After KSAT reports, state funding suspended for SA nonprofit that used money on trips, smoke shop, land for hemp

A San Antonio nonprofit that provides assistance to pregnant women and young parents had its state funding suspended after an investigation by the KSAT 12 Defenders revealed it used the money on trips, a smoke shop and land later registered to produce industrial hemp.

A state official confirmed Monday that A New Life for a New Generation had its taxpayer-funded reimbursements suspended on Dec. 23, a day after part two of the Defenders investigation aired. Last year, that figure amounted to more than $1 million.

A source familiar with the halt in funding said a majority of New Life’s staff was also laid off at the end of December, after the KSAT Defenders report made the expenditures public for the first time.

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While leaders claim the nonprofit provides material assistance like diapers and formula and program services like counseling to San Antonio families, financial records for New Life showed it also funded multiple out-of-state trips and a smoke shop business owned by the nonprofit’s president and founder, Marquica Reed.

Reed has not responded to inquiries sent to her personal and New Life email accounts.

‘Using money from the state for her own personal gain’

The Texas Attorney General’s Office was made aware of financial irregularities within New Life in a complaint filed in mid-October. The complaint accused Reed of “using money received from the state and donors for her own personal gain.” These types of expenditures are prohibited by the taxpayer-funded state health program that provides the majority of New Life’s money.

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In response to a public information request by the Defenders, the attorney general’s office released a copy of the complaint and background information it had compiled on New Life. However, agency officials have not responded to multiple inquiries about the status of the case.

New Life’s reimbursements, which routinely exceed more than $100,000 a month, come from the Texas Health and Human Services Commission’s Alternatives to Abortion program.

Funding is provided to administrators, in New Life’s case the Texas Pregnancy Care Network (TPCN), which then gives money to nonprofits in the form of reimbursements for services provided.

Reached via email last week, TPCN Executive Director John McNamara declined to comment about the status of New Life but that his agency “always looks into allegations made against its subcontractors.”

An HHSC spokeswoman confirmed late Monday, however, that TPCN had suspended the reimbursements, which make up a vast majority of New Life’s funding.

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Purchase of land for hemp production

Financial records provided to the Defenders by a source at New Life — covering Jan. 2020 through Sept. 2021 — raised questions about how the nonprofit spent the reimbursements from the state as well as funds from two federal Paycheck Protection Program loans.

In late March, a New Life executive wrote a check from its account to Daryl Wayne Shelton for $25,000 for the “purchase of property.”

The warranty deed for the vacant West Side lot, located at 6743 Buena Vista St., was finalized on Aug. 20 and signed over to Reed by Shelton for the sum of $25,000, according to a Bexar County Clerk record containing both of their signatures.

Shelton told the Defenders last year that Reed claimed she wanted to use the property to store New Life vehicles but also said she planned to build a house on it for her grandchildren.

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Records from the Texas Department of Agriculture, however, showed the property at 6743 Buena Vista St. was instead registered at the end of August by Reed’s family member to be part of a state hemp production program.

The license, which runs through the end of Aug. 2022, allows the property to be used to produce industrial hemp.

The license lists the business registered as “Marquica R. Reed, 6743 Buena Vista, San Antonio, TX 78227.”

Reed posted a picture of the hemp license on her Instagram page on Oct. 19 with the caption: “I can now grow CBD.”

R&J CBD Smoke & Vapor Lounge

Public records show Reed filed business formation paperwork for R&J CBD Smoke & Vapor Lounge in early June, listing herself as the owner.

The smoke shop, located at 137 S. Acme Rd., is about a block away from New Life’s Commerce Street headquarters.

A builder hired last summer to refurbish R&J confirmed to the Defenders that she accepted a $2,000 check from New Life on July 10, which was signed by Reed, as a payment for work done at the smoke shop.

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The builder, who asked that the Defenders not use her name, said she took measurements and pictures at New Life’s Commerce Street location but never did remodeling work there.

Contractor Earl Greenwood told the Defenders in a taped phone interview that he accepted a $20,000 check written to him by New Life in late March for “water damage repair” even though he never completed that type of work.

Instead, according to Greenwood, he cashed the check at New Life’s bank and returned the money to Reed, who then gave him around $1,000.

“I ran it through, what is it, Woodforest Bank. I collected that money and I gave it back to her,” said Greenwood. “I did not do the work. I’m telling you, they hired somebody else to do the work.”

The landlord for New Life’s Commerce Street location told the Defenders in a separate phone interview that he paid for the water damage repairs, which stemmed from February’s winter storm.

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In addition to the questionable checks, financial records also show New Life funds were used to pay for airline tickets, hotel reservations and limousines for out-of-town trips attended by Reed, her family members and some New Life employees in 2020 and 2021, as well as for entertainment.

Questionable vehicle purchases

Bill of sale records from the nonprofit show Reed last January agreed to sell her organization a red 2015 Dodge Charger she owns in exchange for $35,000.

At the time of sale, the Charger had an odometer reading of 82,000 miles, records show.

The same day the bill of sale was written, Reed was provided a New Life check for $10,000 for a “down payment for vehicle.”

Through the end of September 2021, Reed had collected checks for the vehicle, its registration renewal and maintenance of it totaling more than $32,100, New Life records show.

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State title records, however, show the Charger was still in her name and was originally purchased by her in 2019 for only $21,982.

Kelley Blue Book, a vehicle valuation company, lists a fair market price for that style vehicle with over 80,000 miles on its odometer of $18,560, about half the amount New Life promised to pay Reed for it.

Footage captured by the Defenders last year showed the Charger wrapped with New Life’s logo and the back portion of its body now painted pink.

Federal records show New Life was given two Paycheck Protection Program loans totaling $139,600.

The first PPP loan for New Life, for $56,600, was approved in August 2020 and deposited into the nonprofit’s primary account in early September that year.

Days before New Life received the funds from the first PPP loan, records show the organization purchased a three-wheel Polaris Slingshot motorcycle from a local dealership.

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A “You owe-We owe” document from the dealership obtained by the Defenders and bearing Reed’s name and signature on it, contains Reed’s then-home address and her personal email account, but does not mention the nonprofit.

Photos and videos of the motorcycle frequently appear on social media, including being driven by Reed’s family member.

The second PPP loan, for $83,000, was approved last January and deposited into New Life’s account in late March, financial records show.

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