Key West's Gay and Lesbian Community Center is undergoing significant changes while addressing financial problems and working to retain the public's trust.

When Denise Hudson took the reins as GLCC board president in April, she called for the 11-year-old nonprofit's first-ever audit, which showed the group's financial records did not account for more than $100,000.

"There was just something that was not computing with our financial records," Hudson said Monday.

She added that the GLCC had applied for a grant from the Klaus Murphy Foundation, and during the application process, representatives from the foundation called the center's financial records "squirrely."

"It was very embarrassing, and trust is such a huge thing for nonprofits," Hudson said, explaining why she ordered the audit by the Coral Gables accountants. "It quickly became apparent that over the past several years, things were just not taken care of properly."

Among other troubling finds, federal and state taxes had not been paid since 2003, she said.

Hudson said most of the missing $100,000 likely was not stolen, but spent on legitimate items and not accurately recorded.

"In general, when there are situations like this, it is open for debate and could be a combination of both anytime money is involved," she said.

A GLCC volunteer in September was charged with forging checks to herself totaling between $3,000 and $4,000, for example. Heather Johnson, 34, remained in Monroe County jail Tuesday on felony theft and forgery charges.

"Things were just a complete mess," Hudson said. "We had to let our executive director go because we could no longer pay him."

Michael Citro had been the executive director, but Hudson said most of the financial problems occurred several years ago under previous directors.

Citro's annual salary was about $25,000 plus 20 percent of the proceeds the center made from events, Hudson said. Under a complex employment agreement, Citro also pocketed 80 percent of PrideFest proceeds, but had to return five months' worth of his salary for the time he spent working on the June event.

"He gave back $8,500 to us, and the center wrote him a check for about $12,000 as his PrideFest commission," Hudson explained.

Eliminating the executive director will save the center about $1,650 per month, she added.

Hudson said things are looking up. Taxes have been paid, the center has no outstanding debts, and it recently passed the annual PrideFest torch to the Key West Business Guild.

"We just don't have the manpower for it," she said, adding it makes more sense for the gay-owned and gay-friendly business community to produce an event whose mission is to make money for the gay community.

In this year of transition, the PrideFest event in June will be co-chaired by JT Thompson, a GLCC board member, and Dennis Beaver. The guild will take over the whole production for 2011, Hudson said.

"Everyone has the best interest of PrideFest at heart," she said. "Now we're trying to get ourselves back in a stable position. We handed over the event debt-free."

The community center will concentrate on increasing its membership, raising money and focus on community outreach events.

"We're in the midst of a massive transition, and where it's going to come out is not yet clear," GLCC board member Alan Hinand said. "There could even be a new board constituted because a lot of the current members are just burned out."

The center's new mission statement reads, "The GLCC is an organization that sponsors activities of GLBT (gay, lesbian, bisexual and transgender) individuals and our allies in support of the broader community through a commitment to unity, equality and diversity, supported by programs and events that encourage a healthy and vital Key West."

For more information or to become a member, go to http://www.glcckeywest.org.

mbolen@keysnews.com