City auditors said Inner City Health Care Inc., a 30-year-old agency with an original mission to provide health care to minority communities, often submitted "false documentation" for expenses it had not incurred.

An agency board member denies the allegations and said it was never given the opportunity to respond to the audit.

City Manager Valerie Lemmie, in a memo sent to a council member, said the Hamilton County Prosecutor's office notified the city that the case is expected to go to a grand jury in November.

The 2003 audit, which has not been publicly released, found:

• The agency sought reimbursement of $28,967 through the Cincinnati Empowerment Corp. for a 15-passenger van it never bought.

The agency's chief financial officer said Inner City Health Care spent the money on other programs.

• The Journey Begins, an agency program to find activities for boys 7 to 17, could not provide city auditors with a complete list of names of the at-risk children it said it was helping.

Some of the kids they did name couldn't be found - and their phone numbers went to a North College Hill photography studio, a school where the kids weren't enrolled; and an elderly woman with no grandchildren.

• Inner City Health Care paid $2,550 in rent on two buildings owned, through partnerships, by a Walnut Hills physician who also sits on the agency's board.

That physician, Dr. Charles O. Dillard, said Monday that he was aware of the grand jury investigation but was "dumbfounded" about why the city was still investigating a matter that he said was resolved.

"It's taken on a life of its own, and it keeps on going. We thought the minor problem had been resolved a year and a half ago," he said. "We got the van. We just didn't get it the way they wanted us to."

Dillard said parents of kids in The Journey Begins program may have supplied the agency with inaccurate information, but that the youths did participate. And he said he charged the agency below-market rates for rental of his buildings.

The city has no current contracts with Inner City Health Care, and Lemmie has suspended payments on four past-due vouchers to the agency until its cleared of wrongdoing.

Those vouchers amount to more than $70,000, Dillard said. The agency has continued its work and has developed new programs to prevent tobacco use and to help senior citizens get their prescription drug benefit, he said.

ICHC's initial objective was to provide health care to low-income and minority communities. But in 2002, the last year for which tax returns were available, the agency's two largest activities were The Journey Begins and a job training program for adults.

That year, about 97 percent of the agency's $758,211 budget funding came from direct government grants.

A separate audit last year by the U.S. Department of Housing and Urban Development found $71,097 in expenses paid by the Cincinnati Empowerment Corp. that lacked documentation.

E-mail gkorte@enquirer.com