What a deal!

Every January, Harris County hands out roughly $12 million in federal grants to nonprofit businesses serving people with AIDS, and every year, someone gets mad.

This year, the usual level of complaint about who got what was raised a notch. Now everybody wants to know: How can an organization that exists only on paper end up with more than a half-million dollars in federal AIDS grants?

At issue is a nonprofit called Houston Area Community Services, Inc. On January 27, the agency, known as HACS, was awarded $580,000 to provide case-management and outreach services for people who are HIV-positive.

HACS's executive director is Joe Fuentes, who, in late 1996, was appointed by Harris County Judge Robert Eckels to chair the local Ryan White Planning Council. As chair of the council, Fuentes helps set priorities for the use of federal AIDS grants channeled through Harris County, which receives dozens of proposals from area AIDS care providers each year.

Fuentes's proposal, however, was apparently filled with information that, at best, cannot be substantiated and, at worst, is patently false. For example, when Fuentes submitted his proposal last November 18, he claimed to have 23 case managers, counselors and support personnel ready to provide "24-hour, 7-day-a-week" services. But when contacted last week, Fuentes acknowledged that he has yet to hire any professional staff.

Moreover, HACS still has no office space and continues to "operate" from Fuentes's home in far-west Houston. Phone calls to the number listed on the funding proposal reach "the Houston Area Community Services voice-mail system," which doubles as Fuentes's home answering machine.

More troubling is Fuentes's claim that he has reached agreements with other organizations to collaborate on outreach and case-management services. When contacted by the Press, those organizations claimed to have never heard of Houston Area Community Services.

Among those Fuentes proposed to work with is S.E.A.R.C.H., the city's largest homeless shelter. Fuentes had proposed to put case managers and other HACS staff at S.E.A.R.C.H.'s downtown office, in an effort to reach more indigent people with AIDS. The idea impressed the county so much that HACS received $353,610 -- the entire pool of federal money available for local outreach services.

But Fuentes included the idea of this collaboration in his funding proposal without the knowledge of S.E.A.R.C.H.'s executive director, Sandy Kessler. Kessler didn't discover that HACS planned to use her facilities until after the grants had been awarded. Fuentes confirmed that Kessler has since told him that S.E.A.R.C.H will not collaborate with his agency --a development that could hamper Harris County's ability to identify new AIDS cases and refer them to appropriate care providers.

In an interview last week, Fuentes insisted his proposal was "as truthful as possible." He blamed the dispute over his $580,000 in grants on "larger, old-time providers" who had their funding cut this year.

"Times have changed," said Fuentes, who maintains that HACS started in 1995 as an informal group of volunteers who were also people with AIDS. "The disease has changed. Agencies need to change, and I think we can provide something that is different and unique."

Others, however, are appalled that the chair of the Ryan White Planning Council could simply draw up a proposal and, without an actual business address, receive more than a half-million dollars. More to the point, of course, they wonder how HACS will be able to meet the demand for case-management and outreach services when it has no staff or offices.

"He told me two weeks ago that he had an agency that had been there for three years, and I said that's absolutely a lie," recalled Angela Mora, executive director of Amigos Volunteers in Education and Services, or AVES. "Working in this field for so many years, we know what agencies are out there. [HACS] is a home; it's not an agency, it's a private home. Where are clients going to go if there is no agency?"

The ruckus over Houston Area Community Services' funding recalls the annual complaints that accompanied huge grants awarded to the Harris County Hospital District. At the time, the hospital district's director of government relations, King Hillier, was chair of the Ryan White Planning Council.

During Hillier's tenure, the hospital district had a virtual lock on roughly $2 million in federal funds earmarked annually for primary medical care. Hillier was also blamed for a change in county policy that prohibited direct funding of the Minority Caucus, a group of small agencies that carved up funds set aside to serve blacks and Hispanics in their own neighborhoods. By the time Fuentes took over as planning council chair in late 1996, Harris County had stripped the caucus of case-management funding, which minority service providers claimed made it difficult for their clients to find help.  

The appointment of Fuentes, who is HIV-positive, was seen as a positive step by the local AIDS community, which had grown weary of the bitter infighting between the Minority Caucus, which represents communities in which the disease has spread rapidly, and the so-called mainstream organizations that receive most of the federal funds channeled through Harris County.

