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Spectrum Health Systems Pays Massachusetts $7.5 Million for Fraud in Concert with Civigenics
Spectrum came under attack in 2004 after Massachusetts Auditor A. Joseph DeNucci released a report that found the organization had misused $13.4 million in state funds over a 10-year period. The majority of that money, $10.2 million, was funneled through a no-bid contract to CiviGenics, which held a management contract with Spectrum from 1996 to 2002.
CiviGenics operates prisons and substance abuse programs in secure facilities.
DeNucci also questioned a $3.3 million purchase of CiviGenics? Barton Road Clinic by Spectrum, as the clinic was failing financially. Another bone of contention was almost $1 million in compensation paid by Spectrum to a former chairman for undocumented consultation services while he was living in Alaska and Florida.
Under the settlement agreement, Spectrum will pay Massachusetts $3.5 million, CiviGenics will reimburse $3.4 million, and CiviGenics President Roy Ross will pay $650,000. In total the state will receive $7.5 million of the nearly $17.5 million in misappropriated payments. Which isn?t a very good return for taxpayers, but is an excellent take for those running the privatized operations. This occurred during the watch of former governor and current presidential candidate Mitt Romney, who touts his ?business acumen? as a qualifier for public office.
No wrongdoing was assessed because of the settlement. ?Informally, we hear things, and we?ve been led to believe the management at Spectrum has made considerable improvements since our audit, as a result of our audit,? said Glenn A. Briere, spokesman for the Auditor?s office.
?Certainly, the auditor did not want to see them put out of business.
They do good work.? Apart from the ?clear abuse of public funds? cited by the Auditor in this case, that is.
As part of the settlement, Spectrum is required to add four new independent members to its board of trustees, and at least two of those members must have nonprofit governance or financial expertise. Spectrum must also review its bylaws and procedures and create education programs for its trustees. The focus must be on law, accounting, finance, employee compensation and other topics related to their duties. The original 2004 audit is posted on PLN?s website.
Sources: Telegram & Gazette; Auditor of the Commonwealth, Report No. 2002-4453-3C
