THURSDAY, Jan. 22 — Cash flowing from the city of Lansing to a local nonprofit operated by one of the city’s top executives points to conflicting interests and could help explain what prompted officials to put Joan Jackson Johnson out of a job, at least temporarily.
Jackson Johnson, who has served as the city’s director of human relations and community services since 2006, remains on paid administrative leave this week while the Michigan Attorney General’s Office continues to review “issues with contracts” that, according to Mayor Andy Schor’s office, prompted her suspension Jan. 9.
Schor — in response to questions on the situation — said that city officials were notified by the U.S. Department of Housing and Urban Development of an alleged “legal concern” toward the end of last year that involved various contracts signed by Jackson Johnson. He declined to elaborate further on what triggered the review.
And while city officials continue to keep details at a minimum as the investigation unfolds, records obtained this week through the state’s Freedom of Information Act helped shed some light on a possible conflict of interest that could have been revealed in a recent forensic audit, prompting those legal concerns with several city contracts.
Jackson Johnson previously told City Pulse that her recent suspension was tied to a perceived “conflict of interests” with her position as the longtime president and chairwoman of One Church One Family, a nonprofit organization founded in 2008 and largely designed to provide housing and counseling to local homeless families.
She said city officials took issue with her role as the president of a nonprofit that regularly received financial support from city coffers, in this case with funding directly managed by Jackson Johnson’s department. She also insisted her departure was tied to a “witch hunt” and that she didn’t take cash for herself.
“There is nothing financial going on,” Jackson Johnson declared to City Pulse earlier this month. “I’ve been told there’s a conflict of interest with my position in different organizations. I was working on that. After a while, you have to think they’re on a witch hunt against me. I’m not sure I really understand anything.”
Records, however, show that the city’s Department of Human Relations and Community Services — under Jackson Johnson’s direct oversight — contracted with One Church One Family at least six times beginning in 2016, funneling more than $500,000 in federal grant money and general fund contributions to support its operation.
During that time, state licensing records show Jackson Johnson had also served simultaneously as the president, secretary and treasurer of One Church One Family — essentially forming contracts with herself, teetering into a legal grey area in which she cashed several city-issued checks that carried her own signature.
“We are aware of the situation and have taken necessary and appropriate action as a result,” Schor said.
Records of thousands of dollars in financial support from the city to One Church One Family date back to at least 2016. Older documents and contracts couldn’t be located within city records. In accordance with record retention laws, it’s presumed they’ve since been lost or destroyed, according to City Attorney Jim Smiertka.
In 2016, the Department of Human Relations and Community Services paid Advent House Ministries $20,000 from Lansing’s general fund to help assist eligible families with case management services and to relocate up to nine families into decent, affordable housing through its “One Church One Family Program,” records show.
By 2017, that financial assistance was flowing directly to One Church One Family Inc. The city then allocated $10,000 in general funds alongside $250,700 in federal grant funding from the U.S. Department of Housing and Urban Development directly to Jackson Johnson’s organization — all while she controlled the purse strings.
State records listed Ingham County Treasurer Eric Schertzing as the registered agent of One Church One Family as recently as last year, but he said he cut ties with the nonprofit organization in 2013. He was also surprised to see his name on those records and criticized the organizational ability of those behind its registration.
“Joan was leading things from the get-go,” Schertzing said. “I left because it just wasn’t a safe place to be. Joan is a force of nature in wonderful ways, but also in some ways that weren’t so wonderful. Keeping track of the details isn’t her strong suit. She wants to help people, but lord knows what those financial records look like and how those dollars were flowing into the organization. It was just a huge administrative burden to deal with.”
One Church One Family received more federal grant funding from the city of Lansing in 2018, this time for $243,300. Additional contracts in 2018 and 2019 allocated another $20,000 in general fund dollars to the nonprofit — totaling at least $50,000 in general fund dollars and nearly $500,000 in grant funding since 2016.
The Lansing City Council had approved each contract. Each of them also carry the signatures of first Mayor Virg Bernero and then Schor, who succeeded him in 2018.
Those contracts also included a conflict of interest clause that stated that officers, employees or officials of the city who exercised “any function or responsibility” with administration of the contract shall not have any interest — either directly or indirectly — in the proceeds of city-allocated funding or distributions of grants.
Jackson Johnson, as part of the contract, was also required to adhere to the Code of Federal Regulations, which states that an “organizational conflict” can arise when the recipient of grant funding is unable or potentially unable to separate themselves from their role in distributing those same funds. Knowingly false statements or representations related to the award of federal grant funding also carries a potential five-year prison sentence.
“The city of Lansing has charter and ordinance language regarding conflict of interest, ethical conduct, and disclosure,” Schor said. “Every elected official and department director is informed of these laws and required to follow these laws. An ethics manual is distributed to officials and department directors at the time of hire.”
Bernero, who first hired Jackson Johnson, said that he wasn’t aware of her close ties to One Church One Family as some of the earlier contracts were being awarded. Multiple audits never revealed any problems and the City Council never spotted any issues as it voted to approve the funding, he said.
“I really didn’t get into the weeds on where the money was flowing,” Bernero added. “I understood it to be a partnership with the community. There was never any issue brought to my attention. Maybe something that seems black and white now was more of a grey area back then. It doesn’t mean anyone is guilty of anything.”
But Jackson Johnson’s conflicting interests certainly made a blip on Schor’s radar sometime late last year.
Smiertka said two additional contracts — for a combined $262,000 — were slated to be issued to One Church One Family in 2019 but were pulled before they could be fully executed. It’s unclear what exactly killed those contracts, but Schor said “legal irregularities” within them were spotted by city officials.
If those contracts remain unfunded, Schor said officials will find another local organization to maintain services.
Dozens crowded City Hall earlier this month to support Jackson Johnson, repeatedly lauding her department for its charitable efforts throughout the city.
Bernero said the funding might not have followed best practices, but it made a positive impact in Lansing.
“The main question for me is whether the money went where it was supposed to go,” Bernero said. “Certainly, we should follow guidelines on these things but I’m more concerned on whether the cash was spent as intended. That seems to be what people care about, and Joan’s department has always been there to take care of people.”
Jackson Johnson resigned from One Church One Family last December after she said she was told to “divorce” herself from the organization given its financial ties to the city, she said. She stopped returning calls to City Pulse after the AG’s office announced it was reviewing her department’s finances.
Lansing’s charter also defines a conflict of interest as an avenue for city employees to derive “any income or benefit, directly or indirectly, from a contract with the city or from any city action.” Employees are asked to report conflicts on an annual basis. If one exists, employees are barred from mixing those related affairs.
An affidavit filed by Jackson Johnson last year noted that she received no personal financial gain from her nonprofit and hasn’t generated more than $2,500 in annual income outside of her post with the city of Lansing. She also told City Pulse that she never collected payment through her connections to One Church One Family.
“Joan is the person that was entrusted to see those funds were properly spent and used as intended,” Bernero added. “Like every department, she went before the Council and presented a budget. It’s not like any of this has been done in secret. There’s never been a question in my mind that this money was going where it was needed.”
Calls to the U.S. Department of Housing and Urban Development for additional details on the sorts of “legal concerns” Schor said were spotted last year within Jackson Johnson’s contracts were not immediately returned.
Visit lansingcitypulse.com for previous and continued coverage as the investigation continues to unfold.