Two employees of a politically connected nonprofit that misused state-issued federal COVID relief funds are facing criminal charges for embezzlement after allegedly stealing more than $300,000 from the organization since 2019.

Updates on the charges and the organization’s financial status came in an emailed letter sent to various community members and The Nevada Independent on Monday from Amanda Cormican, who was formerly the executive director of the Foundation for Positively Kids and, as of January, is its CEO. The nonprofit, based in Las Vegas and established more than two decades ago, serves children who are medically fragile or have developmental disabilities.

An outside state audit last year revealed two fraudulent invoices surrounding COVID-19 funds received by the organization, leading two Democratic state legislators to leave their positions with the nonprofit. Positively Kids subsequently conducted an internal investigation that showed that two former employees (the previous CEO’s executive assistant, Rita Nadamia, and the bookkeeper, Julie Alston) had embezzled funding through payroll, unwarranted fuel reimbursements and vendor checks since 2019. In the letter, Cormican said the employees had signature stamps for the then-board treasurer and then-CEO.

“In hindsight, the embezzled funds felt minuscule in comparison to the turn of events that was triggered by the associated fraud and poor financial oversight,” Cormican wrote in the letter. “We calculated nearly $5 million in lost revenue from [the audit and embezzlement revelation], in addition to a resignation from most members of our Board of Directors, who didn’t want their name or reputation to be associated with us during this difficult time.”

In an interview with The Nevada Independent on Wednesday, Cormican said that the small foundation put too much trust in Nadamia and Alston. By the 2022 and 2023 fiscal year, she said the organization’s annual budget had increased to $5.5 million for all programs, and Nadamia and Alston “were their own checks and balances.”

“It was also during COVID when a lot of things started happening from home vs. the office where we were all together,” Cormican said. “So I think that that didn’t help.”

Cormican said the financial difficulties were compounded because Nadamia had signed several contracts with lengthy terms and conditions that she “necessarily shouldn’t have” and hadn’t informed staff about problems with paying rent for the organization’s office.

Judy New, the program director, added that the organization knew it was behind on the rent, but Nadamia indicated she had everything under control. 

“[Nadamia] would always come through and say, ‘Oh, I talked to the landlord, and he’s giving us a break on this or a break on that. And so we’re OK,’” New said. “We didn’t really realize the severity of it until the eviction notices were actually hung on our doors.”

The nonprofit is negotiating a settlement surrounding the eviction.

The attorney representing Nadamia and Alston, Adam Vander Heyden, did not respond to a request for an interview via his secretary.

Cormican wrote in the letter that the audit findings led to the termination of the more than $1.4 million award the nonprofit had received from the state and the loss of an expected American Rescue Plan (ARP) award of more than $2.5 million to establish a childcare center for children with special needs at the Harry Reid International Airport.

She added in the letter that Positively Kids hired professional investigators to take over the fraud and embezzlement case, which was eventually turned over to police and the district attorney’s office. Criminal charges were filed in Las Vegas Justice Court on Jan. 24, and the next preliminary hearing for the former employees is scheduled for May 8.

The organization fired both employees before they were criminally charged, Cormican wrote, noting that Nadamia was fired in April after she became “increasingly uncooperative” during the internal investigation. Upon discovering that both had “excessive amounts” of sick leave and vacation time available but also frequently paid out to themselves in addition to their regular paychecks, Cormican said Alston was fired in June.

Reporting from 8 News Now indicates that Alston allegedly stole nearly $200,000, and Nadamia reportedly stole almost $140,000. The Las Vegas Metropolitan Police Department told the news organization that though the foundation provides 200 hours of annual time off for long-term staff, Nadamia allegedly “cashed out” more than 4,400 hours and Alston more than 5,500 hours.

The financial revelations about Positively Kids led to at least two resignations from the organization by sitting state lawmakers last year. 

Assemblywoman Shea Backus (D-Las Vegas), who served as a member of the board and Assemblywoman Michelle Gorelow (D-Las Vegas), who worked as the vice president of business development, left their roles last year after learning about the state’s investigation into the nonprofit’s financial irregularities.

Gorelow, who was elected to the Legislature in 2018, is not running for re-election. Backus has announced her intention to run for re-election but has not yet filed for office.

Though Cormican took over as CEO from founder Fred Schultz in January, she said that was a planned retirement and had nothing to do with the organization’s financial troubles. Cormican said that Schultz had planned to leave in July and then stayed on as part of the transition.

During the rise of the organization's financial problems, it began construction on the “Center for Special Needs Children.” While its original plan to provide 60 beds to serve children with long-term needs was changed to 36 beds for pediatric extended care for medically fragile children, Cormican said the project is now separate from the organization, but Positively Kids had planned to rent a space within the site when it was completed.

“That was [Schultz]’s own business,” Cormican said about the center. “When we became aware, also around the same time last year, that things were overlapping too much, we tried to draw a hard line making sure all of that was separated.”

Despite the financial difficulties and need to lay off more than half of the nonprofit’s staff, Cormican wrote that through revisions to the organization’s financial systems and other cost-saving measures, Positively Kids had paid off $1.7 million in outstanding debts, made all past-due accounts current, fulfilled outstanding paychecks and met payroll — tasks the organization had not been able to achieve when the financial troubles came to light. 

Cormican told The Nevada Independent that she, New and Jeanette Smith, the finance director, formed an executive committee dedicated to putting the organization on firm financial footing. She said the organization had fulfilled all its contracts and repaid all its debts by January.

The three said they tried to be as transparent as possible amid an ongoing investigation, alerting vendors and the community to what was happening. Smith said the organization hosted its annual Christmas give-back for families and tried to show the community that they were still present, adding that she stayed on to help fix the problems because the need for the organization’s services was too great.

“I can’t walk away from this,” Smith said. “So many other places are like just shut the doors, we’ll file bankruptcy and fire everybody, but we knew we had a whole set of kids we couldn’t let down.”