Chico, Calif. -- Allegations of fraud have the state getting involved in a dispute between management and the Board of Directors for Chico's Esplanade House.
The State Department of Community Services and Development is investigating the agency that runs the Esplanade House in Chico.
"There are two non-profits that make it work, Community Action Agency and our Esplanade Children's Fund. We safeguard it to make sure the money is safe," said Lynne Bussey, Board Member of the Children's Fund for the Esplanade House.
Bussey is on the Board of Directors for the Children's Fund, which complained to the state about Community Action Agency practices and how the CEO is managing the Esplanade House.
The state is now looking into those charges, which include a failure to maintain a full tripartate board.
"One third have to be members of a low income community, one third are elected officals, and one third are business or religious leaders," said Bussey.
"Our response to the state has been we continually are in recruitment mode, we have some board members come and go and it's really not unlike what other agencies experience throughout the state and country," said Tom Tenorio, Chief Executive Officer of the Community Action Agency of Butte County, Inc.
The state is also looking into claims of fraud, waste and abuse.
"Our point to them is the state has audited us, monitored us. Every year we provide frequent reports on what we do," said Tenorio.
"We know for at least five years Community Action Agency has not been in compliance with their own bylaws. The state has asked for reports, but for five years there have been no consequences," said Bussey.
In November, Tenorio said his agency would sever ties with two of the Esplanade House's co-founders. The founders are concerned about financial management and staff turnover, and how that is impacting families and their quality of care.
"We offered $100,000 to fill that gap until we find funding," said Bussey.
"The fact we did not use that funding they were offering just means we were not willing to take the obligations that come with those funds," said Tenorio.