Suffolk County overpaid a Mastic homeless shelter $1.42 million from November 2006 through 2012, according to audits released Tuesday by Suffolk County Comptroller Joseph Sawicki.
Never Alone, Never Afraid Inc. -- also known as NANA's House -- gave employees $570,000 in unapproved raises, almost half of which went to the top four employees, who are related, Sawicki said.
"While they ran a very productive homeless shelter, they're not allowed to give unauthorized raises to themselves at taxpayer expense," Sawicki said. He said the county typically allows groups that are overpaid to pay their balances over five years.
The nonprofit has about 150 beds at 11 locations in Suffolk. It also spent $323,000 more than allowed on administrative costs, which the county caps at 20 percent of overall costs.
Additionally, the group couldn't account for some expenses, including a $9,000 furniture set, a vehicle, a laptop computer, a refrigerator and $3,370 for uniform shirts. All were charged to the county without prior approval from the county.
Wendy Falanga-Smalls, executive director of the nonprofit, admitted mistakes were made but said the group never intentionally did anything wrong. She also said she believes the amount the group owes is less than auditors claim.
"We legitimately owe them money. We're prepared to pay them back," she said. For the unapproved raises, she blamed an accountant, whom she declined to name. Some costs auditors listed as administrative, like her salary, she said should be operational.
In other cases, she couldn't find the invoice or receipt for some items, such as the furniture, laptop and refrigerator, which she said were all used for nonprofit business.
She said she received only verbal approval for some expenses. "We were getting audited for a period of time when nothing was done in writing," she said.
Sawicki said about $285,000 of the unauthorized raises went to the top four managers: Falanga-Smalls; her mother, Judith Cardella, assistant executive director; her father, John Cardella, former head of maintenance; and her husband, Herbert Smalls, associate program director. The group submitted budgets to the county each year, but some of the budgets were never looked at by the county Department of Social Services, which administered the contract, she said.
The nonprofit has about 50 other employees, who she said were given 3 percent annual raises.
Falanga-Smalls' salary went from $60,637 in 2006 to $91,201 in 2013, according to publicly available IRS records.
The group runs shelters in Mastic, Shirley, Flanders, Ridge, Middle Island, Patchogue, Centereach and Center Moriches. It started in 1998 and won a contract with the county a few years later, Falanga-Smalls said.
The group received about $1.5 million to $2 million per year during the audited period, Falanga-Smalls said, though it has since expanded and receives $3.5 million to $4 million a year from Suffolk County.
She said she has so many family members working with her because, "My family and I started the agency. We used our own money to start it," she said. She met her husband on the job.