SAN ANTONIO – Editor’s note: Read Part 2 of this investigation here.
A San Antonio nonprofit that provides assistance to pregnant women and young parents spent $25,000 this year to purchase land that was later registered to produce industrial hemp, records obtained by the KSAT 12 Defenders show.
The land purchase was finalized in August, according to Bexar County Clerk records, and is one of a long list of questionable expenditures made by A New Life for a New Generation, a nonprofit founded in 2016 with locations on the city’s West Side and East Side.
While leaders claim the nonprofit provides material assistance like diapers and formula and program services like counseling to San Antonio families, financial records for New Life show it has also funded multiple out-of-state trips and a smoke shop business owned by the nonprofit’s president and founder, Marquica Reed.
The Texas Attorney General’s Office was made aware of financial irregularities within New Life in a complaint filed in mid-October. The complaint accuses Reed of “using money received from the state and donors for her own personal gain.” These types of expenditures are prohibited by the taxpayer-funded state health program that provides the majority of New Life’s money.
In response to a public information request by the Defenders, the attorney general’s office released a copy of the complaint and background information it had compiled on New Life. However, agency officials have not responded to multiple inquiries about the status of the case.
Listen to Dillon Collier’s interview with Texas Public Radio about this story:
‘I can now grow CBD’
Twenty months of financial records provided to the Defenders by a source at New Life — covering Jan. 2020 through Sept. 2021 — raise questions about how the nonprofit has spent significant reimbursements from the state as well as funds from two federal Paycheck Protection Program loans.
In late March, a New Life executive wrote a check from its account to Daryl Wayne Shelton for $25,000 for the “purchase of property.”
The warranty deed for the vacant West Side lot, located at 6743 Buena Vista St., was finalized Aug. 20 and signed over to Reed by Shelton for the sum of $25,000, according to a county clerk record containing both of their signatures.
Shelton told the Defenders earlier this year that Reed claimed she wanted to use the property to store New Life vehicles but also said she planned to build a house on it for her grandchildren.
Records from the Texas Department of Agriculture, however, show the property at 6743 Buena Vista St. was instead registered at the end of August by Reed’s family member to be part of a state hemp production program.
The license, which runs through the end of Aug. 2022, allows the property to be used to produce industrial hemp.
The license lists the business registered as “Marquica R. Reed, 6743 Buena Vista, San Antonio, TX 78227.”
Reed posted a picture of the hemp license on her Instagram page on Oct. 19 with the caption: “I can now grow CBD.”
The Defenders tracked down Reed outside a smoke shop she owns in November.
When asked about nonprofit funds being used for the land purchase, Reed agreed to answer questions after putting a child inside the store.
Reed, after locking the door behind her, said she would not answer questions because she did not want to look bad on TV. An attorney claiming to be friends with Reed called the Defenders minutes later.
After the Defenders provided a long list of questions, the attorney — who said she did not represent Reed but was calling on her behalf — did not offer a response to our inquiries. The attorney also did not respond to a call to the law firm she works at.
A social media post shows New Life closed down its locations for the rest of the day on Nov. 10, shortly after the Defenders approached Reed for comment.
R&J CBD Smoke & Vapor Lounge
Public records show Reed filed business formation paperwork for R&J CBD Smoke & Vapor Lounge in early June, listing herself as the owner.
The smoke shop, located at 137 S. Acme Rd., is about a block away from New Life’s Commerce Street headquarters.
Financial records and interviews with contractors indicate that money from the New Life nonprofit has been used to fund Reed’s side business, rather than fund assistance for young parents and pregnant women. One lawmaker called it “an egregious misuse of tax dollars.”
A builder hired this summer to refurbish R&J CBD Smoke & Vapor Lounge confirmed to the Defenders that she accepted a $2,000 check from New Life on July 10, which was signed by Reed, as a payment for work done at the smoke shop.
The builder, who asked that the Defenders not use her name, said she took measurements and pictures at New Life’s Commerce Street location but never did remodeling work there.
“It was specifically for working for a smoke shop and (Reed) was trying to divide the building into a smoke shop and a hookah lounge,” the builder said during a phone interview Nov. 11.
