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UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION UNITED STATES OF AMERICA, Plaintiff, Case No. 8: 13-cv-
V.
APPROXIMATELY $87,000 IN FUNDS CURRENTLY HELD IN SYNOVUS BANK ACCOUNT NUMBER 100-118-0932, Defendant. VERIFIED COMPLAINT FOR FORFEITURE IN REM
In accordance with Rule G(2) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions, Plaintiff United States of America brings this complaint and alleges upon information and belief as follows: NATURE OF THE ACTION
1.
This is a civil action in rem to forfeit to the United States of America,
pursuant to 18 U.S.C. §§ 981(a)(1)(C), approximately $87,000.00 in funds held in Synovus Bank Account Number 100-118-0932, held in the name of "HARC Endowment" (Subject Funds), on the ground that the funds are the proceeds of the theft of government property, committed in violation of 18 U.S.C. § 641. JURISDICTION AND VENUE
2.
The Court has subject matter jurisdiction over this action pursuant to 28
U.S.C. § 1345, which provides the Court with jurisdiction over all civil actions commenced by the United States, and pursuant to 28 U.S.C. § 1355, which provides the Court with jurisdiction over actions to recover or enforce forfeitures.
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3.
This Court has in rem jurisdiction over the Subject Funds, because
pertinent acts or omissions giving rise to the forfeiture occurred in the Middle District of Florida, see 28 U.S. C. ยง 1355(b)(1 )(A). 4.
Venue is also proper in the United States District Court for the Middle
District of Florida, because pertinent acts or omissions giving rise to the forfeiture occurred in the Middle District of Florida, see 28 U.S.C. ยง 1355(b)(1 )(A). THE DEFENDANT IN REM
5.
The Subject Funds are Social Security benefits owed to and intended for
the mentally retarded clients of the Hillsborough Association for Retarded Citizens (HARC). These funds were wired by the government into personal accounts established by HARC in the names of HARC's clients, and used solely to receive the clients' Social Security benefits. Despite the fact that the accounts were held in the clients' names, however, HARC's clients were not given any access to the accounts. Rather, HARC wired the funds deposited into the clients' accounts into its Synovus "HARC Endowment" account and used the money to pay for its operating expenses and for a monthly remuneration given to its Chief Financial Officer and Chief Executive Officer. STATUTORY BASIS FOR FORFEITURE
6.
As the proceeds of the theft of government property, the Subject Funds
are subject to civil forfeiture to the United States, pursuant to Title 18, United States Code, Section 981 (a)(1 )(C). 7.
Under section 981(a)(1)(C), the United States is authorized to civilly forfeit
any property that constitutes or is derived from proceeds traceable to a "specified
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unlawful activity," as defined in Title 18, United States Code, Section 1956(c)(7). Section 1956(c)(7) defines "specified unlawful activity," to include offenses listed in Title 18, United States Code, Section 1961 (1 ), which, in turn, includes the theft of government property committed in violation of Title 18, United States Code, Section 641. 8.
Specific facts supporting the forfeiture of the Subject Funds are contained
in the Affidavit of Special Agent Charles 0. Thomas of the United States Department of Health and Human Services, Office of Inspector General. His affidavit is attached to this Complaint as Exhibit A and fully incorporated herein by reference. 9.
As required by Supplemental Rule G(2)(f), the facts set forth herein
support a reasonable belief that the government will be able to meet its burden of proof at trial. Specifically, they support a reasonable belief that the government will be able to show by a preponderance of the evidence that the Subject Funds are proceeds of the theft of government funds. CONCLUSION
WHEREFORE, pursuant to Supplemental Rule G, Plaintiff United States of America requests that this Court initiate a process of forfeiture against the Subject Funds, and duly notice all interested parties to appear and show cause why the forfeiture should not be decreed. The United States further requests that the Court
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order the Subject Funds forfeited to the United States for disposition according to law and grant the United States such other and further relief as this case may require.
