By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
By New Times
"They know goddamned good and well that taking money from grant A and spending it on grant B is wrong," Chandler says. "If they don't know that, they shouldn't be answering the phone."
The misappropriation of funds eventually sent criminal investigators from the Department of Health and Human Services' Office of Inspector General to Tucson to probe Amity's finances.
Another former board president, John Mahwinny, says criminal investigators interrogated him about Amity's management. Young also says he gave a taped, sworn statement to investigators about Amity managers.
"That was not a good moment," Mahwinny says.
Both men say the investigators indicated that no money had been stolen. The Inspector General's Office declined to comment about Amity.
The misspent federal money appears to have gone into Amity's programs, which frequently had more people in treatment than required under the grants.
Amity's bankruptcy attorney Matthew Waterman says Amity kept providing housing, food and treatment to people, including mothers and their children, even after other funding ran out.
"Rather than throw the babies on the street, Amity continued to feed them," Waterman says.
But its managers' inability to balance federal grant rules with providing services eventually drove Amity into bankruptcy.
"They don't seem to realize the severity and the importance of keeping track of money from the federal grants," Susumu Uyeda says.
Uyeda also dismisses Mullen's contention that the accounting error played a major factor in Amity's collapse. While the auditors should have caught the mistake, Uyeda says, there were plenty of other indicators showing Amity's finances were out of control.
"The writing was on the wall," Uyeda says.
Even other nonprofit drug-treatment agencies believe that management had much to do with Amity's failure.
Fred Streit, executive director of New York-based National Drug Research Institute, says Amity's managers devoted too much of their time to running their programs and not enough time keeping the finances under control.
NDRI got a close look at Amity's financial condition just prior to bankruptcy. The New York agency agreed to take over several programs that Amity could no longer afford to operate.
Streit says Amity's shortcomings could be summed up simply: "They did not, for many reasons, apply proper controls."
It's not the first time Amity's future managers saw an organization collapse because of lack of controls.
Synanon's rise and failure are testament to an organization where there were no external controls to keep its founder and charismatic leader Charles Dederich from running amok.
Synanon evolved from a handful of drunks living in Dederich's apartment to a $10 million-a-year business with more than 2,000 members. Dederich and his followers repeatedly clashed with government authorities over issues ranging from zoning, child care, education, taxes and ultimately beatings and attempted murder.
Synanon finally collapsed after the Internal Revenue Service revoked its tax-exempt status with the help of Arbiter, Mullen and Fleishman.
But that action came years after the future managers of Amity were loyal, devoted members of Synanon.
The movement, which its own attorney described as a cult, started out quietly enough.
Dederich founded Synanon in 1958 in Santa Monica, California, first as a dry-out tank for alcoholics and later as a commune to help heroin addicts kick the drug.
In 1967, Dederich expanded the role of Synanon to include nonaddicts who wanted to participate in the racially and economically integrated community.
Those joining the community donated their personal assets to Synanon in exchange for having all personal needs ranging from housing to education to health care to transportation and employment provided by Synanon.
By 1970, all three of Amity's future managers had become active Synanon members.
Mullen joined Synanon in 1967 and remained a member for 13 years where he was a director at Synanon's communal school. He donated $60,000 when he joined Synanon after graduating from the University of California at Berkeley where he studied political science.
Arbiter spent ten years at Synanon, entering the program after being arrested on drug-transportation charges as a teenager in 1970. Arbiter says she became a close friend of Dederich's daughter, who later became chairman of Synanon.
Fleishman, who remains as Amity's executive director, spent 12 years at Synanon, joining the commune the day after she graduated from Hollywood High School in 1968. The daughter of a prominent Los Angeles First Amendment attorney who assisted Synanon in a successful libel suit against the San Francisco Examiner, Fleishman donated her college-tuition funds to Synanon.
While at Synanon, Fleishman says she "apprenticed" herself to Dederich's late wife, Betty, who was a primary contributor to Synanon's philosophy and about the only check on her husband's power, which was primarily maintained by the game.
"Anything important had to be said in the game," says Richard Ofshe, a University of California sociology professor who shared in the 1979 Pulitzer Prize with Mitchell. "If you felt reservations or were opposed to what was going down in Synanon, you couldn't talk about that outside of the game.
"If you started to do that, you were being negative and needed additional education. It was your friends' obligation to rat you out. The friend would accuse you of dumping your stuff outside the game."
But raising concerns about Synanon's direction or policies in the game was also a dangerous tactic.