Pima County may face a federal investigation after Catholic Community Services — which manages the Casa Alitas shelters for migrants crossing the Mexican border, using millions in “pass-through” federal funding — told officials that a laundry company paid hundreds of thousands of dollars was owned by the mother of its director.
Since that May disclosure, the Pima County Attorney’s Office has reviewed the issue and found “no civil or criminal penalties” should be imposed, but the situation prompted U.S. Rep. Juan Ciscomani to demand an investigation by federal watchdogs on Wednesday.
County officials have stonewalled releasing records about the issue, and they have not responded to an extensive set of questions put to them regarding CCS procurement and the county. The Tucson Sentinel requested public records about how the county learned and dealt with the problems on July 2. Arizona state law requires that such records be provided “promptly.” But not a single document has yet been provided.
Over the last five years, Pima County has received nearly $77 million in federal dollars to shelter 500,154 people in a partnership with Catholic Community Services in Tucson. Earlier this year, Pima County was granted another $21.8 million from Homeland Security to provide refuge for asylum seekers through the end of the year.
The program sought to avoid “street releases” of migrants after they are processed by U.S. Customs and Border Protection, and since last September, the effort – aided by state emergency managers – helped transport thousands of people dropped off by CBP in Cochise and Santa Cruz counties, as well as in Pima County.
However, county officials have been careful to avoid spending dollars from the general fund, and as federal dollars began to dry up earlier this year, Pima County Administrator Jan Lesher moved to wind down the shelter operation and the Board of Supervisors agreed.
During a high-water mark, the county spent nearly $1 million per week to support as many as 1,000 people arriving each day, but those costs will decrease as the number of people released by CBP declines and the county finds way to minimize spending.
On May 17, Pima County Administrator Jan Lesher sent a memo to the Board of Supervisors, saying Catholic Community Services had discovered during a March audit that two employees violated the nonprofit’s conflict of interest and purchasing policies.
Elena Dwyre, head of Catholic Community Services, told Lesher that after an internal review, the organization found CCS “had been overcharged for services.” A laundry vendor was operating without a contract in violation of county and federal procurement rules, Lesher said.
Amado Laundry Service, registered in Amado, Ariz., is owned by Irene A.G. Piña, the mother of Diego Piña Lopez, who spent years working for Casa Alitas before he was tapped to become its director last year. Amado Laundry charged Catholic Community Services nearly $412,000 before the relationship was terminated, The New Republic reported last week.
The Sentinel learned of the leadership changes at Casa Alitas before the May 17 memo from Lesher.
Piña Lopez resigned from CCS in May, following word of the March audit reaching the county. Teresa Cavendish, his supervisor, was terminated from her position. Neither Piña Lopez nor Cavendish would comment on their partings from the nonprofit.
Dwyre told the Sentinel that “as an organization rooted in faith,” CCS staff “take seriously our duty to operate with integrity and be good stewards of the resources entrusted to us.”
“Earlier this year, we learned our migrant shelter program, Casa Alitas, had been overcharged for laundry services by a contractor. Following an investigation into this discrepancy, we learned this contractor had not been procured in line with county guidelines, and we were shocked to discover two Casa Alitas employees had violated our conflict of interest and purchasing policies, which are in place to ensure fiscal responsibility,” she said, noting that CCS “promptly self-reported” the matter to both the county and the Diocese of Tucson.
Lesher told the supervisors in that May memo that she would review other grants and report her findings, and last Thursday she reiterated her take.
“Our perspective has been that this issue was an error on the part of CCS and any information about the specifics of that error lie with CCS, including the amounts paid to the conflicted company providing laundry services and the names of the employees involved,” Lesher wrote. She said neither Cavendish or Piña Lopez were county employees and “it is not the county’s place to speak to internal personnel matters of our contractor.”
“While the conflict of interest associated with the procurement of laundry services for CCS was troubling, the response by CCS has been appropriate and reassuring,” Lesher wrote last week. She added CCS reported the issue to the county after its own audit and “took immediate action to discipline the employees involved and continues to work cooperatively” with county officials to “ensure there are no other violations of federal rules and guidelines for federally reimbursed contracts.”
The county administrator said Catholic Community Services remains a “trusted” partner, and while CCS has reduced its involvement to the Casa Alitas Welcome Center on Ajo – which continues to shelter families with young children – this wasn’t done because of the laundry services.
“It is important to note that these two things are not connected in any way,” Lesher wrote, adding CCS elected to withdraw its role in sheltering people “many months” before they, or the county, knew about the issue with the laundry services.
Instead, AMI is providing services for the shelter on Drexel Road.
Lesher noted that while news organizations including the Tucson Sentinel have sought public records, “there has been a delay in releasing” because hundreds of pages were under review by the County Attorney’s Office.
“I’ve asked the county attorney today to do what she can to expedite the review and release of the requested records,” Lesher wrote last week, after the Sentinel amended our records request to extend the time period of documents that should be released due to the lack of public action by the county, sending notice to the entire Board of Supervisors.
