Friday, June 22, 2018

All in the family: Ten relatives of top executives were on payroll at PFH, the nonprofit troubled by corruption scandals

Preferred Family Healthcare, the Medicaid-enriched nonprofit with a vast network of service providers in Arkansas that gobbles up tens of millions of dollars in state funding annually, has been in the news frequently this year because of its connection to multiple federal corruption cases.

The nonprofit itself has not been charged with criminal wrongdoing, but according to federal court filings, key executives and lawmakers were engaged in kickback schemes to funnel more public money and favorable policies for PFH (and a previous incarnation, Alternative Opportunities, that eventually merged with PFH). During this period, as we've noted previously on the blog, the nonprofit's top executives were rewarded handsomely. In 2015, five key members of the nonprofit's "Resource Team" — used to refer to its highest level of executive leadership — were paid between $400,000 and $1,000,000.

That's not all. According to the most recently available tax filings, in 2015 10 family members of the Resource Team were on the payroll, drawing salaries from PFH — including relatives of all four of the executives who were put on leave in the wake of the scandals. Three of these family members were making more than $100,000.

Rusty Cranford, a former lobbyist and PFH executive, pleaded guilty earlier this month to bribery, kickback, and embezzlement schemes involving PFH/AO. Multiple other former legislators and lobbyists have likewise pleaded guilty to schemes involving the nonprofit, or in the case of former state Sen. Jon Woods, found guilty at trial.

Court filings have mentioned the involvement of at least four other former PFH executives who have not been criminally charged. These executives are unnamed but their job titles are listed in the federal information; according to Cranford's plea, they "devised and executed multiple schemes to embezzle, steal, and unjustly enrich themselves." The executives that held the positions described in the federal information are former Chief Financial Officer Tom Goss, former Chief Operating Officer Bontiea Goss, former Chief Executive Officer Marilyn Nolan, and former Chief Clinical Officer Keith Noble. The federal information also refers to wrongdoing by "other executives" and "other members of the Resource Team," without providing further information.

Tom Goss, Bontiea Goss, and Nolan were fired in January 2018 in the wake of a separate plea agreement, by Pennsylvania lobbyist D.A. Jones, that implicated them in kickback schemes. In a statement at the time, PFH said that after these ousters, the nonprofit would be led by Noble and PFH president Michael Schwend (later named CEO). Noble continued on until just last week,when he was placed on administrative leave by PFH the day after the Arkansas Times made inquiries about references in the Cranford filings to wrongdoing by the PFH Chief Clinical Officer. Schwend, who has not been directly alluded to in court filings, remains in charge.

The government information describes elaborate efforts by Cranford to influence lawmakers and state policymakers in ways that would help PFH's bottom line. According to the government, that included improper lobbying, political contributions, and political advocacy, as well as outright bribery. They were trying to pile up state money, according to Cranford's plea, not to provide better services but to line their own pockets: "to increase the Charity's total receipts so they had more funds available from which to embezzle and steal."

Keep in mind, however, that kickbacks and embezzlement aside, the success in increasing PFH's "total receipts" also helped to fund lavish compensation for PFH executives. Cranford himself drew $276,000 in 2015 (his private firm also received $547,000 for "public relations). Five top executives who were on the PFH Resource Team made even more: Schwend was paid around $987,000; Marilyn Nolan $507,000; Bontiea Goss $502,000; Tom Goss $489,000; Keith Noble $402,000.

They also found money in the PFH budget to employ ten family members of Resource Team executives, including two as executive vice presidents making more than $160,000 per year and one as a financial analyst making more than $100,000.

Here's the list, which the nonprofit disclosed as part of its required 2015 990 tax form:

There's nothing improper per se about a nonprofit employing family members of executives. But the situation might raise eyebrows when four of those executives are implicated in government filings in a scheme to try to get more public money by improper means in order to enrich themselves. Among the illicit influence peddling described in the Cranford information, by the way, was a $70,000 job given to then-Sen. Jon Woods' fiancee. "Senator is taken care of," Tom Goss wrote Cranford regarding giving her the job at a PFH affiliate. "He is a new bubba for our team."

"With nearly 4,000 employees, Preferred Family Healthcare currently employs five individuals related to current or former executives," McElhannon said. "Each of these individuals was properly disclosed [on tax filings]."

McElhannon added: "PFH has worked closely with the government in its investigation, as well as undertaken its own, and based on information identified in that process, have taken steps where appropriate when it comes to former leaders and their actions."

In a previous statement after Cranford's plea, McElhannon said that PFH had been "victimized by the actions of former employees and representatives."

PFH continues to receive more than $40 million per year in state taxpayer money.

More by David Ramsey

The more than 500 pages of court filings recently unsealed by Federal Judge Timothy Brooks in the federal corruption case against former state Sen. Jon Woods include notes from a 2017 meeting between former state Rep. Micah Neal and federal investigators. According to these notes, Neal described what appears to be an accusation by Woods that state. Rep. Tim Summers, then a lobbyist, took kickbacks in exchange for helping to get GIF money for an affiliate of Preferred Family Healthcare where Summers worked on staff.

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