Wisconsin lawmakers are launching a statewide investigation into taxpayer-funded community action agencies following the financial collapse of Newcap, a Northeast Wisconsin nonprofit accused of misusing millions in government funding.
The Joint Legislative Audit Committee announced Tuesday that it would order the nonpartisan Legislative Audit Bureau to investigate state oversight of the Wisconsin Community Action Program (WISCAP) and its affiliated agencies, including Newcap.
“Programs that accept taxpayer dollars to carry out their mission also accept a higher level of oversight to ensure they are compliant in carrying out their intended work,” said State Sen. Eric Wimberger (R-Gillett), co-chair of the Audit Committee. “When taxpayer funding is mishandled, it’s critical that we get to the bottom of it and bring an end to the waste.”
The investigation comes months after Newcap abruptly shut down and filed for bankruptcy amid mounting allegations of financial mismanagement. The nonprofit provided housing, health care, weatherization, and other services for low-income residents across 10 counties in Northeast Wisconsin.
Newcap had been operating with a roughly $2 million deficit when the state took the unusual step of placing the organization under enhanced financial monitoring late last year. Former employees subsequently alleged that taxpayer money was diverted from its intended purposes, while raising concerns about executive salaries and spending on work trips.
Former CEO Cheryl Detrick was placed on administrative leave in February before eventually leaving the organization. Detrick has denied wrongdoing and maintained that Newcap complied with government rules for grant funding. Newcap closed at the end of March and later filed for bankruptcy, owing more than $4 million to 209 parties.
The state audit will now add another layer of scrutiny to Newcap’s finances. A federal investigation into the organization and its former leadership is also underway, according to U.S. Rep. Tony Wied (R-WI), who requested an investigation from the U.S. Department of Housing and Urban Development earlier this year.
Wied told FOX 11 in July that HUD’s Office of Inspector General informed him that the investigation had begun, although details about its scope have not been made public. Independent audits found Newcap received nearly $100 million in taxpayer funding over its final five fiscal years.
The Legislative Audit Bureau’s review will extend beyond Newcap, examining state oversight of WISCAP and other community action agencies across Wisconsin. The proposed scope calls for auditors to review compliance with state funding requirements, agency expenditures, and whether existing oversight policies adequately protect taxpayer dollars.
There are 16 regional community action agencies operating under the WISCAP umbrella in Wisconsin. Wimberger had previously indicated that he wanted any Newcap audit to look beyond the failed Northeast Wisconsin nonprofit and examine other agencies receiving taxpayer dollars.
“Today’s audit will shine further light on recent abuse and give us a clearer understanding of how WISCAP and its partner agencies are using taxpayer dollars,” Wimberger said.
