State auditor details ‘disturbing' spending within nonprofit serving Nebraskans with disabilities

Yahoo

09-04-2025

The Nebraska State Auditor's Office is located in the State Capitol. (Paul Hammel/Nebraska Examiner)
LINCOLN — A plane ticket for a 'romantic' partner and other 'suspected improprieties' have turned the State Auditor's spotlight on a small, publicly-funded nonprofit whose board is appointed by the governor and whose mission is to support Nebraskans with disabilities.
A new auditor probe of the Nebraska Statewide Independent Living Council points to alleged 'malfeasance' by the former executive director, Don Dew — though Dew and the council's former treasurer insist that the spending was board-approved.
Both have resigned, and assert that certain board members stirred trouble for Dew in part because he is gay.
The new board chairwoman dismissed that as nonsense and said State Auditor Mike Foley was summoned after Dew did not produce requested records to support spending.
Both sides agree on at least one thing. They said the gubernatorial-led process by which the board's appointments are made has been slow-going — and they believe an undersized governing board with too many unfilled slots contributed to problems.
The board is authorized for 15 voting members and five non-voting members, which represent various state agencies and service providers, according to the auditor's report. For several years, current and past members said, the organization has operated with two or three voting members and several non-voting members.
Currently, the council has two regularly voting board members 'with a third that is used under certain circumstances,' and 10 nonvoting members mostly representing independent living organizations, said Jody Faltys, who returned to the board in late in 2024 and is now chair.
Phil Olsen, state accounting administrator under Gov. Jim Pillen, said the minimum requirement under law is three voting board members but that he foresees others being appointed soon. He said the council has seen turnover with members uneasy under Dew's financial leadership.
Based in Lancaster County, the Nebraska Statewide Independent Living Council (NESILC) is funded primarily with federal dollars from the Independent Living Administration.
Established in 2001, the public benefit nonprofit corporation has a mission to, in partnership with the Independent Living Network, promote independence, inclusion, non-discrimination and dignity for all people with disabilities in Nebraska.
States are required to establish and maintain such independent and statewide councils, according to the auditor's report, to be eligible for financial assistance authorized under the Rehabilitation Act of 1973 that was further amended under the Workforce Innovation and Opportunity Act of 2014.
State leaders said a federal grant of about $340,000 is divided between the council and two Centers for Independent Living, which are the League of Human Dignity and Independence Rising.
Faltys said interest in joining the council board had waned, and she hopes that will improve.
'It's all about checks and balances, and what we need is to get those guard rails as strong as they can be to make us as strong as we can be,' Faltys said.
The Statewide Independent Living Council, with an annual budget of about $115,000, is a small but vital organization whose existence is required by law to unlock federal funds that help Nebraskans with disabilities live independently.
It came under auditor scrutiny after board members reported possible financial improprieties. Findings are laid out in a 25-page report, which included recommendations to improve internal controls. The report was made public last week and addressed to Faltys.
Any further investigation lies with the FBI, Lancaster County Attorney and Nebraska Attorney General, which got copies of the report from Foley's office.
Foley, in a statement, focused on $9,466 in what his team called 'suspected improprieties' by Dew over a three-year period: $2,043 in alleged excess pay to himself; $6,750 in health insurance reimbursements that lacked documentation, and a $672 plane ticket for his partner to a work-related conference.
While better late than never, some of this could have been avoided had the NESILC board taken its oversight responsibilities more seriously from the start.
– State Auditor Mike Foley
'At the risk of sounding like a broken record, I can't emphasize this enough: Allowing someone to exercise anything close to exclusive control over an organization's finances with no meaningful oversight is begging for serious trouble,' Foley wrote.
He said the audit team noted the council's lack of policies and procedures for safeguarding funds and said leaders appear to be taking corrective measures.
Olsen said he, representing the Nebraska Department of Administrative Services, took over in 2024 as the designated state conduit responsible for receiving and disbursing funds to the council from the federal government. He said he raised a red flag after he started attending the council's quarterly meetings and noticed a lack of bank statements, credit card and expense approvals.
