Nonprosecution Agreements Are Bad—Secret Nonprosecution Agreements Much Worse
While the Justice Department says it will get tougher on corporate crime, it is still using agreements not to prosecute organizations that commit crimes. A prime example is Preferred Family Healthcare in Springfield, Mo., a nonprofit that provides drug abuse treatment and mental health services, which bribed politicians and bilked taxpayers out of millions of dollars.
Worse, the non-prosecution agreement’s terms, which U.S. Attorney Teresa Moore helped reach with Preferred Family, are secret. Legal experts say this is, to be polite, an awful practice.
In return for financial favors, the Arkansas politicians voted for legislation that the nonprofit executives helped write and opposed state programs that could lower profits for Preferred Family Healthcare.
“It is clear that these kinds of deals fail to deter corporate crime,” said Rick Claypool of Public Citizen.
John Coffee, a Columbia University law professor renowned for his expertise in white-collar crime, complained that “there is no document publicly filed.”
Professor Coffee added that “the Department of Justice and the corporation settle without there being a court having any oversight at all.”
The agreement Preferred Family reached with prosecutors in return for not filing criminal charges called for the nonprofit to forfeit more than $6.9 million to the federal government and pay more than $1.1 million in restitution to Arkansas, one of five states where the company operated.
“Employees of Preferred Family Healthcare used charitable organizations to illegally line their own pockets through fraud and bribery,” said Tyler Hatcher, the special agent in charge of the IRS criminal investigation.
ACTION BOX /What You Can Do About It
Tell Lisa Monaco, the U.S. deputy attorney general, your opinion about non-prosecution agreements. Call the Justice Department at 202-514-2000 or write her at U.S. Department of Justice, 950 Pennsylvania Avenue, NW Washington, DC 20530-0001.
Tell Teresa Moore, the top federal prosecutor for western Missouri, your opinion about the nonprosecution deal for Preferred Family Healthcare. Call Moore at 417-831-4406 or write her at U.S. Attorney’s Office, Hammons Tower, Suite 500, 901 St. Louis, Springfield, MO. 65806-2511.
Contact Public Citizen at 202-588-1000.
In 2020, Preferred Family agreed to pay $6.5 million in civil settlements to the federal government and Arkansas for fraudulently billing taxpayers. The nonprofit also reached a corporate integrity agreement with the U.S. Department of Health and Human Services so it could continue billing Medicaid and Medicare.
State Attorney General Leslie Rutledge said in 2020 that the deal “ensures Arkansans that the Arkansas Medicaid program was made whole after this wrong and illegal act.”
The non-prosecution agreement only includes a payment to Arkansas even though Preferred Family currently operates in Missouri, Illinois, Oklahoma and Kansas.
Preferred Family stopped operating in Arkansas after Arkansas stopped paying Medicaid claims to Preferred Family.
Politicians who were criminally charged include former Arkansas state Sen. Jeremy Hutchinson (R-Little Rock), the nephew of Arkansas Gov. Asa Hutchinson.
Hutchinson, who exercised his power in the legislature to both hold up agency budgets and requested legislative audits to benefit Preferred Family, pleaded guilty to tax fraud and accepting bribes. He has not been sentenced.
Tommy Ray Goss, the former chief financial officer of Preferred Family, pleaded guilty Wednesday to conspiracy and aiding and assisting in the preparation of presentation of false returns. Bontiea Goss, the former chief operating officer, pleaded guilty to a count of conspiracy. The couple’s trial had been scheduled to start Oct. 3.
The Gosses agreed to pay $4.35 million in restitution to the federal government. She faces up to five years in prison although the judge could sentence her to more time. He faces up to eight years.
In January, Preferred Family merged with another nonprofit to create Brightli, which the company called one of the largest nonprofit behavioral health and addiction-treatment organizations in the nation.
The pay the Gosses reported to the IRS for 2016 was huge, $807,465 for her and $794,709 for him. That was more than 20 times their pay for 2005, when the Gosses started stealing money from the nonprofit, prosecutors said.
But prosecutors said the Gosses lied on tax returns the charity filed and failed to report perks the charity paid for including air charter flights for themselves, family members, and even their dogs.
Prosecutors said Preferred Family spent more than $300,000 on such flights as the Gosses commuted between their homes in Colorado and Missouri. Their dogs, Daisy and Boo Boo, were frequently on the flights.
Preferred Family also paid for personal aides for the Gosses, prosecutors said. Their duties included cleaning the Goss homes, picking up groceries and taking the Goss dogs to the groomers.
Prosecutors said that the Gosses also shielded an employee, David Carl Hayes, the nonprofit’s internal auditor, who embezzled more than $1.9 million from the charity. When another employee told the Gosses about the theft, the Gosses told that employee not to look into it, according to prosecutors.
Preferred Family, which sued the Gosses and other former officers of the nonprofit, said in court documents that Hayes also embezzled almost $259,000 in 2011 which he and his wife used to buy rural property in Greene County in Missouri.
Tommy Ray Goss didn’t report the theft to the charity’s board of directors but sent Hayes a series of 13 emails asking for the money back before apparently giving up.
“Don’t forget to put the $258k back before Friday,” Goss wrote in June 2011.
Hayes pleaded guilty in June 2017 to federal charges including theft from an organization receiving federal funds. He died in an apparent suicide later that year.
In 2016, Tommy Ray Goss caused the nonprofit to file a tax return reporting that the charity had paid more than $2 million for two “administrative buildings” and some vehicles, prosecutors said.
The “administrative buildings” were a house on 590 acres in Compton, Ark. near the tallest waterfall between the Rockies and the Appalachians, and a 5,202-square-foot lake house with a private boat dock in Eureka Springs, Ark. The Gosses originally owned both houses.
Court documents detail how Tommy Ray Goss allegedly arranged for a lobbyist firm to pay him kickbacks.
“At 30% I think about $28,500 roughly,” Goss texted Rusty Cranford, a lobbyist who admitted to paying more than $600,000 in kickbacks to Goss. “I think the total was $95k or $96k. That leaves you 40% of my half for taxes.”
Another politician Goss allegedly bribed was former Arkansas state Sen. Hank Wilkins (D-Pine Bluff), the pastor at a Methodist church. The charity put $30,000 into a discretionary account at the church that Wilkins had access to.
Goss later told auditors the money was for a youth summer program. Wilkins pleaded guilty in 2018 to conspiracy and bribery.
In return for financial favors, the Arkansas politicians voted for legislation that the nonprofit executives helped write and opposed state programs that could lower profits for Preferred Family Healthcare.
“This means they will quit giving us bs reviews that are unfounded,” Cranford wrote in another email.
