A Terrifying Tale of Two Nonprofits Allegedly Hijacked

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June 2, 2016; Huntsville Times

Any number of schemes might have been taking place in this convoluted story of what can happen when a less-than-attentive board meets a compelling leader, but here’s one that might give you a flavor of the whole.

When Birmingham Health Care’s board of directors voted unanimously in February 2008 on a plan to sell its building on the Southside of town to a company formed by the group’s CEO Jonathan Dunning for about $2.8 million and then lease it back at least one board member was in the dark about a much higher appraisal.

“I don’t recall seeing an appraisal,” testified Terry Burney, Birmingham Mayor William Bell’s chief administrative analyst and a longtime Birmingham Health Care (BHC) board member.

Burney testified Friday he wasn’t aware of an appraisal five months before the sale that showed the value of the building was twice the sale amount—$6 million.

Jonathan Dunning is the former CEO both of BHC and of Central Alabama Comprehensive Health (CACH), a federally funded health center in Tuskegee, Alabama. “Former,” in this case, means he left the positions in 2008. But a few days ago at his trial, where he is charged with 112 counts of fraud and conspiracy, current CACH employees claimed that he remained the boss through 2011 by setting up contracts through businesses that he owned to manage and provide services to BHC, and through BHC to CACH. Dunning’s fraud and conspiracy charges could be worth $14 million.

Sharon Waltz is a major witness in the case; she is also a former employee and Dunning’s ex-lover, with whom he had two children before parting on bad terms. Waltz testified that Dunning established a network of businesses to contract with BHC and CACH “to make a profit off” the health centers.

By all accounts, Dunning kept the boards, staffs, and others on a tight leash, complaining that the boards and auditors “asked too many questions” and ordering staff to be fired when they crossed him. He handpicked his CEO successor at CACH, Alan Yoe, who had previously served under Dunning as Chief Operating Officer at CACH, inviting him to dinner in early 2009 after he had left as CEO to ask if he wanted the job. When Yoe protested that he clearly wasn’t qualified since he had gotten a poor annual review as COO, Dunning told him not to worry—all of the accounting, grant writing, and reports would be taken care of by Dunning’s staff. As it turned out, Yoe said he was not given authority to sign checks.

The CACH board apparently eventually approved Yoe’s hiring at a salary twice what he made as COO. But by then, BHC was managing CACH, while Dunning’s management consulting company was managing BHC—supposedly just until BHC’s new CEO, Jimmy Lacey, could transition into the position. (Lacey, who has since passed away, was a former board member at CAHC to whom Dunning gave a $25,000 check during the real estate transaction referenced at the top of this article.)

Then, as Ken Faulk of AL.com writes,

Yoe said that he sent a letter of resignation on April 1, 2011, to the CACH board after he had heard he might be replaced. He said he had planned to take a job with Dunning.

On May 12, 2011, Yoe received a letter from CACH board chairman Louis Maxwell stating that the board was rejecting his resignation, Yoe said. He said around that time the board had also cancelled its management contract with BHC.

As a result, Yoe testified his job duties changed, with him getting control over grants and check writing.

CACH had to sue BHC to get its records back.

Regarding the real estate transaction, Terry Burney, chief administrative analyst to Birmingham mayor William Bell and a longtime Birmingham Health Care board member, said he didn’t see any documents regarding the real estate transaction or other such details because “We were more of a policy-setting board rather than a governing board.”

Under questioning by defense attorney Bill Athanas, Burney said the board wasn’t involved in the day-to-day operations but delegated to Dunning.

“Jonathan was a good CEO. He did a great job for our organization,” he said.

The FBI, Internal Revenue Service Criminal Investigation Division, and U.S. Health and Human Services Office of the Inspector General have investigated this ongoing sordid mess of a case, and Assistant U.S. Attorneys Melissa Atwood and John B. Ward are prosecuting it.—Ruth McCambridge