Faltys saw the audit as confirming 'what we saw.'
Said Foley: 'While better late than never, some of this could have been avoided had the NESILC board taken its oversight responsibilities more seriously from the start.'
In a response included in the auditor's report, the council recapped what led to this point. Its current leader said a COVID-19-related shutdown led to heavy change in the organization — as its only executive director up to that point retired.
Dew, a former board chair, then was hired and held the position three years until his resignation effective at the close of 2024. The audit said his salary was $26,168.
The council wrote that Dew 'didn't live up to the high standards' set by his predecessor.
'With board members leaving, with policies and procedures not being applied rigorously, it soon became clear that the future of NESILC was a turning point,' stated the council.
The council wrote that it was disappointed in its own lack of oversight and was 'wiping the slate clean and refocusing on our mission.'
Dew, with a completely different take, was angry at the allegations. He said the auditor's team didn't ask him for his version of what happened.
He said he had filed his own complaint with the Nebraska Attorney General after a board member removed what he said were confidential files from a storage area.
Dew said he is working with an attorney and considering legal action as he feels his name should be cleared.
'Everything had been approved,' he told the Nebraska Examiner, calling the probe incomplete. 'It's in a budget or through an executive committee meeting, so there's no way that they can say I did (anything) without approval.'
Deanna Henke, treasurer of the council's board during much of the alleged misuse of funds, backed Dew.
She said the board approved the airline ticket in the spring of 2024 for Dew's partner who, she and Dew said, served as a personal attendant. Dew said he has epilepsy, controlled by medication, and other disabilities. At the time of the conference, Dew said he was suffering from several broken ribs.
It was not a sightseeing trip. He wasn't gallivanting around town in Little Rock, Arkansas.
– Deanna Henke, former treasurer of the NESILC
Henke said Dew was mandated to attend the work conference, which she said he helped lead. 'If they require a personal attendant due to their disability, then we pay … not only for Don to go, but for his assistant.'
She said 'it's been that way for years,' and added 'it was not a sightseeing trip. He wasn't gallivanting around town in Little Rock, Arkansas.'
According to Foley's press release, council representatives informed the audit team that the ticket was for a man with whom Dew had romantic and business relationships. The representatives said the man is 'neither an employee nor in any way affiliated with the organization.'
Said Henke: 'Don being a gay man, they've had a target on his back ever since he became executive director.'
Faltys said she saw no pre-approval records and called the ticket the 'final straw that broke the camel's back.' She added, 'There were no receipts. There were no minutes for meetings.'
Noted in the audit were 98 'questionable' credit card transactions, besides the airline ticket, that totaled about $8,400, including for a Dropbox account, business vendors and Jimmy John's restaurant. The report said Dew controlled the card.
'Board members were not aware of, nor did they approve, most of these payments,' the auditing team said.
In addition, the auditing team said it could not locate adequate documentation to substantiate board approval of 17 payments totaling $47,580 over three years for apparent reimbursements or other payments unrelated to wages, including health insurance stipends, retirement contributions and bonuses.
Deputy State Auditor Craig Kubicek said in an interview that the team didn't speak directly to Dew, but its findings were based on records available at the time.
'We look at facts, we look at documentation, we look at compliance,' Kubicek said.
He said Dew concurrently served as executive director of a separate organization in Iowa also dedicated to people with disabilities, and that Dew declined the Nebraska auditor team access to the Iowa payroll records. Based on that, Kubicek said his team figured it would get nowhere if it asked Dew for input on the Nebraska review, so it didn't.
Meanwhile, Faltys said she is effectively acting also as executive director and pushing to add more voting board members.
Herself a quadriplegic, she said the organization is more important than most understand. It works with state partners to develop Nebraska's three-year plan for independent living and community based services. It supports research, education and reforms related to disability issues.
Without it, advocates said, certain federal funding could not flow to groups such as the League of Human Dignity and Independence Rising. Faltys said the availability of the services and accountability of the organization should matter to all.
'Everyone is a moment away from being disabled,' Faltys said. 'You could have a stroke, a car accident, these are issues vital to everyone.'
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