Preferred Family Healthcare, a non-profit organization based in Springfield, Missouri, is set to pay over $8 million in forfeiture and restitution to the federal government and the state of Arkansas. This settlement comes as part of a non-prosecution agreement announced, acknowledging the criminal actions of its former officers and employees.
“Preferred Family Healthcare must relinquish the illegal profits it garnered from a wide-ranging fraud and bribery scheme,” stated U.S. Attorney Teresa Moore for the Eastern District of Missouri. She emphasized the gravity of the situation, adding, “Several former officers and employees are being prosecuted in separate criminal cases for their individual criminal conduct. This non-prosecution agreement holds the charity itself responsible for their actions as agents of the charity. Public tax dollars were stolen and misused in the course of this public corruption scheme, and through this agreement and these separate prosecutions, those dollars are being restored to the public coffers.”
Details of the Fraud and Bribery Scheme
The investigation revealed a disturbing pattern of misconduct within Preferred Family Healthcare. According to Special Agent in Charge Tyler Hatcher of IRS-Criminal Investigation (IRS-CI), “Employees of Preferred Family Healthcare used charitable organizations to illegally line their own pockets through fraud and bribery.” This fraudulent activity involved the misuse of funds intended for vital healthcare services. Hatcher affirmed the commitment to combating such financial crimes, stating, “IRS-Criminal Investigation and our law enforcement partners will continue to work diligently to uncover large frauds designed to divert funds that were meant to help those in need of medical services. Preferred Family Healthcare has acknowledged that its former employees engaged in criminal activity, and they are taking steps to make amends by forfeiting a sum of money to the federal government and paying restitution to the state of Arkansas.”
The FBI also weighed in on the severity of the breach of trust. Special Agent in Charge Charles Dayoub of the FBI’s Kansas City Field Office remarked, “The public should not suffer or be responsible for individuals who abuse their leadership positions out of greed for personal financial gain. It is never acceptable to embezzle and misappropriate funds, especially those that directly impact our health care system. As today’s announcement underscores, although the individuals directly involved are no longer with Preferred Family Healthcare, this organization is accepting responsibility for its employees’ actions.”
Further highlighting the misuse of public funds, Special Agent-in-Charge Steven Grell of the U.S. Department of Labor, Office of Inspector General, stated, “The misuse and misappropriation of millions of federally sourced funds, designated for employment training and behavioral healthcare services to the public, by former executives of Preferred Family Healthcare (PFH) is a gross abuse of the positions of trust they once held within the organization.” Grell added, “These former executives failed the public and did a disservice to PFH employees by prioritizing their own personal benefit and financial gain over the public they served. Today’s agreement demonstrates PFH’s willingness to take corrective actions regarding the criminal actions of former executives of the organization.”
Services Provided by Preferred Family Healthcare
Preferred Family Healthcare operates across several states, including Missouri, Arkansas, Kansas, Oklahoma, and Illinois. The non-profit provides a range of essential services such as mental and behavioral health treatment and counseling, substance abuse treatment and counseling, employment assistance, aid to individuals with developmental disabilities, and various medical services. A significant portion of the organization’s funding originates from federally appropriated funds, with Medicaid reimbursement being the largest component.
Admission of Criminal Conspiracy and Financial Repercussions
As a condition of the non-prosecution agreement, Preferred Family Healthcare representatives admitted that former officers and employees were involved in a conspiracy. This conspiracy included the embezzlement of funds from the charity and the bribery of elected state officials in both the Arkansas House of Representatives and the Arkansas Senate. These illegal activities directly resulted in financial gain for Preferred Family Healthcare, facilitated by a lack of proper oversight from the board of directors, allowing officers and employees to violate federal law.
Under the terms of the agreement, Preferred Family Healthcare is obligated to forfeit more than $6.9 million to the federal government and pay over $1.1 million in restitution to the state of Arkansas. This restitution is specifically linked to the misuse of funds from the state’s general improvement fund.
Ongoing Criminal Cases
The investigation has already led to several guilty pleas from former executives of the charity, former members of the Arkansas state legislature, and other individuals involved. Furthermore, the former chief operating officer and chief financial officer of Preferred Family Healthcare were indicted by a federal grand jury in March 2019. They have pleaded not guilty and are currently awaiting trial, scheduled to commence on October 3rd.
The prosecution of these separate criminal cases is a collaborative effort involving Senior Litigation Counsel Marco A. Palmieri and Trial Attorney Jacob Steiner of the Criminal Division’s Public Integrity Section, alongside Supervisory Assistant U.S. Attorney Randall Eggert and Assistant U.S. Attorney Shannon T. Kempf of the Western District of Missouri, Assistant U.S. Attorney Steven M. Mohlhenrich of the Western District of Arkansas, and Special Assistant U.S. Attorney Stephanie Mazzanti of the Eastern District of Arkansas.
The extensive investigation was conducted by IRS-Criminal Investigation, FBI, and the Offices of the Inspectors General from the Departments of Justice, Labor, and the Federal Deposit Insurance Corporation (FDIC). This multi-jurisdictional investigation involved collaboration between the Criminal Division’s Public Integrity Section, the Western District of Missouri, the Western District of Arkansas, and the Eastern District of Arkansas.
Conclusion: Accountability and Restitution
The non-prosecution agreement with Preferred Family Healthcare underscores the commitment of federal and state authorities to hold organizations accountable for the fraudulent actions of their employees, particularly when it involves the misuse of public funds intended for healthcare. The forfeiture and restitution payments aim to restore the misappropriated funds to the public coffers, while separate criminal prosecutions continue to address individual culpability in this extensive fraud and bribery scheme.
