A half-dozen former Chattanooga Neighborhood Enterprise employees say the city-funded agency's leaders routinely sexually harassed employees, mishandled funds and made racially bigoted remarks.
Complaints show a pattern of abuse since 2008 from David Johnson, president and CEO of the taxpayer-funded nonprofit, and his top lieutenants.
Following Johnson's 2008 takeover of CNE, some workers quit and others were fired after they refused to submit to sexual advances, the former CNE workers claim in lawsuits and federal discrimination filings.
Amelia Roberts, a labor attorney for Conner & Roberts who's representing the ex-workers in lawsuits and complaints to the Equal Employment Opportunity Commission [EEOC], said CNE executives "toyed with these employees like they were playthings."
"At the very least, it's a misuse of taxpayer funds to allow this gross behavior to continue and force taxpayers to pay these legal bills," said Roberts.
Johnson and other CNE officials named in the complaint declined to comment, citing pending litigation, according to a CNE spokesman.
In a written statement, CNE's public relations consultant, Albert Waterhouse, said the allegations had "no basis in fact."
"CNE has successfully defended five previous EEOC complaints in the past three years, including a previous allegation of sexual harassment," Waterhouse wrote. "We are completely confident that with further review, a court of law will also find these false and misleading charges are without merit."
Waterhouse also denied the allegations of fraud against CNE.
"The allegations of fraud were made previously and those charges have already been investigated by the appropriate governmental agencies and were found to be without support," Waterhouse wrote.
A spring 2012 review by the city, however, noted that auditors had "great concern" with CNE's financial reporting and found financial discrepancies that were "very serious."
In the workers' cases, they claimed they were harassed then terminated after refusing to alter paperwork to hide kickbacks or other abuses, according to lawsuits and discrimination filings.
"What we have is this retaliation against these employees who, if they speak up about the budget, if they disagree about what's going on, they're immediately blacklisted at this company," Roberts said.
Demands to see cleavage and receive "front hugs" were part of everyday life for Mignon Turner, who says in a complaint that she was harassed from 2008 to 2012.
"The sexual harassment I suffered from David Johnson was unbearable," Turner wrote in a discrimination complaint to federal regulators.
Johnson forced the single mother to kiss him, demanded to see her cleavage in exchange for a bonus check and pressed himself against her at parties, she said.
When she later gained weight, Johnson took $15 from his wallet and handed it to her, saying it was for the first week at the gym, she alleged in her complaint.
Like several other former employees, Turner said she was subjected to racial epithets and passed over for promotion because she, like Johnson, is black.
"One hundred percent of the employees who were fired were African-American," Turner said.
Johnson even called one black employee a "tar baby," Turner alleged.
As CEO, Johnson became obsessed with the appearance of women in the workplace, according to a complaint by Lisa Darger.
Johnson called one employee "physically disgusting," and noted that the "bulk" of another bothered him, Darger wrote in her complaint.
She complained to current CNE Chief Financial Officer Carlos Camacho, alleging that Johnson was getting drunk at parties and putting his hands on the women -- herself included.
"Carlos told me to keep it quiet," she wrote.
She resigned in June 2011.
But former CNE board Chairman Ric Ebersole called Darger's complaints and the complaints of others into question, noting that a handful of discrimination accusations already have been dismissed by federal investigators.
"I assume that they would all be classed as disgruntled former employees," Ebersole said.
The board, along with its lawyers, already has conducted an investigation, he said.
"I'm not going to say it couldn't have happened, but we couldn't find any evidence of it," he said.
He blamed the bad feelings on CNE's unusually high turnover in employees.
"When David came in, he was taking over a staff that had been pretty well-decimated," Ebersole said.
Prior to Johnson's tenure, CNE slashed a large number of jobs, shrinking the staff from 54 employees to 19, Ebersole said.
"Just because of the nature of organizations when they are in troubled financial times, enormous emphasis was being placed on financial reporting," Ebersole said. "That was an area that got his attention more rapidly than, say, programs and management."
Chattanooga Mayor Ron Littlefield, who serves on the board for CNE, said that, while his office tracks financial performance, it does not investigate discrimination complaints, which are handled by federal investigators.
"We're not in the chain of resolution," he said. "I don't know what we can do other than to applaud them when they do right and to chastise or prosecute them when they do serious wrongs."
While Johnson was busy elsewhere, CNE Human Resources Director Dawn Scates initiated an extramarital affair, offered kickbacks to contractors and retaliated against whistleblowers, according to a lawsuit filed by former CNE property manager Richard Maynor.
Maynor claims that Scates, who had a husband, initiated a sexual affair with him and later had Maynor fired when he refused to sign off on kickbacks. One of Scates' kickbacks had CNE paying $600 to a contractor for a $13 exhaust fan, Maynor said.
He was fired shortly after he ended the sexual relationship, he said.
After CNE fired Maynor, Scates and the company's chief financial officer, Carlos Camacho, asked Samantha Edmonson to state that Maynor had been fired for not following procedure, according to Edmonson's complaint. She refused, and instead backed up Maynor's allegations of bid fixing and sexual harassment with a complaint of her own.
"I reported what I thought was sexual harassment and possible bid rigging by the HR director, Dawn Scates, in favor of contractors with whom she appeared to be having inappropriate relationships," Edmonson wrote.
Davida Knall-Flowers claims that she, too, was fired "after reporting irregularities with the bidding process, where I reported my belief that my supervisor was rigging bids to help particular contractors."
Like other female employees, Knall-Flowers claims that she received amorous hugs from Johnson at work-related functions.
But she turned him down and "he treated me in a more hostile manner afterward," she alleged.
Later, Johnson told Knall-Flowers that she looked "too ethnic," and she was fired in favor of an employee who "is under 40, white, attractive and appears to have had breast augmentation," Knall-Flowers wrote in her complaint.
The firing came one week after she alleged that CNE had falsified documents.
This story was edited on Sept. 5, 2012.
Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...