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A local charity responsible for helping communities near FedEx Field in Landover was forced to return more than $500,000 in Prince George's grant money Thursday, and county officials have stopped future payments until the organization's problems are resolved.

County auditors said the Central Prince George's County Community Development Corp., a nonprofit organization based in Largo responsible for distributing $500,000 annually in county grant money to community groups, suffers from mismanagement and missing funds. The audit report cited the organization's failure to file tax returns with the IRS and questions about a former board member who set up several bank accounts without the organization's knowledge. (Read the audit here)

"Transparency of the organization's activities was not always readily apparent," auditors wrote in their report, issued Sept. 30.

Auditors went on to say that the organization had no "formal accounting system or consistent financial record-keeping practices in place," and cited disagreements among the nine-member board of directors, chaired by Terry Speigner, who is also chairman of the county's Democratic Central Committee. The organization's vice chairman is Arthur Turner, who also works as Speigner's second-in-command on the Democratic Central Committee.

The organization failed to keep minutes documenting its activities since January 2006, auditors noted.

"With the ongoing disputes on the board, the lack of minutes to show the official record of the organization's activity and the evidence of unauthorized activity taking place using the name of the CPGCCDC, we are concerned about the organization's ability to effectively manage and account for the annual county grant," the audit states.

County officials confirmed the organization returned $541,398 in unspent funds to the county finance office this week.

"We felt it was best that they return the money until they can correct the deficiencies," said County Auditor David Van Dyke, head of the county's Office of Audits and Investigations.

The organization was formed in 1995 to distribute grants to communities near the Washington Redskins' stadium — part of a deal then-County Executive Wayne K. Curry negotiated to bring FedEx Field to the county. The Redskins' stadium was previously located in Washington, D.C., until FedEx Field opened in 1997.

However, the grant agreement was not finalized until 2006, when the County Council voted to give the organization $500,000 per year to distribute.

The money for the fund comes through the county's entertainment tax.

So far, the group has awarded $440,000 in grants to charities within a three-mile radius of the stadium.

Sources close to the investigation confirm that much of the discord stems from disagreements between Speigner, the board chairman, and Randy McRae, a Washington, D.C., attorney and accountant who served as the organization's lawyer and treasurer. The sources said McRae served on the board without pay for years, handling administrative duties and finances.

According to auditors, "a former board member" set up accounts in the name of the group to apply for money from the county's Office of Housing and Community Development for other community efforts the organization was considering. County records show Prince George's has given that account $25,000 since 2007.

Board members told The Gazette that the auditors were referring to McRae. McRae, who ran unsuccessfully for county executive in 1998, did not return phone calls to his law office or an e-mail requesting comment.

Some board members told auditors they did not know McRae had set up the accounts, and he was dismissed from the board in July, according to the audit.

"We did what we could to get him separated from the organization," Speigner said.

Other board members have said McRae was acting on behalf of the group, and the $25,000 was a reimbursement for money he had spent before the group got regular funding from the council. McRae was a founding member of the organization, while Speigner came on board two years ago.

Conflicts have risen between newer and older board members who established the group, auditors noted. Some board members said Speigner seized control of the group's finances and has vetoed board decisions without their permission.

McRae's position as accountant for the group may have been the reason why the organization failed to file IRS reports, Speigner said.

"We were under the impression that our CPA was doing it," said Speigner, adding that the group is working to resolve concerns outlined in the audit.

"I'm disappointed and hurt that the people who worked so long to bring this to fruition are having to deal with this issue," Speigner said. "It makes folks question everyone, which is not how it should be. Once the board found out, we took action."

Auditors said they did not find evidence indicating that the 26 grants given by the organization were improperly made, though they noted that the group failed to follow an evaluation checklist to rank the grant applications.

"We believe the groups [who received money] met the criteria," Van Dyke said. "It's the process that was not followed."

Organization board member Jerry Mathis declined to go into details of the audit when reached.

"All I want to say is that the money was spent properly," Mathis said. "But there are internal problems we're looking to resolve."

The Central Prince George's Community Development Corporation is not the first local charity to face scrutiny over the way it distributes grants to the county's nonprofit and community organizations. A similar group set up to give away $350,000 per year in impact grants from the National Harbor mixed-use development in Oxon Hill was disbanded in 2007 over funding irregularities.

Responsibility for that grant program was turned over to the Prince George's Community Foundation after investigations revealed that grants were awarded to organizations that did not apply for funding and, in some cases, were distributed by county officials during the 2006 campaign season to politically influential churches and community groups.

E-mail Daniel Valentine at dvalentine@gazette.net.