Republican congressman wants federal probe
On Wednesday, U.S. Rep. Ciscomani sent a letter to the Office of Inspector General for Homeland Security, asking officials to “conduct a comprehensive investigation into the use of federal funds by Catholic Community Services’ Casa Alitas in Tucson, Arizona.”
Ciscomani said Pima County has received nearly $22 million for the 2024 fiscal year-which began last October and runs through September 2024-and said when compared to other grant recipients, “the burn rate of funds used by Casa Alitas has been incredibly high.”
County officials have previously defended the Casa Alitas program, noting that at its height, the shelters spent around $1 million per week, but that effort protected more than 10,000 people from being released directly to the streets across three counties, offering food, clothing, some medical care, and transportation.
Ciscomani said federal dollars are meant to “provide local communities with relief when dealing with a migrant crisis. However, recent reports indicate corruption, conflicts of interest and the misuse of at least $200,000 taxpayer dollars.”
“Moreover, these same reports indicate that Casa Alitas did not properly follow procurement processes and may have overpaid vendors,” he said. “Congress, and the American people deserve to know where our federal dollars are going, and individuals and entities who have taken advantage of these programs should be held accountable.”
Wednesday, Lesher noted Ciscomani’s request and said the county shares his concerns.
“That is why Pima County is thoroughly meticulous in the expenditure of more than $150 million a year in federal grant funds, on average, and it is why the county has strong internal financial controls and conducts regular audits of all our grant-funded programs,” Lesher said. She reiterated her statement that CCS and the Catholic Diocese of Tucson are “strong community partners” and repeated her statement that CCS “self-reported” the issue to the county when they “identified lapses in their procurement procedures, and… self-reported the conflict of interest associated with that procurement failure.”
“Moreover, the charitable organization has been fully cooperative in all past and ongoing audits of federal sheltering funds that have been used to reimburse the county for the enormous costs of temporarily sheltering more than 500,000 asylum seekers released into Pima, Santa Cruz, and Cochise counties by the Department of Homeland Security since 2019,” she said.
“We welcome any federal agency that would like to review our books about any federally funded program, including our Temporary Sheltering Program,” Lesher wrote.
Dirty laundry
Sources with knowledge of the situation, speaking on condition of anonymity to protect their jobs, confirmed that Piña Lopez offered to resign after the audit, and Cavendish was terminated.
Piña Lopez’s mother has been one of the owners of the corporation, Pina Enterprises Inc., behind Nogales Cleaners, a dry-cleaning operation in that border city.
Although Amado Laundry Service began sending invoices to CCS in March 2023, the LLC of that name wasn’t set up by Irene A.G. Piña until May 5 of last year, Arizona Corporation Commission records show. That LLC is not set up at the same address as Nogales Cleaners, but at a private residence in rural Amado, just off Interstate 19 between Nogales and Tucson.
Irene A.G. Piña is the only individual listed on those records.
The audit of CCS found that the nonprofit may have been overcharged by about $200,000 over the course of the year – paying nearly twice as much as the going rate for commercial laundry service on a per-pound basis.
County and internal CCS sources told the Sentinel that the nonprofit had been unable to find another Tucson-area laundry operation able to undertake the contract to wash all of the bedding and other items needed by the shelter operation.
County officials and CCS representatives declined to speak on the record about the amount of the over-billing, which was charged against federal funds passed through the county to the nonprofit under a contract. No records of requests for bids from other commercial laundries have been released, whether formal or informal.
Nor have officials accounted for the lag in time between CCS attesting to procedural changes being made in March as part of the audit, and disclosing the issue to the county in the middle of May.
Decisions ‘on the fly’
Former Tucson Councilman Steve Kozachik has been involved in efforts to shelter asylum seekers for nearly a decade and began working with Piña Lopez when hundreds of migrants families were released by Customs and Border Protection at the Greyhound Bus Terminal, then located in a double-wide trailer near the Tucson Convention Center.
For months, the bus station became an ad-hoc shelter and humanitarian groups used part of the station to store blankets, clothes, and snacks for migrant families. Later, churches and non-government organization stepped up, and four churches offered their sanctuaries as temporary respites. During the Trump administration, a new influx of migrants were sheltered at the Benedictine Monastery until 2019 when the county formalized the long-running effort by establishing the Casa Alitas Welcome Center in an unused section of the county’s juvenile detention center.
During the COVID-19 pandemic, the effort expanded with help from the city of Tucson to include a few hotels and the Casa Alitas Drexel Center.
Kozachik, who resigned from city government to work as a special advisor to Lesher, said both Cavendish and Lopez “poured their hearts” into their efforts to shelter thousands of migrants.