Dated: June
v<t, 2013
Respectfully submitted, ROBERT E. O'NEILL United States Attorney
By:~~
NATALIE HIRT ADAMS Assistant United States Attorney USA NO. 141 400 N. Tampa Street, Suite 3200 Tampa, Florida 33602 Telephone: (813) 274-6000 Facsimile: (813) 274-6220 E-mail: Natalie.Adams@usdoj.gov
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VERIFICATION Pursuant to 28 U.S .C. ยง 1746, I, Charles 0. Thomas , declare under penalty of perjury that: I am a Special Agent with the United States Department of Health and Human Services , Office of Inspector General , Office of Investigations. I have read the foregoing Verified Complaint for Forfeiture in Rem and aver that the matters alleged as fact in the Complaint are true to the best of my knowledge and belief. I have acquired my knowledge in this matter through my personal experience, observation, and investigation , and through information conveyed by witnesses and other law enforcement officers.
Executed this
(cb1ayof June, 2013 . 0.
Charles Thomas, Special Agent United States Department of Health and Human Services, Office of Inspector General
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AFFIDAVIT
I. AFFIANT'S BACKGROUND I, Charles Otis Thomas, declare under penalty of perjury, pursuant to 18 U.S.C. ยง 1746, that the following is true and correct: 1.
I am currently a Special Agent with the United States Department of
Health and Human Services (HHS), Office of Inspector General (OIG), Office of Investigations, Tampa, Florida Field Office. I have been employed by OIG since April 1995. In connection with my official OIG duties, I primarily investigate health care fraud and "white collar crime" matters. 2.
During my tenure as a Special Agent, I have served in the following
capacities: trainer for new agents; Director of a Headquarters Staff responsible for supervising undercover operations and the use of technical surveillance equipment; and Director of the Internal Affairs Unit in the agency headquarters. 3.
I have supervised investigations into the theft of government property,
have personally led numerous health care fraud investigations, and have participated in the execution of numerous search warrants resulting in the seizure of evidence related to health care fraud. As a part of my participation in health care fraud investigations, I have also conducted surveillance and analyzed information obtained from Court-ordered pen registers and consensually-monitored telephone and non-telephone conversations. 4.
Prior to becoming a Special Agent with HHS OIG, I served in the United
States Border Patrol as a Patrol Agent for three years.
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II. PURPOSE AND BASIS FOR FORFEITURE 5.
I submit this affidavit in support of an application for a seizure warrant for
funds currently held in Synovus Bank account number 100-118-0932, in the name of "HARC Endowment" (Subject Funds). The information in this affidavit is personally known to me, has been relayed to me by Financial Investigator Mary Hull of the Florida Department of Financial Services (DFS), Division of Accounting and Auditing, Office of Fiscal Integrity in Tallahassee, Florida, or other witnesses, or is based on my experience and training as a law enforcement officer. 6.
This affidavit does not set forth every fact known from the investigation,
but rather sets forth only those facts sufficient to establish probable cause to believe that the Subject Funds are composed of criminal proceeds and subject to forfeiture. Specifically, I submit there is probable cause to believe that the Subject Funds are proceeds of the theft of government property, committed in violation of Title 18, United States Code, Section 641. 7.
My investigation has revealed, in short, that the Subject Funds are Social
Security benefits owed to and intended for the disabled adult clients of the Hillsborough Association for Retarded Citizens (HARC), located in Tampa, Florida.
1
These funds
were wired by the government into personal bank accounts that were established by agents of HARC in the names of HARC's clients, and that were used solely to receive the clients' Social Security benefits. Despite the fact that the accounts were held in the clients' names, however, HARC's clients were not given any access to the accounts. Rather, agents of HARC wired the funds deposited into the clients' personal accounts
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into its Synovus "HARC Endowment" account and used the money to pay for HARC's operating expenses and for a monthly remuneration given to its then Chief Financial Officer and Chief Executive Officer. Ill. JOINT INVESTIGATION
8.
This investigation is being conducted jointly with, among others, DFS
Detective William Geier and Financial Investigator Mary Hull. Detective Geier, has worked in his current capacity for the past nine years and has worked for 19 years as a sworn law enforcement officer. He has over 32 years' experience conducting white collar crime investigations. Financial Investigator Mary Hull is a Certified Fraud Examiner in good standing with the Association of Certified Fraud Examiners. She has over ten years of auditing and financial analysis experience in an official governmental capacity in the state of Florida.