In April, $714 was debited from New Life’s primary bank account by Toro Imports in Houston, records show.
Toro Imports refers to itself as Texas’ largest wholesaler for smoke shop, vape, dispensary and hookah bar products.
A second invoice from Toro Imports from late April for $268 shows the items were billed to R&J smoke shop but shipped to New Life’s Commerce Street address.
In addition to the questionable checks, financial records also show New Life funds were used to pay for out-of-town trips attended by Reed, her family members and some New Life employees in 2020 and this year, as well as for entertainment.
The entertainment purchases include $227 for Schlitterbahn Waterpark tickets in August 2020, more than $1,200 at Dave & Buster’s in October 2020 and 18 charges for Razor and Bird scooters in November 2020.
The state-run program that accounts for the majority of New Life’s funding specifically prohibits funds being used on admission fees or tickets to any amusement park, recreational activities or for the acquisition or construction of facilities.
‘I did not do the work’
Contractor Earl Greenwood told the Defenders in a taped phone interview that he accepted a $20,000 check written to him by New Life in late March for “water damage repair” even though he never completed that type of work.
Instead, according to Greenwood, he cashed the check at New Life’s bank and returned the money to Reed, who then gave him around $1,000.
“I ran it through, what is it, Woodforest Bank. I collected that money and I gave it back to her,” said Greenwood. “I did not do the work. I’m telling you, they hired somebody else to do the work.”
The landlord for New Life’s Commerce Street location told the Defenders in a separate phone interview that he paid for the water damage repairs, which stemmed from February’s winter storm.
The landlord said he paid several thousand dollars to a contractor to replace sheetrock and a pipe that burst. But he told the Defenders there was nowhere near $20,000 worth of damage to the eight-unit building, in which New Life occupies seven units.
Greenwood said he did some work at the nearby smoke shop owned by Reed, but she paid him in cash.
Greenwood said other, much smaller checks written to him by New Life, were for construction work he actually completed for the nonprofit.
How New Life gets its funding
A New Life for a New Generation was granted tax-exempt status as a 501(c)(3) by the U.S. Department of the Treasury in late September 2016, public records show.
The nonprofit later became part of the state’s Alternatives to Abortion program, created in 2005, which is now overseen by the Texas Health and Human Services Commission.
The program “promotes childbirth and provides support services to pregnant women and their families, adoptive parents, and parents who have experienced miscarriage or the loss of a child,” according to a description on the state’s website.
Funding is provided to administrators, in New Life’s case the Texas Pregnancy Care Network (TPCN), which then gives money to nonprofits in the form of reimbursements for services provided.
Since the third quarter of fiscal year 2018, New Life has received more than $2.5 million in reimbursements, HHSC records show. New Life received more than $1 million in state reimbursements last year alone, according to the records.
The reimbursements make up a vast majority of New Life’s funding, tax records for the nonprofit confirm.
After the Defenders requested records pertaining to New Life’s state reimbursements in October, TPCN Executive Director John McNamara sent an email to its San Antonio subcontractors asking for them to let him know if they were contacted by a TV station or an investigative reporter.
McNamara declined multiple requests to be interviewed by the Defenders for this story, claiming he was “booked pretty solid,” but he offered to answer questions via email.
McNamara, who wrote that he was unaware of any financial irregularities within New Life, did not respond to multiple emails from the Defenders asking for the stipulations for how New Life can spend its reimbursements or for the current agreement between the two entities.
An HHSC spokeswoman this month said via email that TPCN had not reported any possible financial irregularities involving New Life.
‘An egregious misuse of tax dollars’
State Rep. Donna Howard, D-Austin, has for years said HHSC does not have the staffing levels in place to properly monitor the program’s contractors and its subcontractors.
“There was no data, and there still, in my opinion, is very little data that provides any kind of accountability for this program,” Howard said during an interview at the state Capitol earlier this month.
