Prominent Brevard charity on verge of collapse as former CEO faces criminal probe
One of Brevard County's most prominent charities has been all but shut down amid a wide-ranging crisis that includes crumbling finances, a criminal investigation into its former CEO and a flurry of questions about an obscure executive account, according to dozens of leaked emails between its executives and board of directors.
Crosswinds Youth Services in Cocoa runs one of Brevard's only dedicated shelters for homeless and runaway teens. Since opening in 1974, its board of directors has included a Who's Who of local business and political figures, including most recently several prominent attorneys, a Port Canaveral commissioner and Brevard County Sheriff Wayne Ivey.
However, the organization, known for its popular annual rubber duck race fundraiser, now appears to be on the verge of collapse.
The Florida Network of Youth and Family Services, which oversees a major portion of Crosswinds' annual funding, on Monday suspended new admissions to its network-funded programs and ordered the reassignment of shelter residents housed under its contract.
It cited a laundry list of concerns, detailed in an extensive cache of internal emails, reports and meeting minutes separately obtained by FLORIDA TODAY.
Among them, Jan Lokay, its recently retired CEO, is under investigation by the Brevard County Sheriff's Office over a series of questionable transactions involving the nonprofit's assets. The inquiry comes as its board of directors reckon with years of losses and a steep operating deficit, the emails show.
The irregularities were first uncovered as the organization sought for cash to fund a $50,000 severance payment to Lokay, authorized in May by the Crosswinds executive board.
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Lokay did not return messages seeking comment. Her attorney said she maintains she has done nothing wrong.
The dire financial situation has meanwhile trickled down to staff and the children who depend on the shelter for support. Roof leaks and a runaway mold problem shuttered its executive offices in August. A/C outages at its shelter over the summer — after the board was unable to afford repairs — reportedly forced teens to sleep in common areas to escape the oppressive heat. Unpaid electric bills nearly led to the lights being shut off earlier this month.
Crosswinds received about $2.48 million in government grants and contracts in the 2021-2022 fiscal year, along with about $300,000 in charitable contributions, against $3.3 million in expenses, tax forms show.
As the board scrambles to put out the fires, over half a million dollars sits idle in an exclusive executive retirement account Lokay was set to walk away with after leaving the nonprofit in June.
Emails show the paper trail for the account was slim, with little or no supporting documentation. Worse, payments into the account appear to have had little oversight, bypassing the nonprofit's payroll system, possibly for years, the emails show.
The fund's murky origins have fueled uncertainty over tax liabilities, its ownership — and even its legality.
The mounting concerns have triggered a forensic audit and shakeups among Crosswinds staff and directors, including the resignation of at least four board members since July and the pending resignation of its new CEO after only five months.
The trove of internal communications offers unprecedented access into the organization's unraveling since May, but many questions remain about how and why. Multiple interview requests to Crosswind's current CEO were not returned, and board members contacted by FLORIDA TODAY did not respond to messages or declined to comment.
With the suspension of programs this week and its funding under threat, it's unclear when or if the nonprofit can recover.
Former CEO under investigation
Florida Network officials warned the Crosswinds board of directors in a stark five-page letter Monday to get its act together or face the termination of its contract, in past years worth up to 30% of Crosswinds' annual revenue.
The letter cited poor performance metrics and the nonprofit's flagging finances, which have caused recurring problems paying its staff and creditors. The board only narrowly avoided disaster on Nov. 2 when Florida Power and Light workers arrived on site, threatening to cut the power of unpaid energy bills, the emails show.
Other issues cited include persistent problems with employee morale; hostile work environment complaints lodged against a senior executive; record-keeping and reporting deficiencies; and a string of recent incidents involving teens and shelter staff.
"We have become increasingly concerned with the ongoing instability of programs operated by Crosswinds Youth Services," wrote Amy Orman, the Florida Network of Youth and Family Services' chief operating officer.
Orman ordered the suspension of most network-funded services while the board worked through an onerous list of demands to retain its contract funding, though the nonprofit would continue to offer community counseling and SNAP food benefits, according to the letter.
Of special concern is an ongoing criminal investigation into Crosswinds' former CEO, Jan Lokay, whose June retirement came amid rumblings from some board members over her use of nonprofit funds.
Internal emails show board members raised concerns over Lokay's use of the charity's credit card. Among the purchases, according to bank statements obtained by FLORIDA TODAY:
Hundreds of dollars spent at craft stores and online retailers, including $85 to a luxury pen company and $315 to a company specializing in high-end wool blankets;
Over $400 spent on flowers and artisanal cookies;
Purchases from overseas electronic and appliance outlets;
Monthly subscriptions to the New York Times and AOL, which Lokay used in place of a nonprofit email address.
Board members also questioned write-offs Lokay allegedly made, which they said included billing the nonprofit for her Spectrum home internet and a portion of her homeowner's insurance, according to the emails.
Perhaps the most serious issue involved a Crosswinds-leased van, which Brevard County Sheriff Wayne Ivey told the board she may have bought out for a steep discount using equity financed by the charity, according to the minutes from an Aug. 16 board meeting.
"There is definitely some criminality, especially regarding the issue of the van," the summary of Ivey's presentation reads. "She clearly used equity in the van that could have gone towards the purchase of the other Crosswinds van in order to make the purchase."
Lokay's attorney, Scott Robinson of Eisenmenger, Robertson & Peters, P.A., said she was "completely, 100% adamant" that she had not broken any laws.
"There's a distinction between something that, say, is criminal, and something that was not optimal or was done wrong somehow. That's what we're trying to figure out," Robinson said.
