State officials have frozen funding to a Hartford nonprofit after learning it lost $300,000 to a wire fraud last year.
Officials from the Department of Economic and Community Development halted payments to the Blue Hills Civic Association (BHCA) in late March after the group notified the state of the theft.
The state also ordered the organization to stop disbursing any state funds and return any remaining public money it received, according to records obtained by Connecticut Public through a Freedom of Information Act request.
The consequences have been crippling for BHCA, which was forced to lay off nearly all its staff earlier this month. The organization provides housing assistance, youth employment programs and other community services.
A timeline the organization created shows the theft occurred in October 2024. Staff became aware of the missing money in December. However, it was months before BHCA alerted officials at the Department of Economic and Community Development (DECD) and the state attorney general's office of what occurred.
In a notice provided to the state, the group's board of directors said it learned of the circumstances on March 19, 2025 and took immediate action. It has since terminated the nonprofit's executive director, Vicki Gallon-Clark, and its chief financial officer, Tom Sussman, after an internal investigation uncovered "failures that led to BHCA being in this unfortunate position," according to the board.
Gallon-Clark did not respond to requests for comment. Sussman could not immediately be reached.
Blue Hills was contractually required to report any loss or misuse of funds to DECD within two weeks, DECD Deputy Commissioner Matthew J. Pugliese said.
State officials are currently reviewing Blue Hills' finances to determine what needs to be done in order for them to continue receiving state funds, he said.
"We are not rescinding the awards," Pugliese said. "We want to make sure that the people's money is adequately protected."
State records show Blue Hills received significant state and federal funding in recent years, getting close to $14 million through programs administered by DECD. They include various state grant programs and money from the federal American Rescue Plan Act (ARPA) pandemic stimulus program.
Most recently, state lawmakers targeted the organization to receive $5 million in remaining ARPA funding through an allocation passed in the state's fiscal 2025 budget bill.
State spending records show DECD continued to send federal money to the nonprofit after the theft occurred, providing a combined $1.23 million worth of federal dollars in March alone, with the last transfer occurring on March 20.
Staff from the nonprofit met with DECD's deputy director the following day and disclosed the wire fraud for the first time, according to its timeline.
Money lost to the fraud came from state funding provided to Blue Hills totaling $5.5 million.
The organization said it has notified the FBI and Hartford police. A spokesman for the Hartford Police Department said police received a fraud complaint from BHCA on Dec. 6, 2024 and are actively investigating.
Contacted Thursday, the chair of the nonprofit's board, Kaydian Reid, pointed Connecticut Public to a statement the board released this week. It said the organization is working with state officials to determine a pathway forward to rebuild the organization.
“The gravity of this situation and its implications for our partnership, employees, and community are not lost on the Board, and we are doing everything we can to promptly resolve this issue,” it said in the statement.
According to materials provided to the state, BHCA is responsible for distributing millions in taxpayer funding to partner organizations, including My People Community Services, Inc., which provides social services in Hartford.
BHCA wired two separate payments intended for the group in October 2024 after being contacted by a person purporting to be a representative. The person "sent an email with My People's budget, W9 form, and ACH form to BHCA, which led BHCA to wire the Funds to a fraudulent bank account," according to a letter the nonprofit sent to the attorney general's office.
BHCA staff discovered the theft after being contacted by My People in early December, according to the group's timeline of events. An insurance policy in place at the time didn't provide coverage for cyber security incidents.
The organization contacted state and federal law enforcement, and issued a new check to My People on Dec. 23, 2024 to replace the money never received, categorizing the payment on its books as a miscellaneous expense, according to the board's timeline.
BHCA's executive director discussed the theft in a February 2025 meeting with Sen. Doug McCrory, who has worked to secure funding for the organization. In a conversation with investigators from a law firm probing the incident, BHCA's former chief financial officer said that McCrory "advised [the executive director] not to notify other parties about the Wire Fraud until the FBI had completed its investigation," according to records provided to the state.
The executive director recalled the conversation differently, however, telling the firm that notifying DECD didn't come up.
McCrory has not responded to multiple requests for comment from Connecticut Public.
Members of the board learned of the wire fraud during a meeting in March 2025. BHCA staff then alerted DECD's deputy commissioner, Pugliese.
Pugliese said the delay created challenges for the state, which intends to restore funding after a review.
"We wanted to hold those funds in trust to make sure that the financial controls and the environment were safe," he said.
