CEASE Inc., a domestic abuse shelter that served Morristown for almost 40 years, closed last month after a state agency that oversees federal grant money found questionable money transactions, lack of protective measures to guard against possible fraud and a lack of oversight from those in charge of the program, state records show.

The Office of Criminal Justice Programs, which is an arm of the Tennessee Department of Finance & Administration, conducted two monitoring reports of the program in September and October and found several issues that raised red flags.

“There are serious concerns with how your program is being administered and the lack of oversight,” a letter to CEASE from the state agency said in October. “You are expected to ensure an effective system of internal controls is maintained and funds are spent in accordance with grant requirements.”

CEASE was a non-profit agency assisting in help with domestic violence victims through shelters and outreach. The agency covered a six-county area of Hamblen, Hancock, Hawkins, Grainger, Claiborne and Union counties.

The Office of Criminal Justice Programs told CEASE in the October letter that it needed to implement corrective actions and satisfactorily resolve all the issues the office found within its investigation or its contract may be terminated “for cause” by Feb. 1.

CEASE shut down operations on Jan. 31.

In December, there were indications the non-profit agency was experiencing problems when officials said they had lost a federal grant that provided more than $1 million in funding. That grant, through the Victims of Crime Act, is funneled through the Office of Criminal Justice Programs.

CEASE laid off 18 employees and shut down its domestic violence shelter in Claiborne County in December. Last week, Donna Kelly, former executive director of CEASE, said the agency would be laying off all remaining employees and shutting down the Hamblen County shelter.

SafeSpace, a Sevierville-based non-profit agency, announced this week it would provide outreach assistance temporarily until June 30. Other surrounding agencies have stepped in to help as well.

The OCPJ review states the organization had a lack of internal controls, had unallowable expenses and improper documentation.

Some of the discrepancies included using the grant money for fundraising activities, which is prohibited, double billing the grant and not meeting audit requirements.

The agency also twice submitted quarterly reports late.

The review states that CEASE employees altered time cards in between two monitoring visits the OCJP conducted in May and July.

Several documents also included accounting errors.

The OCPJ stated in its monitoring report that CEASE did not have sufficient controls in place, especially on the accounting end.

The state agency noted that there had been an expansion of CEASE recently and the organization had taken on a significant debt load. The review stated that CEASE was in a category of being high risk and not being able to generate enough cash flow to cover debts.

“There has been improvement in regards to the agency’s financial health in the last year but more needs to be done in order to continue operating at the current level and become financially stable,” the report states.

Other alleged improper usage of funds also included improperly billing the federal grant for items such as gift cards, staff lunches and paying sales taxes.

Office of Criminal Justice Programs officials first came for a monitoring visit in May 2019.

When they arrived, the accounting team was not ready and could not provide sufficient documentation, the report states.

The state agency then came back for a second review in July.

That review showed several deficiencies in documentation. CEASE was given an August deadline to provide additional information. The state said CEASE missed that deadline.

The report concluded that state officials felt there was a deficiency in the board of directors handling of the organization.

“There is a concern about the oversight provided by the board of directors as the board is the responsible party for the agency’s operation,” the report stated.

State officials said they reviewed a year’s worth of meeting minutes of the board and found no reports from the finance or executive committees, nor any focus on strategic planning or addressing the agency’s financial health.

The report also said there were questions regarding the top of the chain for the agency – the executive director – and the board’s role in oversight.

“There are concerns regarding the effectiveness of the board of directors’ oversight of the executive director as the party responsible for establishing and maintaining sufficient internal controls and accounting practices,” the monitoring report concluded.

Roxanne Bowen, the chair of the CEASE Board, said the board is doing its best to make amends.

“We were a group of citizens doing the best we could with a program that got too large too fast. We are doing the best we can to liquidate the assets and pay the bills,” Bowen said. “We are also working with a new group of regular citizens who will soon regroup, rename and restore services to Hamblen County.

“Please keep in mind that hindsight is 20/20.”