Role Models' payment still sought

October 07, 2002|by SCOTT BUTKI

The U.S. Labor Department still wants Role Models America Inc. to repay $262,258 in questioned grant expenses, even though a Role Models attorney says the company has less than $200, Labor spokesman Chad Aleshire said Friday.

Role Models, a military-style academy at the former Fort Ritchie U.S. Army base, was funded with a two-year $10 million Labor grant. The grant expired in May. Role Models was evicted from Fort Ritchie in July.

A September 2001 Labor financial audit questioned $262,258 in expenses funded with the grant, including rent, a security deposit, furniture and a water-conditioning system at the Waynesboro, Pa., home of Role Models President Robert Alexander and his wife, Janessa, Role Models' chief executive officer.


In June, the department ordered Role Models to repay the $262,258.

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

The appeal hearing date has not been set, Todd Smith, legal counsel for the office of administrative law judges for the Department of Labor, said Friday.

Smith said the hearing was temporarily moved from the active to inactive appeals docket after Role Models declared Chapter 11 bankruptcy in May, which frees it from the threat of creditors' lawsuits while it reorganizes its finances.

But at a Sept. 26 hearing, a U.S. Bankruptcy Court judge in Greenbelt, Md., indicated he would probably approve Role Models request to dismiss the bankruptcy case, a Role Models attorney said last week. Unless objections are raised, the decision will become effective about 10 days after the court hearing, Role Models attorney Ed Kimmel said.

Kimmel, of Takoma Park, Md., said he advised Alexander to withdraw the Chapter 11 filing because, without a site for the school, "there really wasn't anything to reorganize."

Kimmel and the Alexanders could not be reached for comment Friday.

Should the bankruptcy case be dismissed, the appeal procedure would proceed and a hearing would be held, Aleshire said.

The Labor 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.

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.

But Labor officials said that was not true and each were paid a $75,000 annual salary.

Fewer than 20 students graduated from the school during its two years at Fort Ritchie.

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