IV. SOCIAL SECURITY BENEFITS At all times material to this affidavit: Entitlement to Social Security Benefits 9.
The Social Security Act provided that individuals meeting the
qualifications below were eligible for monetary benefits from the government: (1) Each aged, blind, or disabled individual who does not have an eligible spouse and (A) Whose income, other than income excluded pursuant to section 1612(b), is at a rate of not more than $1,752 (or, if greater, the amount determined under section 1617) for the calendar year 1974 or any calendar year thereafter, and (B) whose resources, other than resources excluded pursuant 1
HARC was later known as the Hillsborough Area Resource Center.
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to section 1613(a), are not more than: i.
in case such individual has a spouse with whom he is living, the applicable amount determined under paragraph (3)(A), or
11.
in case such individual has no spouse with whom he is living, the applicable amount determined under paragraph (3)(8),
(2) Each aged, blind, or disabled individual who has an eligible spouse and(A) whose income (together with the income of such spouse), other than income excluded pursuant to section 1612(b), is at a rate of not more than $2,628 (or, if greater, the amount determined under section 1617) for the calendar year 1974, or any calendar year thereafter, and (B) whose resources (together with the resources of such spouse), other than resources excluded pursuant to section 1613(a), are not more than the applicable amount determined under paragraph (3)(A),shall be an eligible individual for purposes of this title. 42 U.S.C. ยง 1382(a),(b). 10.
The Social Security Act also stated that, "[t]he right of any person to any
future payment under the title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law." 42 U.S.C. ยง 407. 11.
HARC's clients, referenced above and discussed further below, received
Social Security benefits. The Subject Funds are some of the Social Security benefits that agents of HARC wrongfully took from HARC's clients.
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The Right to Receive Social Security Benefits on Behalf of an Eligible Recipient 12.
HARC was not a "representative payee" designated by the Social Security
Administration to accept or manage its clients' Social Security benefits.
Even had
HARC been a representative payee permitted to receive its clients' Social Security benefits-which it was not-the manner in which HARC's agents used its clients' benefits would still have violated its obligations to its clients. 13.
As stated by the Social Security Administration (SSA), a "representative
payee is an individual or organization appointed by SSA to receive Social Security and/or Supplemental Security Income (SSI) benefits for someone who cannot manage or direct someone else to manage his or her money." See 'What is a Representative Payee?" United States Social Security Administration, http://www.socialsecurity.gov/payee/faqrep.htm/NewGuide/ (last accessed June 11, 2013). A representative payee "acts on behalf of the beneficiary." See 'What are the Duties of a Representative Payee?" United States Social Security Administration, http://www.socialsecurity.gov/payee/faqrep.htm/NewGuide/ (last accessed June 11, 2013). 14.
To become a representative payee, one "must submit an application; form
SSA-11 (Request to be selected as payee) with supporting documents to prove [his or her] identity." See "How Do I Apply to be a Representative Payee?" United States Social Security Administration, http://www.socialsecurity.gov/payee/faqrep.htm/NewGuide/ (last accessed June 11, 2013). The Social Security Administration generally requires the applicant "to complete the payee application in a face-to-face interview (with certain exceptions)." /d. 5
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15.
"Having power of attorney, being an authorized representative or having a
joint bank account with the beneficiary is not the same thing as being a representative payee." See 'What is a Representative Payee?" United States Social Security Administration, http://www.socialsecurity.gov/payee/faqrep.htm/NewGuide/ (last accessed June 11, 2013). "These arrangements do not give legal authority to negotiate and manage a beneficiary's Social Security and/or SSI payments." /d. "In order to be a representative payee, a person or organization must apply for and be appointed by the Social Security Administration." /d. 16.