Fuentes, who has worked with many agencies but had never been a service provider, was also expected to put an end to a long-standing problem: the conflict of interest that exists when members of the planning council, who also happen to operate social-service agencies, decide how federal grants are distributed.

"The whole mechanism is set up to be incestuous," says Katy Caldwell, executive director of the Montrose Clinic. "It's a dysfunctional process. You're always going to have problems when you have people who are competing for the money deciding how the money is going to be spent."

Even other minority service providers, who typically applaud any additional resources made available to black and Hispanic people with AIDS, are critical of Fuentes.

More than a year ago, Lucy Reyna left her position as director of HIV services for the Association for the Advancement of Mexican-Americans to form the Life Center, a community-based agency on the east side. But Reyna used her own money, plus a small grant from Texas Southern University, to establish the Life Center before applying for a federal grant.

"When I got my organization started, I was under the understanding that I had to have an office, phones, everything," Reyna said. "I didn't know that you could just write up a proposal and say you were going to set up something.

"Maybe this is one way to get money into our community, to the people who are infected and who are minorities. But I don't like the way they went about it. It's created a lot of friction in the community."

Interestingly enough, Fuentes seems content to defend the funding of HACS by pointing out how others before him have taken advantage of flaws in the system. He maintains that "there is always going to be an inherent conflict of interest," and that it has infiltrated planning councils around the country.

But no one can recall the last time an agency with no established history of service received more than a few thousand dollars in grants. There are also serious questions about the data Fuentes included in his funding proposal to the county and how it was arrived at.

For instance, though HACS was not officially incorporated until October 1997, Fuentes claims to have provided a range of services to some 789 people with AIDS last year. The proposal also notes that Fuentes referred more than 300 people to other service providers, including AVES and the Family Service Center. However, when contacted, neither organization could recall receiving clients referred by HACS.

Critics of the county's funding process say that a serious flaw is the lack of input by the Ryan White Planning Council in the selection of external reviewers who score the grant proposals. As a result, there is no way to know if, by chance, any reviewer has ties to a particular agency.

Indeed, judging by his extraordinarily high scores and the comments offered by the reviewers, Fuentes's proposal didn't receive much in the way of critical analysis. Rather, his claims were clearly taken at face value and were instrumental in the committee's decision to recommend HACS for funding over more established agencies.

"Thought this proposal was good," said one reviewer in a written evaluation of the proposal. "Not many negative items found in this proposal," said another. The review of the HACS outreach proposal praised the agency's "continuum of care" -- its history of providing services to known cases of AIDS --as "very specific."

But when asked what method he used to document his claims, Fuentes described the kind of informal record keeping that the word shoddy does not begin to describe. Fuentes said that he and his volunteers -- which his proposal claims number 164 --kept "a sheet" on which they wrote anonymous data about the sex, gender and HIV status of people they helped.

"We didn't keep documented charts or things like that," Fuentes acknowledged. "We started as advocates and ended up doing lay case management, I guess you'd call it. We got clients through word of mouth from the community, and we'd try to hook them up with things like service linkage, job training, case management, outreach."

When pressed as to how his numbers could be verified for accuracy, Fuentes answered, "That's a good question. We didn't have a name until October of '97."

Charles Henley, the director of the Harris County HIV Services Division, said complaints about case-management grants were inevitable this year. According to Henley, the Ryan White Planning Council decided last August to reduce the number of agencies that would offer case management in 1998 from seven to five, creating intense competition for a limited amount of funds.  

Henley said he questioned Fuentes about his proposal and came away satisfied that HACS has been serving clients on an "informal basis" as a group of volunteers. "They made their case that they were a new agency, but they had good ideas," he said.

That remains to be seen, of course. Fuentes says he knows his organization, which has until March 1 to get up and running, will be subjected to serious scrutiny by many in the local AIDS community.

Some are already worried that Houston Area Community Services will be unable to perform as promised, leading to a reduction in the quality of care received by people with AIDS.

"Everybody's talking about it," said Lucy Reyna of the Life Center. "He's trying to recruit case managers from other agencies to work for him, so he doesn't have a staff. He's obviously dug himself into a little hole.

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