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Labor Department official - Role Models heads received salaries

June 12, 2002|by SCOTT BUTKI

scottb@herald-mail.com

CASCADE - A U.S. Labor Department official said Tuesday that despite statements made by Role Models America Inc. President Robert Alexander to the contrary, Alexander and his wife received salaries during a period for which the military-style academy at the former Fort Ritchie U.S. Army base was audited.

Alexander and his wife Janessa, Role Models' chief executive officer, each were paid an annual salary of $75,000, said David Dye, Labor Department deputy assistant secretary for employment and training.

Role Models was funded with a two-year, $10 million U.S. Department of Labor grant. The grant, which expired May 30, will not be renewed, the Labor Department has said.

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The Labor Department on Friday ordered Role Models to repay $262,258 in grant expenses questioned in a September audit.

Alexander said Friday he has requested an administrative hearing to appeal the decision. He said he did nothing improper and does not owe money to the Labor Department.

The Alexanders did not return phone calls left Monday and Tuesday.

The costs questioned in the financial audit include rent, a security deposit, furniture and a water-conditioning system at the Alexanders' Waynesboro, Pa., home.

The audit examined grant use from June 5, 2000, to March 31, 2001. For the audit period, Role Models reported costs of $6.65 million. Its general ledger supported costs of $4.6 million, the report said. Role Models justified all of the $2 million in grant expenses except for the $262,258, the report said.

Dye on Monday disputed Alexander's statement that he and his wife were to receive a management fee instead of salaries. He said there was no agreement to pay a management fee.

Alexander has maintained that he and his wife were not paid salaries during the period covered by the audit but were to be paid a management fee instead. The money questioned in the audit would have constituted that fee, he said.

Some of the questioned costs involved the Alexanders' adult son and daughter. The two worked for the Waynesboro-based College Corps Management Service, a for-profit corporation that provided administrative services to Role Models. Alexander's wife was the director of the company.

The Labor Department questioned how Alexanders' son and daughter worked 80 hours every two weeks while attending an out-of-state university.

The audit questioned $44,257 of the $49,448 in salaries and fringe benefits paid to the two. The university's calendar said students had 20 days off, so the audit report allowed salary payments for those 20 days.

Role Models paid College Corps $32,051 a month for administrative functions during the audit period, then asked the Labor Department for reimbursement, the report said. Role Models no longer uses College Corps, Alexander has said.

Classes at the school for high school dropouts ended last month. Alexander has said he was optimistic the program would continue with private grants, two of which could be confirmed this month.

Role Models on May 10 filed for Chapter 11 bankruptcy, which frees it from the threat of creditors' lawsuits while it reorganizes its finances.

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