The head of a faith-based nonprofit that has worked to rebuild the Upper 9th Ward is scheduled to appear in U.S. District Court next week on charges she stole tens of thousands of dollars from the federal government.
Marcia Peterson, who served as executive director of CDC 58:12, a community development group, was charged last month with theft of government funds and wire fraud. Court records show she plans to change her earlier “not guilty” plea, but it’s not clear which charges she will admit to at an Aug. 27 hearing.
A felony bill of information says Peterson stole nearly $25,000 from the U.S. Department of Education and more than $62,000 from the U.S. Department of Housing and Urban Development.
Federal prosecutors also have accused Peterson — who according to court documents suffers from a gambling addiction — of falsifying claims for unemployment benefits.
Court documents have offered few details about the federal investigation. However, David Gilmore, the former chief of the Housing Authority of New Orleans, said some of the misappropriated dollars appear to have stemmed from a contract HANO awarded to Peterson’s group in 2012 to provide social services to families in The Estates, a low-income housing complex formerly known as Desire.
Gilmore, who refused last fall to explain why he ended the HUD-funded contract, which was reportedly worth $500,000 a year, confirmed Tuesday that he decided to cut ties with Peterson after he found out she was under federal investigation.
“Out of an abundance of caution not to see any more of HANO’s money fly out the window, I just terminated the contract,” Gilmore said, adding he was surprised to learn of the allegations against Peterson from HUD’s Office of Inspector General. “I had no prior reason to suspect there was any funny stuff happening.”
“The only thing they were willing to divulge to me was that the charges against her were substantial and fairly accurate,” Gilmore said, “but they wouldn’t tell me what they were, so I was operating sort of in the blind at that point.”
Peterson, who is free on an unsecured $10,000 bond, could not be reached Tuesday, and her defense attorneys did not return a message seeking comment.
A HUD spokesman declined to provide details about the case, saying he could neither confirm nor deny the existence of the investigation.
Federal prosecutors’ use of a bill of information, rather than an indictment, often is a sign that a defendant is cooperating with the authorities.
Ronald McIntyre, a former finance director at HANO, said Peterson’s organization never should have received the social-services contract in the first place. He said CDC 58:12 “didn’t actually win the bid” but that Gilmore, who led HANO before it returned to local governance this summer, forced the agency’s bid-review panel “by threat” to “go back and rescore” the bid from Peterson’s group, which McIntyre said lacked expertise and wasn’t the lowest bidder.
“Gilmore wanted Marcia Peterson to get the deal. I don’t know why, and I don’t know what he knew about her,” said McIntyre, who filed a discrimination lawsuit against HANO last month claiming he was fired for speaking out against Gilmore’s contracting practices. “He only acted (to end the contract) when it became apparent to the government that there were problems.”
In a telephone interview Tuesday, Gilmore denied those claims, calling them “absolute bunk.”
“To the best of my recollection, the process went through the normal procurement process and CDC was selected for whatever reason,” he said. “I knew no one at CDC and would have had no reason to intervene on anybody’s behalf, nor would I have done it. It would be stupid for a CEO to manipulate the system that way.”
Gilmore served as a one-man board of directors and the last appointed receiver of HANO, which was taken over by the federal government in 2002 after years of poor local management.
At a board meeting in October, when Gilmore ended the contract with Peterson’s organization, he would say only that he had received some “disturbing information” from a reliable source that was “still evolving,” according to minutes of the meeting. He acknowledged at the time that not renewing the contract would leave a significant gap for residents.
McIntyre said HANO provided the services “on its own” after the contract was canceled.
According to CDC 58:12’s website, Peterson, who is still listed as the organization’s executive director, has worked in community development for several years. “Peterson has facilitated thousands of volunteers,” the website says, “who continue to come and work in New Orleans even years after” Hurricane Katrina. CDC 58:12 derives the second part of its name from a passage in the Book of Isaiah.
Aside from the allegations that she stole money from HUD and the U.S. Department of Education, the bill of information accuses Peterson of committing wire fraud by falsely representing to the Louisiana Workforce Commission that she had been laid off from CDC 58:12 even though she was working as the organization’s executive director and accountant.
Peterson’s conditions of pre-trial release include participating in gambling addiction treatment and refraining from entering “any casino or other gambling establishment.”
Follow Jim Mustian on Twitter, @JimMustian.