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State investigates Bayside head of shelter

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"There is no misspending here," said Father Coleman Costello, the organization's director, in a telephone conversation last week. "All of my expenses and charges have been for the benefit of Walk the Walk, which has been my life for the last 13 years."

Costello, who founded Walk the Walk in 1993, is also a priest stationed at Sacred Heart Parish at 215-35 38th Ave. in Bayside.

A recent report by the state Welfare Inspector General Paul Balukas cited Walk the Walk for "fiscal and programmatic mismanagement" centering around the agency's construction of a shelter for senior citizens called Mary's House.

Funded primarily by state and city grants, the organization "over-reported the quantity of services being rendered to its clients, thereby giving the false impression to agency officials that the organization was substantially fulfilling its contractual obligations," Balukas said. Costello's group had received $2 million in state homeless housing funds to construct the shelter, which was significantly over budget by $1 million and at least three years behind the scheduled 2001 opening, the report said.

"Walk the Walk had been having problems for quite some time. There was the shelter that never opened, and (the organization) was shut down on two occasions for fiscal problems," Balukas said in an interview last week. "Those were red flags."

The report said Costello's organization managed to escape scrutiny for years because it had the powerful Parkside Group lobbying firm supporting it through legislative efforts and initiatives. Flushing state Sen. Toby Stavisky's son, Evan, as well as former Flushing state Assemblyman Barry Grodenchik both work for Parkside Group along with numerous Queens people with strong political connections.

A listed number for Walk the Walk was disconnected. The exact location of Mary's House was not disclosed because it is a shelter designed to be a haven for abused seniors.

The report also said Costello was "permitted to incur credit card charges of a personal nature that were ultimately paid with the charity's assets." Balukas said in a recent interview that the state investigation revealed the controversial charges made from 2002 to 2004.

"He charged $22,000. Now some of those could be legitimate expenses, but part of the problem was that they kept no records and weren't able to provide us with backup," Balukas said. "Costello admitted that at times he did charge dinners to the Walk the Walk credit card, which was a mistake." He said there were additional charges at shops, restaurants and other stores near Costello's Hamptons home that were reviewed and questioned.

"The report is correct in that I didn't keep receipts," Costello said. "Frankly, I regret that now and I didn't pay attention to those accounting details." But, he maintained, "I've reviewed the credit card reports. I'm certain that all expenses during that period were proper corporate expenses for Walk the Walk."

Because no criminality is suspected, Costello will not be prosecuted, Balukas said.

"There was no criminal conduct here. It was more (a matter of) mismanagement," he said. "The organization could have been run a lot better and not enough senior citizens were being served. They took a lax approach to that, and they needed more strategic planning."

Despite the findings, the state investigators took pains to honor Costello's record of public service in the report. "In particular, we found that (Costello), who had developed a reputation for assisting individuals in need, aspired to open the first domestic violence shelter aimed at assisting the elderly," the report said.

"Father Costello has been a lifelong advocate for the elderly," Balukas said. "He needs credit for that."

The state agency made recommendations for the restructuring of Walk the Walk in hopes of eventually opening Mary's House, though under different leadership if necessary.

"Mary's House is there, and it's ready to open. It was way off budget and has taken too long, but it's there ready to be open," Balukas said. "I'm eager to see it open, so that elderly abuse victims and senior citizens have a place to go."

Costello said that in the midst of the "deeply hurtful" report and publicity he will continue to advocate for the elderly as he has done for so many years.

"The issue of elder abuse has been laid aside," he said. "It's an issue of great importance too often overlooked."

And in time, the controversy will die down, Costello said.

"God willing, this will pass," he said.

Reach reporter Sophia Chang by e-mail at news@timesledger.com, or by phone at 718-229-0300, Ext. 146.

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