He declined to comment on specifics, saying that there has been no communication from the sheriff's office or Crosswinds since the early part of the investigation, which emails show began in July.
"I know Ms. Lokay. She ran the organization for over 30 years. I don't know what nonsense they're trying to throw at her. We've been trying to figure it out for months and no one has told us anything," he said.
Lokay has not been charged with any crimes. Whether the investigation remains open was not known Wednesday. Questions sent to a sheriff's office spokesman were not returned before the time of publication.
Financial problems affect staff, shelter teens
Crosswinds' financial woes aren't new. Tax filings show the nonprofit has long operated in the red, with rising expenses outstripping fluctuating revenues for six of the last seven years.
A $388,000 operating deficit this past year contributed to problems meeting payroll and delays in needed repairs and facility maintenance. That came to a head this summer, impacting both Crosswinds staffers and teens staying in its shelter, the emails show.
To pay its staff, in September the board took out a $170,000 cash advance from the Florida Network, just two months after borrowing from its investment account to cover payroll gaps. Network officials have demanded the return of a $46,000 balance in light of the ongoing issues.
Unable to afford roof repairs at its administrative building on Dixon Boulevard, employees were forced to catch leaking rainwater in trash cans, according to a June 13 email to the board from current CEO Kevin Maloney.
"We have water leaks in many parts of the building where the tiles have become so saturated that they have given way and fell from the ceiling," Maloney wrote.
A mold infestation from the prior year resurged after the board couldn't afford the $6,000 cost to clean the air conditioning ducts, affecting the health of the staff and forcing them to relocate to a secondary office nearby, the Aug. 16 meeting minutes show.
History: Crosswinds gets its duck race in a row
At the children's shelter, A/C outages during the hot summer months led teens to sleep in common areas, according to the emails. Staff brought in temporary air conditioning units in September after a complaint to the Florida Department of Juvenile Justice, the emails show.
Florida Network staff also recently reported concerns that Crosswinds was unable to fund outings for the teens in its care due to lack of money, Orman said in the Monday letter.
Obscure executive fund raises unanswered questions
As facilities languished, emails show the nonprofit's four-person executive board for years has annually approved the transfer of tens of thousands of dollars into an exclusive retirement account, available only to Lokay and two other high-ranking employees.
As of September, just as the board was borrowing to pay its hourly employees, the balance on the account was over $620,000, according to a Sep. 29 email from Maloney to the board. Lokay was not required to pay into the account, which was financed entirely by nonprofit funds, the emails show.
The account began to raise alarm bells this year after the board learned the transfers, paid in bi-weekly installments, were bypassing payroll, creating a potential tax liability and concerns about unreported income.
The reason, like most everything about the obscure fund, is unclear. A staff review led by Maloney (initiated at Lokay's request) revealed almost no documentation about the origins or specifics of the account, Maloney told the board in the Sep. 29 email. A single document referencing the account as far back as 2006 brought little clarity.
The lack of a paper trail led to confusion about even what kind of account it was, evidenced in emails and board minutes between June and August, for a while leaving it unclear to whom the money belonged and the organization's responsibilities under federal tax laws.
Further research revealed several years worth of payments may have exceeded federal contribution limits, Maloney reported.
"From what we’ve been able to establish thus far, is that the account was not setup appropriately and there was no oversight on the amount of money being bypassed by the payroll system," Maloney wrote in the September email.
The current status of the account is not known. Communications between board members in October show they resisted touching the funds until they could hire an attorney, which they were then unable to afford.
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Minutes from the August board meeting showed the account had been rolled into the criminal investigation, as agents sought to determine whether the board had approved the creation of the fund in the first place.
As of Aug. 16, according to the report, Lokay had not received any money from the account.
"Though it is a poor management issue and possibly a civil issue, the fact that she has not received the money may mean that it does not rise to the level of criminality," the minutes read. "If the Board had never authorized the account, then there may be cause for criminality."
Leadership crisis leaves future unclear
The mounting problems led the Florida Network of Youth and Family Services to initiate a forensic audit of the nonprofit's books in July. On Monday, however, that audit had not been completed.
The network blamed the failure of Crosswinds leaders to provide critical financial records in its letter to the board.
"This investigatory accounting engagement has been ongoing for over 4 months without receiving adequate responses from management which would facilitate the review of charges to the Florida Network contract," Orman wrote.
As a condition of restoring its funding, officials have given Crosswinds until Wednesday to produce the requested documents.
A leadership crisis threatens to further derail any plans to get back on track. At least four board members have resigned since July, including two in October as rising tensions led to board infighting, the emails show.
This week, Maloney announced in an email to staff that he too was stepping down, after only five months on the job.
"It is with a mix of emotions that I share with you my decision to resign as the CEO of Crosswinds. This has been a difficult choice, but one I believe is in the best interest of the organization," he wrote, citing the network letter.
Maloney's email didn't include any mention of a transition of leadership. Resolving that issue was another condition set by the Florida Network to maintain its contract.
In the face of already major cash flow problems, it's uncertain whether the long-serving charity could survive the hit.
With no clear leadership plan in place and next week's deadline fast approaching, the future of Crosswinds — which will next year celebrate its 50th anniversary — appears to hang in the balance.
Eric Rogers is a watchdog reporter for FLORIDA TODAY. Contact Rogers at 321-242-3717 or esrogers@floridatoday.com.
This article originally appeared on Florida Today: Crosswinds, a prominent Brevard nonprofit, in crisis amid criminal probe
