By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
The clients who spoke to the Observer, however, say their stipends are deducted out of their personal trust accounts. For some, that means the money comes directly out of their Social Security checks or, in the case of those who are legally disabled, their SSI checks, according to client interviews and documents of client trust accounts the newspaper obtained.
"The things they say were worth money were paid by my Medicaid," says Carole Stead, who joined the program in 1998 while suffering from severe depression, a condition that made her eligible to receive disability checks from the Social Security Administration.
Similarly, copies of David Dickey's contract with Trinity Works clearly show that his stipend was drawn out of his personal trust account. "It was my own money," Dickey says. "Trinity never paid a dime to me."
When pressed further on the issue, Schaefer and Schultz say they researched all the applicable laws and determined that clients don't need to be paid a wage because the agency doesn't make enough money off of the OTC program to qualify it as a workplace under the jurisdiction of the U.S. Department of Labor.
On that point, Schaefer appears to be correct. The money Trinity Works reports earning off the OTC program is far less than the minimum amount that would give the Labor department jurisdiction over the agency. However, there are other factors, particularly the presence of interstate commerce, that require nonprofit agencies such as Trinity Works to pay their clients a minimum wage, says Judith Edmondson, a wage specialist at the U.S. Department of Labor's regional office in Houston.
Although Schaefer describes the OTC program as therapy, the Labor department would consider it work if the agency is competing for the business, for example, or generating revenues off of it. In addition, if that work involves interstate commerce, the clients would be individually covered by the Fair Labor Standards Act, which guarantees them the right to be paid a minimum wage, says Edmondson, who was unaware of Trinity's program and who spoke only generally about the law.
The work Trinity does for Michaels, for example, would appear to fall into that category. So, too, could some of the work Carole Stead says she performed as an office assistant inside Trinity's headquarters, where she says she handled out-of-sate mail, faxes and phone calls.
One exception to the rule is that some organizations receive special certification from the Labor department allowing them to pay a "sub-minimum" wage, Edmondson says. Those organizations are typically nonprofit agencies that run sheltered workshops for people who are mentally or physically disabled. Those agencies still must pay their employees a reduced wage, which the Labor department strictly regulates.
The program "is intended for workers whose disabilities impair them so much they cannot work for minimum wage. It gives them an opportunity," Edmondson says.
Although Schultz described Trinity's OTC program as a "sheltered workshop," Edmondson confirms that Trinity Works has received no such certification from her department.
While Schaefer has made a career out of injecting her authority into the lives of people who turn to her in desperation, she grows defensive when her agency is publicly examined. During two interviews that took place inside her headquarters, Schaefer refused to grant the Observer's request for copies of the agency's bylaws. (Under IRS regulations that govern 501C3 nonprofit agencies such as Trinity Works, Schaefer is required to provide a copy of those bylaws when they are requested in writing or in person, according to local IRS officials.)
Schaefer did, however, provide an audited copy of the agency's most recent financial statement, an IRS 990 form, which contained some questionable information. For example, the agency reported having 15 paid staff members, including Schaefer, yet it did not report paying any federal payroll taxes. Local IRS officials say no agency, whether it is for-profit or not, is exempt from paying payroll taxes. Schaefer, who earns an annual salary of $37,200 including benefits, says the omission of taxes must be an oversight.
The statement also includes information that the agency's primary debt consists of a $105,329 loan Schaefer made to the agency in 1997 and later renewed in 1999. Schaefer, who made the loan at an 8.5 percent interest rate, collected a total of $17,468 in interest off the loan in 1998 and 1999. When asked to explain what the loan was for, Schaefer said she originally made the loan back in 1989 or 1990, and it has been sitting there ever since.
"Let me put it this way, [Trinity Works] can't pay me back," she said. "It draws interest. I'm not a wealthy person. That's my retirement."
Schaefer declined to say whether her board of directors is aware of the loan and stopped answering further questions about it. "Everybody in the world," she says, "doesn't need to know that."
Wage considerations are not the only source of questions surrounding the legality of Trinity's programs. Another troublesome area involves the way in which the agency manages the Prince of Wales apartments.
Contrary to Schaefer's claim, the apartments in the Prince of Wales do not constitute a service that Trinity Works offers. In fact, the building, like the OTC program, actually generates revenues for the agency. Specifically, Trinity Works is paid an annual fee to manage the building on behalf of its owners, an entity called Prince of Wales Partnership, Ltd. In 1999, Trinity Works earned $61,061 under the arrangement, according to the agency's IRS 990 form.