Carlo Chiostri [Public domain], via Wikimedia Commons

August 14, 2018; Northwest Arkansas Democrat-Gazette

When bad actors who are involved in fiscal fraud and theft are identified, what happens next with the organization and the rest of the staff? How far out do the ripples of damage go?

In Arkansas and surrounding states, this question is being answered in real time as state contracts for health and human services get cancelled and individuals are fired and charged with crimes. Lobbyist Milton “Rusty” Cranford pled guilty to a $3.5 million bribery case, and several lawmakers had to step down from their positions. Four former state legislators have pled guilty or been convicted of federal fraud charges.

Cranford was also the administrator of operations for Preferred Family Healthcare Inc. until last year. Preferred Family operates in several states and is based in Springfield, Missouri. In addition, the former vice president for Preferred Family, Robin Raveendran, has been charged with Medicaid fraud, involving 20,000 illegally billed services for mental health. NPQ reported the bankruptcy of one of the nonprofits, South Arkansas Youth Services, and the compounding of the deception by the financial misdealings of key staff. Medicaid payments to Preferred Family were suspended on June 29th, and the Arkansas state Department of Health Services, employees of the affected nonprofits, and the individuals they served, are all scrambling.

The latest twist is that Charlie Green, who once administered the publicly funded mental services of Arkansas, has filed a lawsuit against Preferred Family for $500,000. The sum, he claims, is owed to him as part of a three-year contract signed when he was hired as an executive officer of Preferred Family in January 2017 for $250,000 a year. The contract with the nonprofit also included a 2.5 percent cost-of-living increase, bonuses, and fringe benefits, and guaranteed that the organization had to have “cause” to terminate his employment—generally understood to mean gross misconduct, according to the lawsuit.

Green was approached and interviewed by the US attorney’s office in 2017 for “a criminal investigation it was conducting of PFH representatives.” The lawsuit goes on to say that because of the interview, Green “learned of possible unlawful campaign contributions by a PFH official and reported this activity in September 2017.” The suit goes on to state that the next day, Bontiea Goss, his supervisor, informed him “for the first time that she was concerned about his ‘management style.’” Green was let go on January 9, 2018, with two more years left on his contract.

While this appears to be a whistleblower case, there are more moving pieces. When Green left the state job, the state’s Department of Human Services sent Preferred Family a letter saying he had “ongoing obligations” under state law “with regard to potential conflicts of interest and ethical standards governing former state officials and employees.” It appears to be vaguely similar to a noncompete clause. While former state employees may work in the private sector, there are requirements because of conflicts of interest. Lisa Hammersly, writing for the North Arkansas Democrat-Gazette, summarizes,

The two-page letter by the department’s chief counsel, David Sterling, said former employees can’t “act as a principal or agent for anyone other than the state in matters which were within the former employee’s official responsibility.” The state normally looks for a 12-month “cooling off” period when a state employee leaves for the private sector, he wrote.

The letter notes that “there are many aspects of PFH’s current operations that are within Dr. Green’s former official responsibilities” as director of the Division of Behavioral Health Services.

Sterling noted the law doesn’t preclude former employees from accepting employment in the private sector: “We merely bring this to your attention to make you aware that certain measures must be taken in how Dr. Green’s functional role is structured over the next 12 months…”

None of the principals on either side are commenting.

What we do know so far is that administrators of a nonprofit committed fraud and bribery, legislators have been convicted or pled guilty for similar behavior in the mix, and an administrator was hired and fired in the midst of the muck for what looks like whistleblowing but where Arkansas may see some conflict of interest.

Meanwhile, the state has had to find organizations to deliver services to youth at risk, among others, and in some cases find a facility to hold the programs as locations are being sold due to the fraud. To quote Sir Walter Scott, “O, what a tangled web we weave when first we practice to deceive!”—Marian Conway