Benevolent Association
Never Repaid
Misspent Money
(April 17, 1998)
When the ChineseConsolidated Benevolent Association (CCBA)was given money by Chinatown medical institutions to purchase the SCM building at 50 Herald Street in 1985, it agreed to use the community benefit 
to develop "new" affordable housing for the Chinese community.
But between 1991 and 1995, CCBA was using rental income and interest generated from the building to cover its own expenses, which included banquets, legal fees, and expenses associated with a volleyball tournament. And while the money from the account was apparently taken with the intention of someday paying it back to the fund, none of the estimated $672,398 in community housing funds used during that five-year period has been paid back.
In recent years CCBA has been renting the SCM building to the 88 Supermarket and using the money to repay loans the organization took out several years ago to finance the purchase of Tai Tung Village, a 214-unit housing complex in Chinatown. The Herald Street building has been generating an estimated $100,000 in annual income for CCBA.
Although using the money to purchase Tai Tung Village has been justified by CCBA's lawyers as well as some members of the Chinese community as an appropriate use for the SCM money - including CCBA's former auditor Paul Chan - the SCM money that was spent prior to the Tai Tung purchase has never been adequately accounted for by CCBA officials. While the CCBA Council annually approved the spending of the SCM money, the issue was never brought to the broader Chinese community to determine its views on the matter.
In the past, CCBA officials have either been reluctant to talk about the issue or said they knew little about it. Moreover, no one in the Chinese community has come forward to protest the blatant misuse of the funds by CCBA or called for a full accounting of how the money was spent over the years. CCBA's new president, Robert Leung, declined to talk with the Sampan about how the money was spent, saying he didn't have to reveal such financial information to the newspaper. Leung, who has only been CCBA's president for about three months, also said he wasn't well enough informed on the SCM issue to discuss it.
While many members of the community can rationalize using the money to purchase Tai Tung Village - even though the purchase did not create "new" housing - few could justify its use for banquets and strictly CCBA affairs.
A Memorandum of Understanding signed by CCBA, the Trustees of Tufts College, and the New England Medical Center in 1983 states that the building was to be used to increase affordable housing in the Chinese community.
"The Association agrees to use such funds only to increase the availability of adequate affordable housing within Chinatown and its immediate environs," the Memorandum states. The SCM building was given to CCBA on behalf of the Chinese community in return for Chinatown support for several institutional building projects in the Chinatown area in the 1980s.
CCBA lawyers concluded that SCM money could be used to purchase Tai Tung Village because its purchase was meant to preserve the housing development's long-term affordability after a federal mortgage expires in 2014, according to former CCBA president Wilson Lee.
Although there is no restriction in the deed requiring Tai Tung Village to remain affordable after the HUD mortgage expires, the Tai Tung tenants who asked CCBA to purchase the housing complex apparently believe that a community organization such as CCBA will be less likely to take advantage of the building's projected rise in value after 2014, said former CCBA auditor Paul Chan. He said some understanding was reached between CCBA and HUD that CCBA would help the residents convert the building to resident-owned cooperatives. "Compared to other uses, CCBA putting that money into Tai Tung is the least of my concerns," said Chan, who explained that using SCM money to purchase the building was at least connected to its intended housing use.
The SCM debacle, however, shows the serious flaws in the way Chinatown community benefits have been distributed and the lack of accountability of CCBA, which in several instances has received them. The medical institutions, for example, made no effort to ensure that CCBA lived up to the agreement spelled out in the Memorandum after it received approval to move ahead with its projects. Nor has the Chinatown Neighborhood Council stepped into the breach to take a closer look at the issue. Other organizations in Chinatown - several of which have been vocal on issues such as the construction of a garage on Parcel C - have also declined to speak out forcefully against the misuse of the money. After receiving this community benefit, CCBA apparently determined that the SCM money belonged to it rather than to the community.
$672,000 Spent
From 1991 to 1995, CCBA used some $672,000 in SCM money to cover various expenses, according to financial statements filed with the state Attorney General's Division of Public Charities. CCBA transferred the following sums from the SCM account to be used for operating accounts and expenses from 1991 to 1995: In 1991 - $156,887; in 1992 - $88,903; in 1993 - $87,358; in 1994 - $110,199 (includes interest); and in 1995 -$229,051 (includes interest). Between 1991 and 1995, the organization spent about $650,108 in SCM funds. All of this money was spent on CCBA expenses from 1991 to 1993. In 1994 and 1995, it is unclear how much, if any, funds were spent on the purchase of Tai Tung Village, though CCBA accountant Gary Yee and Paul Chan said the money used to purchase Tai Tung Village would not have been included in the transfer figure.
