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WASHINGTON, D.C. 20548
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B-171500
JAN 7 1974
The Honorable Adlai E. Stevenson, III ,
United States Senate
I', Dear Senator Stevenson:
Your letter of January 31, 1973, requested us to audit the
f i &nLan.Ua1, reoxds of the Ascendin Citizen's Development Company.(ACDC)--
the-e .i-- e-etoopmentcnatac-tor of the Model .Cities Program in .Est
ISi]ism £L£inis--and i.ts related corporations and the Model Cities
Program in East St. Louis to determine whether the program's resources
had been mismanaged, mishandled, or misappropriated. The Dep_ rtm e-at of
Hou-sig-andrai.n Developmen_ o(HiUD),_administer.s the program at the
national level.
As agreed with your office on February 1, 1973, we began our work
by reviewing the activities of ACDC and its related corporations, the
results of which are discussed in this report. We plan to report to
you at a later date on our review of the Model Cities Program in East
St. Louis.
We are unable to comment on the propriety of ACDC's financial
activities because of inadequate documentation and our inability to
obtain pertinent records and documents which we requested relative to
ACDC's operations. We were not provided enough information to complete
our review and render an opinion on ACDC's handling of Federal funds.
We did note, however, that $100,000 in Model Cities funds advanced
to ACDC for the Ascending Citizen's Investment Company (ACIC)--an ACDC
corporation--to establish a loan program under the Small Business Admin-
istration's (SBA) Minority Enterprise Small Business Investment Program
(MESBIC) were not used for that purpose. We could not verify the pur-
poses for which these funds were expended because of the lack of
pertinent records.
On September 13, 1973, we discussed this matter with city officials
and officials of the City Demonstration Agency (CDA) of East St. Louis
which is responsible for the administration of the Model Cities Program.
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