Sacramento mayor to pay $73K to settle with feds

SACRAMENTO, Calif. (AP) " Federal prosecutors on Thursday announced a settlement with Sacramento Mayor Kevin Johnson over allegations that a nonprofit founded by the former NBA star used federal money to pay volunteers for jobs including political activities, running personal errands and washing Johnson's car.

Johnson's St. HOPE Academy must repay nearly $424,000 in return for the government lifting its suspension on future federal grants. Johnson will pay nearly $73,000 of that amount, although the organization will reimburse him when it is able to do so. He agreed to complete an online business management class within four months.

Federal authorities last year put Johnson on a list of people forbidden from receiving federal money, and there were concerns that the case could jeopardize Sacramento's access to federal stimulus funds. The mayor, who took office in December, said Thursday the settlement "closes the chapter" on that question.

"From the get-go, I said that federal funds to the city were never at risk, and that the suspension was unwarranted and unnecessary," Johnson said in a statement.

Johnson, St. HOPE and the group's former executive director Dana Gonzalez admit no liability or fault but acknowledge St. HOPE "did not adequately document a portion of its expenditures," according to the settlement. Gonzales agreed to pay $1,000 of the settlement and to take an online business management class.

Johnson started St. HOPE in 1989 to revive the neighborhood in which he was raised in Sacramento, one of the city's roughest. It has since grown from a modest after-school program to include charter schools, art and community development programs and an urban peace corps program called Hood Corps.

It is that program that was at the center of the federal investigation into spending of the nearly $847,000 St. HOPE received between 2004 and 2007 from AmeriCorps, which gives college grants to people who volunteer for certain community service programs.

Investigators from the Corporation for National and Community Service, which oversees AmeriCorps grants, said Hood Corps volunteers were assigned cleaning duties and told to run personal errands for Johnson, including washing his car. Investigators said the volunteers also recruited students for St. HOPE Academy, engaged in political activities and went to New York to promote an academy Johnson opened in Harlem.

All those activities violated the terms of the federal grant, the investigators said.

Johnson, a three-time All-Star guard for the Phoenix Suns who retired from the NBA in 2000, was president and chief executive of St. HOPE during most of the period being investigated, according to the settlement.

His organization is credited with turning the failing Sacramento High School into a successful charter school and has helped bring businesses to Oak Park, one of the city's toughest neighborhoods.

Johnson's spokesmen had dismissed the allegations as administrative errors and suggested racism tainted the investigation. Johnson is the city's first black mayor.

A legal expert hired by the city had warned that the federal decision blocking Johnson from receiving federal funds could make Sacramento ineligible for money from the recently enacted federal stimulus program because Johnson influences city spending.

Johnson denied his status would harm the city, and federal agencies have given the city about $30 million since Johnson took office.

Under the settlement, Johnson's suspension from receiving federal money will be lifted.

"The lifting of the suspension against all parties, including Mayor Johnson, removes any cloud whether the city of Sacramento will be prevented from receiving much-needed federal stimulus funds," acting U.S. Attorney Lawrence G. Brown said.