In notes included in the statements, the accountants state that while the CCBA board said the SCM funds would be paid back to the SCM account when money become available, "the interfund loans are to be considered permanent transfers, principally because contemplated sources of funds for repayment are not readily available."
CCBA formally began dipping into the restricted funds in 1990 when the CCBA Council passed a resolution allowing interest from the funds to be used for specific purposes. Eventually CCBA began using the SCM rental income in addition to interest income in order to cover its own expenses. This money was used during the presidencies of Bing Wong, Paul Wong, and Reggie Wong. Wilson Lee says that during his administration SCM money was used only to repay loans taken out to purchase Tai Tung Village.
"Obviously, the diversion has gone much beyond current interest and clearly without Council approval," wrote CCBA's then-auditor Paul Chan in 1994. In the same statement, Chan noted: "There has been talks within the community, even among those who represented CCBA in the negotiation with Tufts and NEMC, that CCBA ought to pay back the funds 'borrowed' from that account. There has been also talks of bringing CCBA to court on this if CCBA fails to do so." No action, however, has ever been taken on the matter to address the misuse of the money. Even after Chan brought out the fact that the money was being misused, the money continued to be spent at an even faster clip - doubling to a whopping $229,051 in 1995 - during Reggie Wong's term as president and Chan's term as auditor.
Chan said that while the 70-member CCBA Council apparently believes it can spend the money with impunity, no other community organizations or members have been surveyed to determine their views on the issue. Chan suggested that it was unclear if the CCBA Council speaks for the larger community on this issue. "It's up to the community and the Attorney General's office to decide whether they should pay back [the money]," Chan said.
One member of the community, who wished to remain anonymous, said the SCM money - if it had not been misspent by CCBA in the past - would have been available now to cover the initial costs of exploring ways to develop housing on Parcel C in Chinatown.
Chan said last month that "there was absolutely no way for us to know" how the money had been spent in previous administrations. He said some of the money was used during Reggie Wong's term to purchase Tai Tung Village, but he suggested that that sum would have been in addition to the money transferred to cover operating accounts and expenses. The money was obviously not used to maintain its building at 90 Tyler Street, which has had a serious water leakage problem and a poor heating system that has required employees of the Asian American Civic Association to use small electric heaters during the winter. Often circuit overloads regularly blow fuses. The building at 90 Tyler St. was purchased from the City of Boston for $1 with the understanding that it would be used as a community center.
Wilson Lee, who was CCBA president from 1996 to 1997, said he didn't allow any SCM funds to be spent on CCBA expenses during his tenure. He said SCM money was only used to make payments on the $500,000 bank loan taken out by CCBA to purchase Tai Tung Village. He said CCBA only purchased the Tai Tung to help out the tenants, who "didn't want Boston Financial to have too much say in running Tai Tung Village." Lee said he had no choice but to spend SCM money to service the loan. "I had no choice. How are we going to pay the loan? (the $500,000 taken out to finance the purchase of the building)," he said.
CCBA purchased Tai Tung Village in 1994 for about $800,000, financing the sale with a $500,000 loan from the Shawmut Bank and an estimated $350,000 in SCM income. According to CCBA officials, CCBA has no access to rental income from Tai Tung Village until the 40-year, Department of Housing and Urban Development (HUD) low-interest mortgage expires in 2014.
"CCBA cannot touch any money from Tai Tung Village till 2014," Lee said. "I don't think CCBA's mission is to make money off that building." In theory, however, once the HUD loan is paid off in 2014, CCBA could earn profits from the building, though Lee argues the money would likely be reinvested to maintain the building.
Lee said that the money taken out of the SCM fund was "always considered a loan." He said the problem with earlier CCBA administrations was that they used the SCM money to cover operating deficits. He said they were living beyond their means, spending more money than they were taking in. "During my two years I was very very frugal with the money," he says, adding that SCM funds covered overspending on a volleyball tournament during Reggie Wong's term. The quickest way to solve previous budget gaps was to dip into the SCM fund. "I'm not defending my predecessors," says Lee, who adds that "when CCBA has money they should pay all the money ."
That, however, appears unlikely, since there currently appears to be no clear-cut mechanism to hold an organization like CCBA accountable for appropriately using a community benefit.
In 1994, Chan noted in a report on CCBA's finances that the account should have had about $900,000 if money had not been diverted to other uses. The SCM account currently has $75,472, according to newly elected CCBA treasurer Poy Ho, who said money from the account is now being used to repay the Tai Tung Village loan. He said he uses $3,326 in SCM funds per month to repay the Tai Tung Village loan.