“We have a fairly lean government service here in our state and we have not provided, I think, adequate funding for the staffing and resources that are needed to do this kind of accountability work that one would expect in the private sector. You need a lot of staff to follow up on the contractors and the subcontractors of all the programs we have in the state,” said Howard, chair of the Texas Women’s Health Caucus.
While Howard has continued to sound the alarm on the Alternatives to Abortion program structure, her fellow state lawmakers have increased its budget exponentially, to around $100 million the next two years.
Asked specifically about New Life, Howard told the Defenders, “It sounds like an egregious misuse of tax dollars. We have one of the highest rates of maternal morbidity and mortality in the nation. We have the highest number of uninsured numbers in percent in the nation, and yet we’re wasting taxpayer dollars on a program... when we have tremendous need to help women actually get the health services they need.”
Federal records show New Life was given two Paycheck Protection Program loans totaling $139,600.
The first PPP loan for New Life, for $56,600, was approved in August 2020 and deposited into the nonprofit’s primary account in early September last year.
The second loan, for $83,000, was approved in January and deposited into New Life’s account in late March, financial records show.
From April to October last year, New Life records show more than $11,500 in COVID employee appreciation checks, akin to bonuses, were distributed to staff members, including more than $1,100 to Reed.
Gloria Yanez, vice president of New Life’s board of directors since January 2020, was given a $50 COVID appreciation check in late October of that year.
She is also covered by the nonprofit’s workers’ compensation insurance policy, records show, raising questions about whether she was a paid employee of the organization while also serving on its board.
Yanez, who is described as Reed’s common-law daughter-in-law, did not respond to a text message seeking comment.
Attempts to reach Yanez via telephone were met with an automated message that the person dialed was unable to receive calls.
The other member of New Life’s three-person board, on which Reed serves as president, is the father of some of her children, Sanford Jones. Jones has been listed as the nonprofit’s treasurer since January 2020.
When the Defenders attempted to reach Jones, the call went straight to voicemail at New Life’s offices.
From January 2020 to late April of this year, financial records show New Life staff were given checks totaling $26,900 for payroll and cash advances.
A majority of that money, $21,600, went to Reed, including a $200 check on January 24, 2020 that Reed wrote and signed to herself.
An accountant who reviewed New Life’s financial statements said nonprofits are not prohibited from issuing bonuses or even payroll advances, but that these type of expenditures are subject to increased scrutiny by the IRS.
The accountant also said New Life’s practice of transferring round numbers for its month payroll expenses, such as $30,000 in January 2020, is a significant red flag since this figure would almost never be a round number.
‘There might be more going on that we just can’t see’
Jason Meza, regional director of the Better Business Bureau San Antonio, said New Life’s tax records leave many unanswered questions about its inner workings.
The BBB, through its Wise Giving Alliance, accredits and approves charitable organizations.
“Under the surface, there might be more going on that we just can’t see. A lot of holes in the 990 form itself,” said Meza, referring to the 2019 IRS record showing New Life’s finances for that year.
That 990 is New Life’s most recent publicly available tax document.
Meza said the form contains a number of concerning issues, including no description of its program service accomplishments.
The sections in New Life’s 2019 form, as well as in its 2017 and 2018 990′s, were left blank.
“If I don’t see a detailed breakdown right off the bat, that should draw a lot of questions,” said Meza.
He added that New Life listing “0″ under fundraising expenses also stood out, since charities and nonprofits certainly have to spend some sum of money in order to generate donations and lock down sources of funding.
Meza also pointed out that less than 20% of New Life’s total expenses that year went to program services.
“That itself would not pass a BBB accreditation right off the bat,” said Meza, who said at least 65% of a nonprofit’s expenses should go directly to a program or a service it provides.
Asked about the apparent blending of New Life’s finances with Reed’s smoke shop, Meza said, “Nowadays it’s a common tale where people are spending time on private ventures or other businesses. But the cleanliness of this? No, it doesn’t look well, it doesn’t blend well. Is it something that probably crosses a lot of lines ethically? More than likely, yes. Is it illegal? At some point, that’s to be determined. But again, a lot is left. Questions are left open for this and it’s sad to see it’s happening in South Texas. I mean it just hurts.”