2 ACCUSED IN SCHEME AT PORK-RICH CHARITIES

The head of a South Side Chicago group that has received millions of
dollars in state contracts and special pork-barrel grants from top
legislators was sued by the state Friday for allegedly siphoning funds from
two charities.

The suit filed by Atty. Gen. Jim Ryan accuses Yesse B. Yehudah, the head of
FORUM Inc., of misusing or failing to account properly for hundreds of
thousands of dollars from FORUM and Elmhurst-based Life Education Center.

Also named in the suit is David S. Noffs, the former head of Life Education
Center and a longtime friend of Lura Lynn Ryan's, the wife of Gov. George
Ryan. Until last year, she served on the anti-drug charity's board along
with Yehudah.

The suit charges that Yehudah and Noffs washed money between the two
charities and companies they controlled, in the process converting accounts
of the non-profit groups into personal piggy banks. They diverted state
money intended for anti-drug programs to personal travel, health club
memberships, auto repairs, dental work, phone bills and college tuition
costs, the lawsuit charges.

Over the last three years, FORUM has received approval for large
taxpayer-funded grants for youth violence-prevention and computer-literacy
programs sponsored by House Speaker Michael Madigan (D-Chicago), Senate
Minority Leader Emil Jones (D-Chicago), Sen. Donne Trotter (D-Chicago) and
other state lawmakers.

The so-called member initiative grants total more than $750,000, records
show. All were sponsored by Democrats, including one by state Sen. Barack
Obama of Chicago, whom Yehudah challenged, unsuccessfully, as a GOP
candidate in 1998.

Additionally, FORUM holds a $538,000 per year contract for drug-prevention
and health programs funded by the Illinois Department of Human Services.
The agency's payments to FORUM have exceeded $500,000 for the last four years.

Life Education Center leveraged its political ties to obtain more than $4
million in state grants since 1996, even though a 1995 state audit of
earlier grants found "serious and significant" violations of state
accounting rules. The governor's son, George Jr., once served as an
assistant national director for the group and its insurance broker.

More than $500,000 of the group's funds can't be properly accounted for,
$180,000 of which appeared to be used for personal purposes, the suit alleges.

"If these allegations are proven, Noffs and Yehudah cheated Illinois
children by misappropriating thousands of dollars in funds that were
intended to fight substance abuse," said the attorney general.

Attempts to reach Noffs, who is an Elmhurst City Council member, and
Yehudah were unsuccessful.

'Witch Hunt'

In a memo last year, Noffs labeled allegations of misspending leveled
against him by current Life Education Center board members as a "vindictive
witch hunt." At the same time he acknowledged that he occasionally put
charity money to personal use because he was "out of cash," but he promised
to repay all personal purchases made with charity funds.

Noffs was fired in 2000 from Life Education Center. Yehudah remains at the
helm of FORUM, which has offices in the 7500 block of South Saginaw Avenue.
The organization's name stands for Fulfilling Our Responsibility Unto Mankind.

In light of the suit, Madigan spokesman Steve Brown said the speaker's
office plans to put a hold on a $50,000 grant designated for FORUM that has
yet to be paid. Jones, who sponsored $425,000 in grants to FORUM, was
unavailable for comment, according to a spokesman.

Rep. Howard Kenner (D-Chicago), who sponsored a $40,000 grant to FORUM last
year, said, "You've got to be kidding me. It's really unfortunate because
I've known Yesse for a long time."

Tom Green, spokesman for the Human Services Department, said the fraud
allegations would have no direct impact on the state's current contract
with FORUM, which has more than $200,000 yet to be paid this year.

"FORUM, like other prevention programs, does undergo regular monitoring of
programmatic and fiscal activities," Green said. "We will keep an eye on
the program and see if any action is warranted."

Criminal charges are under consideration in addition to the civil suit,
which seeks repayment of misappropriated money, penalties of at least
$50,000 and punitive damages that could add hundreds of thousands of
dollars more, said a spokesman for Jim Ryan.

The suit alleges that as part of the scheme Noffs steered $240,000 in Life
Education Center funds to FORUM. Yehudah, in turn, kicked back $67,000 to
Noffs & Associates, a consulting firm controlled by Noffs and his wife,
Laurie, the suit charges.

Travel Expenses

The suit also charges that Noffs used Life Education Center to pay $67,000
to a company called MTW Consultants, which is owned by a woman who is the
mother of his children and who draws a salary at FORUM.

Noffs also allegedly approved paying $15,800 for travel and other expenses
of a friend, Jill Pearman, who provided no services to the anti-drug charity.

Noffs' travel on the charity's tab included seven trips to Australia
between 1992 and 1999, the suit alleges. He allegedly spent another $15,000
to attend meetings for an entity he created, Drug Watch International.

The suit charges that Noffs and Yehudah hid the transactions between the
two charities from other Life Education Center board members. Lura Lynn
Ryan, who once served as the center's president, told the Tribune last year
that she never had reason to suspect wrongdoing--but she acknowledged her
information was less than complete.