Nor does being a representative payee confer absolute power to dispose
of a beneficiary's benefits in any manner whatsoever. A representative payee must: •
Determine the beneficiary's needs and use his or her payments to meet those needs;
•
Save any money left after meeting the beneficiary's current needs in an interest bearing account or savings bonds for the beneficiary's future needs;
•
Report any changes or events which could affect the beneficiary's eligibility for benefits or payment amount;
•
Keep records of all payments received and how they are spent and/or saved;
•
Provide benefit information to social service agencies or medical facilities that serve the beneficiary;
•
Help the beneficiary get medical treatment when necessary;
•
Notify SSA of any changes in your (the representative payee's) circumstances that would affect your performance or continuing as representative payee;
•
Complete written reports accounting for the use of funds; and
•
Return any payments to which the beneficiary is not entitled to SSA.
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See "What is a Representative Payee?" United States Social Security Administration, http://www.socialsecurity.gov/payee/faqrep.htm/NewGuide/ (last accessed June 11, 2013). 17.
A representative payee is prohibited from:
•
Using a beneficiary's money for the payee's expenses, or spending funds in a way that would leave the beneficiary without necessary items or services (housing, food, medical care).
•
Putting a beneficiary's Social Security or SSI funds in the payee's or another person's account; and
•
If the beneficiary is in an institution, and the institution is receiving Medicaid funds for the current maintenance of the beneficiary, the benefit may not be used for current maintenance.
See 'What Are Some Examples of What Payees Cannot Do?" United States Social Security Administration, http://www.socialsecurity.gov/payee/faqrep.htm/NewGuide/ (last accessed June 11, 2013). 18.
Representative payees should set up accounts for beneficiaries that
minimize fees and enable clear record keeping. See 'What Type of Bank Account Should I Set Up for the Beneficiary?" United States Social Security Administration, http://www.socialsecurity.gov/payee/faqrep.htm/NewGuide/ (last accessed June 11, 2013). A beneficiary's "bank account must be titled so that it is clear that the money in the account belongs to the beneficiary." /d.
V. 19.
PROBABLE CAUSE
This investigation was initiated in response to a complaint made to the
Medicaid Fraud Control Unit in Tampa, Florida, alleging the misuse of Social Security beneficiary funds by certain employees of HARC. The complaint alleged that HARC 7
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improperly accessed funds in the individual beneficiaries' private accounts and used these funds to pay for HARC's general operating expenses. The complaint further alleged that HARC's Chief Executive Officer and Chief Financial Officer were fraudulently receiving remuneration in the amount of $1,800 per month in funds drawn from HARC's general operating funds account. In November of 2011, this complaint was referred to the Florida Department of Financial Services for review of HARC's business practices. 20.
In February 2013, the DFS Office of Fiscal Integrity completed an
investigation into HARC's billing practices as they related to state payments for the work-training of disabled adults and work performed by disabled adults as part of a program called Home-Link. Payments for the work and work-training were billed to the Florida Agency for Persons with Disabilities. This investigation ended in a civil settlement in which HARC agreed to pay the state $310,000 in civil damages and investigative expenses. 21.
Also in February 2013, OIG and DFS began a joint criminal investigation
into agents of HARC's alleged theft of Social Security benefits from its disabled adult clients. Witness Statements 22.
Tiffany Thomas was the AmeriCorps Director at HARC from 2004 to 2006.
In May 2012, Thomas told investigators about her HARC employment. Among other responsibilities, the AmeriCorps Director oversaw the Home-Link program. Thomas said that, in December 2008, Frank Pannullo, HARC's then Chief Financial Officer, demanded that she sign false invoices for Home-Link services that were not rendered.
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She refused to sign the invoices, stating that she would not participate in creating fraudulent documents. Soon after her refusal, Thomas was abruptly fired by Pannullo. In the investigation of HARC's Home-Link program (which ended in HARC's civil settlement with the State of Florida), a pattern of submitting falsely-inflated invoices and invoices for non-rendered services was clearly revealed and documented by investigators. 23.
Bobby Richards started work at HARC in 2004 and held various
management positions, including Assistant Chief Operations Officer, the position he held when he left HARC in September 2010. In May 2012, Richards told investigators about his HARC employment. His responsibilities included reviewing the payroll and signing the payroll checks. At some point, he became aware that funds were missing from various personal accounts held in the names of HARC clients. These accounts were set up by agents of HARC in the names of HARC's clients, specifically to receive the clients' Social Security benefits. No other funds were deposited into the accounts. The patients did not have access to the funds in the accounts. HARC agents alone managed account access, transactions, and record keeping. 24.
