State Attorney General Eliot Spitzer's probe of the Lenora Fulani-affiliated "All Stars Project" is now looking at the possible misuse of funds, City Confidential has learned.
Spitzer's investigation into the arts program for inner-city kids — which was sparked by an allegation of child abuse from a former All Stars worker — is now focusing on "the use of contributions," according to a source close to Spitzer.
The city's Department of Investigation has been briefed on the matter.
The stepped-up probe comes as All Stars is awaiting its first city contract — a three-year, $216,000 deal to run after-school programs.
Funding for the project currently comes from private donors.
Spitzer also has consulted city child-welfare authorities about the original child-abuse charges raised by former All Stars worker Molly Hardy.
"I witnessed emotional and verbal abuse of teenagers who were brought to New York under the auspices of being 'program leaders,' " Hardy told Spitzer in a complaint sent Jan. 17.
"They were put up in a flophouse, verbally intimidated and abused by Lenora Fulani and worked from 6 a.m. until 11 p.m. They also panhandled on the streets to earn money for the trip."
All Stars Project president Gabrielle Kurlander said she's not aware of any probe related to child abuse or financial malfeasance.
"We've received no communications from the attorney general or any other agency concerning an investigation of All Stars," Kurlander said.
"Our financials are impeccable and beyond reproach and we're proud of the difference we're making in the lives of thousands of inner-city youth every year."
The allegations could not only prove damaging for Fulani, but also for Mayor Bloomberg.
The mayor has regularly appeared at the All Stars big benefit bashes and is expected to again to carry the banner for the Independence line, in which the controversial Fulani plays a large role.