Legal-aid agency fires director, cuts staff in wake of investigation

The main provider of civil legal help for poor people in Eastern Kentucky has fired its director and cut several other staff positions after an internal investigation.

The board of Appalachian Research and Defense Fund, a publicly funded legal aid agency, fired Cynthia Elliott on Saturday after finishing the internal review, said AppalReD board chairman Mike Taylor.

Elliott, a lawyer who had directed AppalReD since 2007 and previously worked in its Jackson office, had been suspended since Dec. 23, after a company whistle blower initiated the investigation, said Taylor, a Middlesboro lawyer.

AppalReD has total annual funding of $4.3 million, interim director Jonathan Picklesimer said Wednesday, and during the past four years it might have overspent its budget by nearly $1 million.

An audit for 2010 isn't complete, he said. The non-profit firm is largely funded with taxpayer money through the federal agency Legal Services Corp., which is conducting its own investigation. AppalReD also receives some state and local money.

"We think there are credible allegations that have been made, and we're going to try to pursue it as soon as we can get there," said Jeff Schanz, inspector general for Legal Services Corp.

London lawyer J. Warren Keller, who looked into the matter for the AppalReD board, said he could not discuss his findings without permission from the board.

Elliott's attorney, Henry J. Curtis, said Wednesday the process of firing Elliott was basically a fraud and she would appeal the decision. Elliott was locked out of her office, blocked from access to records that could help her and denied a chance to explain herself without a full investigation, Curtis said.

"She was the victim of a power play within AppalReD," he said.

Five lawyers and four other staffers have left the agency this week, four of them involuntarily, Picklesimer said. Before the reductions, the agency had 66 staff members in 10 offices across south-central and Eastern Kentucky.

The positions were cut to save money, not because any of the people were implicated in the investigation, Taylor said.

"They've all given tremendous service to the program," he said.

In its 40 years, AppalReD has never been flush with money. The non-profit reportedly laid off employees and closed some offices in 2002 after a funding cut and has absorbed other cuts since. A $350,000 cut in 2008 came the same year AppalReD overspent its budget by $480,000, forcing the agency to close its Booneville office in 2009, Picklesimer said.

AppalReD provides legal services to poor people in non-criminal matters, such eviction or foreclosure; women who need help with domestic-violence issues; or people trying to get disability benefits.

The corporation has survived several attempts by Congress to kill it. When AppalReD was started, it provided a good deal of work for miners and other cases related to the coal industry, including black-lung disease benefits and environmental concerns.

Ten years ago, Whitesburg Appalachian Citizens Law Center spun off from AppalReD and now handles coal issues.

Today, a large part of AppalReD's work is in consumer law, particularly in foreclosures, said founding director John Rosenberg, a Prestonsburg lawyer who moved from a justice department job in Washington in 1970.

The firm has run workshops for low-income people trying to keep their homes.

Elliott, the director who was fired, is "a fantastic person, and she really cares about people and has a real heart for service," Picklesimer said.

Picklesimer, who is not a lawyer but has a background in business, said he couldn't pinpoint one place where most of the overspending took place.

"It's become apparent that we weren't watching the shop very well," he said. "We failed to realize that a whole lot of small things really start to add up."