Richards told investigators about five HARC clients who had funds
missing from their accounts. Richards did not quantify the amount that was missing from any of the clients' accounts. 25.
Richards stated that one of the licensing representatives from the Agency
for Persons with Disabilities (APD) was aware that an allegation had been made regarding missing funds from the HARC clients' accounts. The APD is a Florida state government agency specifically tasked with serving the needs of persons with 9
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developmental disabilities. The APD works in partnership with local communities and private providers to assist people who have developmental disabilities, and it has a limited oversight function. Part of its mandate is to ensure that persons with disabilities who desire to work have opportunities to work. According to Richards, the APD representative repeatedly inquired with HARC senior executives, but was unsuccessful in obtaining a satisfactory answer to her questions regarding the missing client funds. 26.
In October 2012, Jane Frank, then the Chief Financial Officer of HARC,
talked to investigators about her work at HARC. Jane Frank told investigators she believed HARC was a representative payee for its clients. (Subsequent investigation by law enforcement revealed that HARC was not an authorized representative payee for its clients.) She told investigators that HARC kept an "Endowment Fund" account at Synovus Bank, which was funded by HARC clients' Social Security benefits and SSI benefits. Each resident had a bank account set up to receive these funds. When a HARC client's personal account reached a balance of $2,000, the account funds were transferred from that resident's personal account into HARC's "Endowment Fund" account at Synovus Bank. Frank described this account as a "pooled trust account." 27.
Frank told investigators that she personally transferred funds from the
Synovus Bank Endowment Fund account into HARC's operations account to cover payroll and other expenses on multiple occasions. These transactions were approved by her supervisor at the time, Steve Roberto, who was then the Chief Executive Officer. Sham Agreements 28.
Robyn Engelman was HARC's Operations Coordinator from November
2009 until HARC was sold in 2013. During that time, she reported directly to the Chief 10
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Operations Officer, who was initially Steve Mason, and later, Bobby Richards. In April 2013, she spoke to investigators about her employment at HARC. In late 2007 or early 2008, Pannullo asked Engelman to obtain the signatures of various HARC clients on "Joinder Agreements." These agreements are explained in detail later in the affidavit. 29.
Engelman knew that many of the clients at HARC had assigned
guardians, because they lacked the legal mental capacity to sign documents on their own behalf. She also knew that Pannullo knew that many of the HARC clients had assigned guardians. Engelman refused to obtain the signatures from the clients, but offered to obtain signatures from the assigned guardians for the clients. Pannullo declined the offer and stated he would get the signatures himself. 30.
Between late 2007 or early 2008, and November 2009, Engelman was
aware that Pannullo and at least two other HARC employees obtained signatures from HARC clients on Joinder Agreements. In November 2009, Engelman saw a stack of these agreements on the desk in Pannullo's office. She briefly reviewed them and determined that many of the signatures were back-dated and included signatures of witnessing employees who were not even employed by HARC on the dates the agreements purported to be executed. Some of the dates written on the agreements were more than a year before the purported witnessing employees began their employment at HARC. 31.
Engelman noticed that at least seven of the agreements she reviewed
were signed by persons who were on HARC's list of clients who had been declared legally incompetent and who had assigned guardians. 32.
In May 2013, the OIG received a written complaint from the brother of 11
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R.F., a former client of HARC, now deceased. The complaint included information about the previously mentioned "Joinder Agreements." R.F.'s brother stated that he and R.F.'s father both served as guardians for R.F. during R.F.'s stay at HARC. The brother had recently reviewed an agreement that appeared to have been executed by R.F. himself during his HARC stay. Neither R.F.'s brother nor R.F.'s father had anything to do with the agreement. The brother stated that R.F. did not have the legal capacity to understand the agreement. 33.
I have obtained and reviewed 47 of the Joinder Agreements signed by
HARC's clients. The agreements purport to have been signed on various dates, though the majority of them purport to have been signed on April 13, 2007-a date prior to the time Pannullo approached Engelman about collecting the signatures. 34.
