacific Northwest."
  • Denver taxpayer money was also spent on "a range of employee perks," including  $48,000 at a meeting last year, "the majority of it to feed the staff." RMHS also "reimbursed staff for travel outside Denver, subsidized home Internet service, and provided Costco memberships for personal use."

RMHS could not be reached by CPR News for comment late Thursday. Interim CEO Shari Repinski told the Denver Post the organization has already instituted tighter accounting and cost cutting measures, including pay cuts and layoffs.

CPR's Ben Markus and Megan Arellano contributed to this report.