“I’ll tell you, I have inherent faith in Diego’s honesty,” Kozachik said last week. “This was in the middle of a surge, you make decisions that are necessary on the fly to make sure people aren’t winding up on the street, get the food they need, and are treated fairly. “
Kozachik said that last summer as Title 42 came to a close, the shelter received 1,200 to 1,500 people per day, and volunteers were taking laundry home, helping out with meals, and transporting migrants across the city.
“All hands were on deck,” he said.
By March 2023, Casa Alitas opened their operation at a former call center on Drexel Road, and as the number of people-largely families with children-increased from week-to-week, the organization struggled to manage laundry, especially blankets and other bedding. The organization considered several options, including the use of “space blankets” — the mylar survival blankets that are regularly given to migrants while in CBP custody, but dismissed that option.
In May 2023, more than 15,000 people were sheltered by Casa Alitas and this accelerated through late-December as the Tucson Sector-which covers Arizona from the Yuma County line to the New Mexico border-became the busiest in the nation as hundreds of people arrived in the U.S. after crossing the border in remote and wild regions of the Arizona-Sonoran border.
In September, Pima County was praised for its efforts to shelter migrants and for doing “the heavy lifting” by managing federal grants, shelter services and transportation with help from the state.
In December alone, Casa Alitas shelters took in 39,714 people, according to county figures.
“No one’s going to defend the immediate decision that was made,” Kozachik said. “But the people not involved in the nuts and bolts of it, have to understand the context.”
“CCS was at the time getting good press for all the right reasons, managing an extremely broken border situation, and other people were touring their operation and learning from them,” Kozachik said. “But, CCS management took their eye off the ball and lost track of their own internal protocols.”
CCS’s Dwyre told the Sentinel that “this was a clear violation of not only our best practices, but also of our values, faith and trust, and we are deeply disappointed by these actions. Those employees were quickly terminated, and the contractor relationship was likewise discontinued.”
Audit: ‘A significant deficiency’
In May, Lesher outlined the issue in a memo to the Board of Supervisors telling them during an audit the organization “determined and disclosed to Pima County that one of its vendors providing services to the Casa Alitas Drexel shelter was working without a contract” in violation of county and federal procurement rules.
She added CCS took “disciplinary action against the employees involved in hiring the vendor and alerted the county about the lack of required procurement procedures and contracting.”
As part of her memo, Lesher quoted the CCS CEO.
“Catholic Community Services recently discovered, in an internal review of accounts, that we had been overcharged for services by a contractor for one of our programs,” Dwyre said. “Upon further investigation we learned that two employees with that program had violated our conflict of interest and purchasing policies.”
“Those employee relationships were quickly terminated, the contractor relationship was likewise discontinued, and program partners were promptly notified of the issue,” Dwyre told Lesher, according to the May memo. “We have begun the steps needed to rectify the billing issues. Additional steps have been taken to improve training and tightening of purchasing oversight, to ensure this situation will not repeat itself.”
In March, Keegan Linscott & Associates provided a review of the nonprofit’s finances and found a “significant deficiency” for a contract linked to Casa Alitas’ funding.
Through 2022 and 2023, the audit found, Catholic Community Services received more than $14.5 million in federal funds, including just over $6 million from the Emergency Food and Shelter Program, nearly $5.6 million which passed through Pima County.
Auditors said they found CCS used a vendor “who in total was paid more” than they should have been under the guidelines, and further, CCS “did not utilize a formal procurement method in selecting this vendor as required.”
“The finding appears to be the result of an immediate need to obtain services and an oversight to subsequently conduct a formal procurement method,” the auditors added. “By not adhering to a formal procurement method, the organization may or may not have chosen the best vendor to provide the services.”
The audit also noted “due to a shortage in staff, all 12 monthly billings for this program were prepared by one individual and were not reviewed and approved by secondary supervisory personnel.”
CCS told auditors they updated their purchasing policy by March 22 and would require staff to complete new training. In addition, an accounting manager at CCS will “monitor large purchases by vendor on a monthly basis” to make sure vendors meet or exceed” federal requirements.
During a meeting on July 16, Supervisor Steve Christy referred to the May memo and asked Lesher to review her findings, including any other “irregularities” at CCS.
“Let’s cut the chase on part of that,” Lesher said. “There were not other irregularities other than this one.”
Lesher told the board, the chief financial officer at CCS reported two issues, including a conflict of interest and a procurement issue. She added the two people involved with the laundry contract were “no longer with” CCS.
Lesher added county officials informed federal officials about the contract and the firings and reviewed the other contacts managed by the nonprofit. “We’ve looked at every other contract that Catholic Community Services has,” she added.
She said the first day county officials “were made aware” of the issue was on May 17, the day she notified the members of the county board.
That day, officials with CCS met with county officials -including Sam Brown, the chief civil deputy of the Pima County Attorney’s Office – to review the files and see if there was “any potential for civil or criminal action that might need to come forward.”
A spokesman for the Justice Department said he could not comment on whether federal officials were investigating, adding the U.S. Attorneys Office for Arizona would review a case if submitted to their office by a federal agency.