Page 1, Article 2.02 of the agreement states that the beneficiary's trust
sub-account will be administered solely for the benefit of the beneficiary during the beneficiary's lifetime. Page 2, Article 3.01 states: "If any assets remain in the Beneficiary's separate Trust sub-account at the Beneficiary's death, such assets shall be deemed surplus Trust property and shall be retained by the Trust." On page 3, Article IV references "a fee for compensation set forth in Exhibit 'F' attached hereto and incorporated herein." No such exhibits are attached to any of the agreements. On page 3, Article 5.04 references a choice of law set forth in section 10.3 of the agreement "attached hereto as Exhibit 'A,' and explicitly adopted and incorporated herein by reference." There is no section 10.3 in any of the agreements, and there is no Exhibit A attached to any of the agreements. On page 4, Article 5.09 references the non-existent "Exhibit A- Declaration of Trust." 12
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35.
In addition to the fact that the agreements would have been legally
insufficient to allow HARC to become its clients' representative payee (as discussed above), the fact that the funds were used in contravention of the agreements' own commitment to use the funds solely for the beneficiaries' benefit, and the fact that the agreements entirely omitted key terms referenced therein, none of the agreements were completely executed or properly notarized. Pannullo himself-despite being a party to the transaction as CFO of HARC-notarized all but one of the agreements. 2 Agreements were signed by adults who were not mentally capable of understanding their nature or effect.
3
On none of the agreements notarized by Pannullo did Panullo
write the "grantor's" (the HARC client's) name in the space provided for the notary to include it. And none of the agreements had the grantor's initials in the place designated for them at the bottom right of the second and subsequent pages. Based on my training and experience, these agreements appear to represent an attempt to conceal and/or disguise the impropriety of the HARC agents' siphoning of HARC's client's Social Security benefits. Bank Records 36.
Synovus Bank records from 2010 through 2013 reveal that funds were
transferred from the private accounts held in the names of HARC's clients at Synovus Bank, Sun Trust Bank, and the Bank of Tampa, into the HARC-controlled Synovus Bank
2
See Fla. Stats. Ch. 107.17 ("A notary public may not notarize a signature on a document if the notary public has a financial interest in or is a party to the underlying transaction"). 3 The notarizing of signatures of mentally incapacitated clients is contrary to Florida State Statute, Chapter X, Section 117.107 ("A notary public may not notarize a signature on a document if it appears that the person is mentally incapable of
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account number 100-118-0932, held in the name of "HARC Endowment." 37.
In 2010, deposits totaling $99,010 were transferred from 56 HARC client
accounts at Synovus Bank alone, into the HARC Endowment Fund account. 38.
In 2011, deposits totaling $120,477 were transferred from 56 HARC client
accounts at Synovus Bank alone, into the HARC Endowment Fund account. 39.
In 2012, deposits totaling $69,400 were transferred from 56 HARC client
accounts at Synovus Bank alone, into the HARC Endowment Fund account. 40.
The Endowment Fund account received no deposits other than those
from HARC's clients' personal accounts. As of today's date, there is $87,827 in the HARC "Endowment Fund" account at Synovus Bank.
VI. CONCLUSION 41.
In sum, the evidence indicates that agents of HARC unlawfully
established accounts to which its agents had sole access, in order to obtain its disabled adult clients' Social Security benefits. They then wired the money from HARC's clients' accounts into HARC's Endowment Fund and operating accounts. Although agents of HARC created sham agreements to shroud the siphoning of HARC's clients' funds with an appearance of legality, even had the agreements been legitimate, they would have been insufficient to make HARC a Social Security Administration-approved representative payee entitled to manage its clients' benefits. 42.
Based on the foregoing information, I submit there is probable cause to
believe that the Subject Funds are proceeds of the theft of government property,
understanding the nature and effect of the document at the time of notarization"). 14
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committed in violation of Title 18, United States Code, Section 641 . Th is completes my affidavit.
,t
to ~
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Special Agent Charles 0 . Thomas US Department of Health and Human Services
15