An obscure federal agency that annually awards nearly $1 billion to tiny nonprofits doles out cash to fly-by-night organizations with little oversight and has been repeatedly bilked.

Not only that, but the inspector general at the Corporation for National and Community Service reports that the agency only slaps the wrists of the few thieves it catches.

The little-known agency administers AmeriCorps and other programs that pay "volunteers" to be active in their communities.

More than one-third of audits of the community-based nonprofits that received federal funds "contain significant negative findings," according to the CNCS IG's report.

But in recent years, CNCS has been handing out cash with fewer strings attached and little oversight.

"In 2009, the Edward M. Kennedy Serve America Act for the first time authorized the corporation to award grants in fixed amounts, based on the hours worked by members to be enrolled in national service positions, without a matching requirement," the IG report said.

"Unlike the corporation’s traditional grants, which reimburse a grantee for program costs, a fixed grant awards a specified amount ... The fixed amount grant program has placed $240 million at financial risk," the IG report said.

One of its largest grantees, the Digital Opportunities Trust, repeatedly received grants from CNCS, even though it was missing all of its goals and heading towards bankruptcy.

"Instead of taking immediate collection steps, the corporation deferred the problem and optimistically extended funding," the IG reported.

The trust racked up more than $1 million in debt to CNCS, then shut down the program and declared bankruptcy, leaving "taxpayers holding the bag," according to the IG report.

AmeriCorps members get tuition payments towards a college education if they pledge to devote a certain amount of time to community service.

But years after the IG told bureaucrats that people who didn't complete the service stint were still getting the money, CNCS officials didn't respond.

Three of every four people who reneged on the service and were still handed the cash didn't qualify for a special dispensation.

Program managers in a handful of cases funneled taxpayer funds to "volunteers" who never did any work, according to the IG.

"Shante Sweet, Executive Director of the Miami AmeriCorps Community Emergency Support (ACES) Program, Miami, FL, conspired with Ms. Ashley Rolle and Ms. Simone West to steal $31,632.90 in federal program funds. Ms. Sweet allowed Ms. West and Ms. Rolle to enroll in the AmeriCorps program without performing services, in return for half of their living stipends," the IG report said.

They received probation, had to pay the money back, and were banned from doing business with the government for three years.

Rosaluz Molina, a supervisor in the Volunteers in Service to America program in Puerto Rico, intentionally filed false paperwork to funnel $142,000 to 11 ineligible people. Similar punishment resulted.

The VISTA program was founded in 1965 “as a national service program designed specifically to fight poverty in America. In 1993, VISTA was incorporated into the AmeriCorps network of programs,” according to CNCS.

"Mr. Kelley Ewing, Jr., Executive Director of Philmont Nonprofit Development Center, Camden NJ, improperly placed VISTA members at JAE Enterprises Inc., a for-profit business run by his wife ... Corporation management identified $48,947.41 in unallowable costs; however, management reported that it would not be recouping the unallowable costs," the IG report said.

Muasau Tofili, who was overseeing the spending of some CNCS money in American Samoa, "abdicated his oversight responsibilities and thereby allowed Federal grant funds to be fraudulently spent for retreats/personal vacations, including one in which he participated," according to the IG report.

After the IG uncovered the problem, officials "did not act upon this recommendation for more than two years, until May 2013," the IG report said. In the meantime, Tofili rose to the position of judge.

Cases like these — where government funds intended to pay people in poor communities to care about their neighbors is instead stolen by supposed community leaders — may be only the tip of the iceberg, however, because CNCS officials have actually weakened oversight of nonprofits.

“Beginning in 2008, without notice to OIG, the Corporation weakened the reporting requirements contained in the AmeriCorps terms and conditions.

"The provisions were diluted from requiring grantees to notify [the IG] of waste, fraud, abuse, criminal conduct or losses of Federal funds to merely encouraging them to inform OIG of undefined criminal violations,” the IG said.

CNCS also tracks its grants on a decrepit computer system that makes it very difficult for officials to be alerted of red flags.