Texas charity a launchpad for entrepreneur's empire

Robert E. Jones takes a faltering nonprofit under his wing and reaps rewards under a federal program aimed at benefiting those who are severely disabled
Monday, March 06, 2006
LES ZAITZ, JEFF KOSSEFF and BRYAN DENSON
The Oregonian

EL PASO, Texas -- Robert E. Jones arrived in this hard-luck border city two decades ago, trailed by a bankrupt business, angry creditors and millions of dollars in court judgments against him.

Today, he oversees a business empire that includes garment factories, downtown office towers and a hospital. The family trust he controls recently claimed a net worth of more than $40 million.

How did he do it?

Charity.

In just nine years, the nonprofit Jones directs -- the National Center for the Employment of the Disabled -- has landed $834 million in exclusive federal contracts, emerging as the Pentagon's primary manufacturer of chemical-warfare suits.

Today, $1 in every $10 spent through the federal government's most ambitious program to employ severely disabled workers flows through the charity. Yet the government repeatedly has found that NCED couldn't document that it met the program's primary mandate -- that severely disabled workers provide three of every four hours of labor at participating nonprofits.

Last week, the U.S. military took the rare step of suspending all orders with the charity until "concerns" about the makeup of its work force are resolved.

Over the past decade, Jones has amassed a fortune in a rags-to-riches journey that took him from a messy business failure in Houston to last year's El Paso "Entrepreneur of the Year" honor. The charity paid his management firm $14 million from 1999 to 2004, according to its tax returns. And it has invested or lent $5 million to for-profit businesses in which Jones held a significant interest.

The story of NCED illustrates many of the shortcomings in the federal Javits-Wagner-O'Day program, which last year set aside $2.25 billion in government contracts for nonprofits that employ the severely disabled. An investigation by The Oregonian found skyrocketing executive pay in the program at the same time nonprofits increasingly hire workers with lesser disabilities. Oversight of the program is essentially an honor system that allows charities to go for years without being inspected to see whether they're using the required amount of severely disabled labor.

In NCED's case, the charity repeatedly assured regulators it was in compliance. But one internal record obtained by The Oregonian represents that from 2002 to 2004, fewer than half the workers were disabled. Another document, a quarterly report summarizing hours worked by each employee, shows hundreds of workers with only "English" listed as a "disadvantage."