Five people charged in Catholic Charities fraud case

A ring of former Catholic Charities employees and accomplices is accused of stealing as much as $750,000 from the nonprofit — money that originally came from state and county coffers to pay rents for people escaping homelessness.

The U.S. Attorney's Office has charged five people so far, describing an elaborate scheme dating back to 2012 that involves fictitious homeless people, forged documents and inside connections at the charity.

According to court filings, former Catholic Charities employees, whom prosecutors identify as unindicted co-conspirators, recruited people to pose as landlords renting apartments to homeless individuals.

The employees used their accomplices' Social Security numbers, fake rental agreements and falsified IRS forms to push through rental reimbursements at Catholic Charities of St. Paul and Minneapolis. The accomplices then split the money with the employees, prosecutors allege in charges filed in late December and January.

Aisha Lenee Davis, Leteaste Henry-Davis, Rachael Elizabeth Ekholm, Shaneka Lashay Mzee and Sharre O. Rush have been charged with conspiracy to commit wire fraud. The five defendants stole a combined $272,000, according to court filings.

In a statement, Catholic Charities of St. Paul and Minneapolis officials say the total could reach $750,000. They are working with insurers to cover the losses.

Mzee pleaded guilty on Tuesday and could face eight to 14 months in prison and up to a $40,000 fine, according to the plea petition.

"She has fully accepted responsibility for her actions," said Mzee's attorney Steven Wolter. "She was responsible for about $27,000, of which she got half and the other half was split with an insider at the charity."

Catholic Charities launched an internal investigation in March 2017, contacted prosecutors and has "cooperated fully" with the investigation, according to a statement released by the charity.

"The employment of Catholic Charities staff members suspected of being involved in the illegal activity was terminated, the individuals were reported to law enforcement, and the affected funding partners were notified," according to the statement.

Defense attorney Kenneth Ubong Udoibok said his client Aisha Lenee Davis "intends to accept full responsibility for only her own actions. When the dust settles, all will see that Ms. Davis is a good woman who intends to follow all the rules. … Ms. Davis hopes that all would exercise some patience until she presents her story to the court."

The other defense attorneys did not return calls or declined to comment.

Catholic Charities has also contacted Hennepin and Ramsey counties, which both award homelessness prevention grants to the charity. The counties received that money from the Minnesota Housing Finance Agency.

Both counties have launched their own audits to determine the amount of money that was misspent.

So far, Catholic Charities has reimbursed Ramsey County $102,000 and Hennepin County more than $19,000. The counties have sent those funds back to the state agency.

"The county's internal audit process is ongoing and we anticipate to be refunded an additional several hundred thousand dollars," according to a Hennepin County statement.

Hennepin County will continue its relationship with Catholic Charities, said county spokeswoman Carolyn Marinan.

The Minnesota Housing Finance Agency did not return a request for comment.

Catholic Charities officials said they regularly review policies and procedures to prevent fraud and abuse and have done so in response to this incident.

Throughout the investigation, Catholic Charities has maintained its housing rental assistance programs.

Catholic Charities is "a leader at solving poverty, creating opportunity and advocating for justice in the community," according to its most recent tax filing.

Its services include homeless shelters in Minneapolis and St. Paul and transitional housing, long-term apartments and support services. In 2017, Catholic Charities opened the first phase of the new Dorothy Day Place in downtown St. Paul, a $100 million public-private partnership that includes emergency shelter beds all the way to permanent apartments and services.

About $29 million of Catholic Charities' $69 million in revenue came from government contracts, according to its 2017 financial report.