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What would you do if you went to your bank and found an extra $247,000 in your account? Would you spend it or notify someone of the mistake?

D.C.’s Information, Protection, and Advocacy Center for Handicapped Individuals(IPACHI) faced that dilemma in fiscal 1994. A computer glitch in a Department of Health and Human Services (HHS) computer system dumped a massive overpayment into the organization’s account. Many of the country’s advocacy groups for the handicapped also received excessive funds.

The other organizations returned the surplus. IPACHI spent it.

Its comeuppance was quick and sure: In fiscal 1995, the feds’ computer corrected itself and stripped IPACHI of the overpayment. According to HHS spokesman Bill McPherrin, the federal agency grantedIPACHI a $254,000 allotment in fiscal 1995, then took back the $247,000 the organization had spent, leaving it with a $7,000 balance.

Although IPACHI is a private nonprofit organization, it is designated by the District government as its official “state” agency, providing outreach, referrals, and legal assistance to those people and government entities seeking to help handicapped individuals. Founded in 1971 by Yetta Galiber, a supporter of Mayor Marion Barry, the organization is best known for its annual Christmas Toy Store at the D.C. Armory.

McPherrin says HHS was forced to seize this year’s money because the 1994 error left federal protection and advocacy programs for the handicapped far over their congressionally mandated budgets. Officials atIPACHI say they have documentation to support their claim that the organization used the additional money to serve 75 percent more people in 1994, but it has been disallowed by HHS. IPACHI is appealing that decision. A meeting between the federal government and IPACHI officials is scheduled for Thursday, June 29. IPACHI can expect to be asked some tough questions.

“Not only did they not return the money, they can’t provide documentation for how they spent $200,000,” says one high-level District official who requested anonymity. “This is serious.”

Despite its premier role in the city’s handicapped community, IPACHI has undergone little scrutiny. Many advocates for the handicapped have persistently criticized IPACHI for ineffective advocacy, but the popularity of the Christmas Toy Store and the group’s predominantly African-American leadership has insulated it from the attacks. Some federal officials and local advocates, citing a decline in the quality of services, are quietly urging Mayor Barry to choose another organization as the state-designated agency.

Vivian Hardy-Townes, who took over as IPACHI director nearly five years ago after Galiber’s resignation, confirmed that the group is experiencing financial difficulties but defended the quality of the services it provides.

“For quite some time, we’ve been having financial challenges,” she said, adding that the problem is compounded by the District government’s slow payment on its contracts with IPACHI. Hardy-Townes says financial problems have “gotten progressively worse.” IPACHI was using credit lines to continue programs, but that option was eliminated at the end of May. The organization laid off some employees in early spring, and more pink slips are expected in July.

A federal source says IPACHI may have spent the overpayment because it was “so deep in the hole; it needed that money.”

Hardy-Townes vows the organization will not close its doors, although it does plan to move from its current Connecticut Avenue location. And even she admits that the fiscal troubles are hurting IPACHI’s 30,000 handicapped clients. The director says the group has reduced its educational mailings, which inform handicapped individuals about where District services are available. And while IPACHI once handled legal cases on its own, Hardy-Townes says, it now must refer them to other lawyers.