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SEABHS scrutiny now includes CPSA
Thelma Grimes/San Pedro Valley News-Sun
The Arizona Attorney General's office is not the only agency investigating Southeastern Arizona Behavioral Health Services, Inc.'s (SEABHS) business practices.
Neal Cash, president of the Community Partnership of Southern Arizona Regional Behavioral Health Authority (CPSA), said if service changes are not implemented, SEABHS could lose public funding.
CPSA has not yet sent a "Letter of Cure" to SEABHS, but they have many concerns. Cash explained that a "Letter of Cure" would outline corrective measures SEABHS must take to continue receiving CPSA funding.
In the 2008-09 fiscal year, Cash said SEABHS received $35 million from CPSA.
If management of SEABHS operations does not improve, and in a worst-case scenario, the contract was not renewed, Cash said patients would have an alternative. Pantano Behavioral Health Services in Tucson is expanding, and Cash said CPSA is interested in bringing more of those services into communities such as Benson, Willcox, Nogales, Clifton, Safford and Sierra Vista.
If Pantano expands services, Cash said it would create competition for funding with SEABHS.
"SEABHS does receive a significant amount of money each year," Cash said. "We are concerned about the operations and services. We want to be assured that proper care is being provided."
Cash said CPSA has a say in how SEABHS handles the services and delivery of care, but despite concerns, does not have authority over decisions by the non-profit's governing board.
CPSA doesn't feel patients are at risk, Cash said, but has questioned staffing levels at the eight different facilities throughout Cochise, Graham, Greenlee and Santa Cruz counties. CPSA is also concerned about business operations, which has become the focus of an Attorney General's investigation.
Last month, the SEABHS board fired 14-year CEO Dana Johnson, who along with other employees has been named a suspect in the state's ongoing investigation.
The state authority has already indicted one SEABHS employee for allegedly embezzling $30,665 over a four-year period.
Johnson is being investigated for borrowing $150,000 and never repaying it.
Documents obtained by Wick Communications show that Johnson asked an executive committee for the loan in 2004.
Current board members Dick Hamilton and Bill Inman were on the executive committee that approved the original loan in April 2004. Other members of the committee included Walter Mares and Fren Lawson.
In an April 29, 2004 memorandum to the board, Johnson said she was requesting the board's approval for a short-term, fully secured loan for an "investment opportunity that is mutually beneficial."
"For me, I have a minimal risk opportunity that will supplement my income and eventual retirement," Johnson said. "For SEABHS, this is a fully-secured loan; contingency covered by life insurance, and at a significantly higher interest than the funds are currently earning."
A copy of the 2004 promissory note shows that Johnson agreed to make 36 monthly payments of $750, starting June 15, 2004.
The former CEO even agreed to pay a 5 percent fee if the payment was more than 10 days late.
The committee voted unanimously to approve the loan, but with little oversight from the governing board, third-party auditors found three years later that Johnson had made no payments.
It was at that point that Johnson asked the committee for an extension. Records showed that the committee approved the extension on Sept. 25, 2005. Hamilton, along with current board members Kathleen Kruger and Ann Morrison voted for the extension.
Morrison is Inman's wife. The couple represents the Clifton area.
In a Sept. 24, 2008, memorandum, Johnson said, "In April 2004, the board's executive committee approved a secured loan to me in the amount of $150,000. I am requesting that the term of this loan be extended through 2010, although it is my intention to pay down the principle balance, if not fully pay off this obligation well before that."
Similar to the 2004 promissory note, the September, 2008, agreement has Johnson promising to make monthly payments at a 6 percent interest, and a 990 form filed with the IRS in 2007 said she would put up her life insurance policy and pension as collateral.
However, documents show Johnson never followed through with her promise. The beneficiary named on her 401K plan is spouse Lee Dapper, and not SEABHS. Dapper is also listed as the beneficiary to the life insurance policy signed by Johnson on June 20, 2008.
Marcelino Varona Jr., a new board member, has been pushing for changes, and at the Dec. 9 board meeting called for the board to take action to protect the company if Johnson does not repay the full $150,000 with interest.
The board approved a measure for Legal Director Rose Weston to take the necessary steps to go to court if necessary.
CPSA has also raised concerns over the company's loaning Johnson money.
In Nov. 25, 2008 letter, Cash told Johnson the Arizona Department of Health Services (ADHS), Division of Behavioral Health Services, Office of Integrity had been alerted about the loan, and CPSA requested information on their behalf.
However, Cash said CPSA did not have the authority to require SEABHS to disclose the documents being requested.
ADHS asked that SEABHS provide all documentation regarding Johnson's loan from meeting minutes and promissory notes to the employee's background.
Roberto Rivera, of the ADHS Office of Program Integrity, said in November 2008, that they have concerns about the loan and with how it was reported to the IRS in the 2005 and 2006 990 forms.
An email sent to a SEABHS auditing board on Nov. 25, 2008, shows Johnson was not surprised by the ADHS inquiry.
"Hey folks. Well, here is 'the other shoe.' I have been expecting this for awhile," she said. "I am going to have a conversation with our attorney just to make sure we are indeed OK with this, as I expect we will have to be responding in some way so CPSA is Ok with this BHS. Goodness . . ."
With SEABHS expenditures coming under scrutiny from ADHS and the Attorney General's office, auditing costs for the agency are skyrocketing.
In an Oct. 29 report, SEABHS Controller of Finance Heriberto Contreras said the board was told at one point that auditing costs were around $300,000 in 2008-09. But after checking, Contreras found that the non-profit had paid the KLK accounting firm $499,343.29 between July 2008 and June 2009.
Contreras said there was some confusion as to how much SEABHS actually spent because KLK was listed in the accounts under two different names.
Last year, besides half a million in auditing fees, SEABHS spent $650,000 managing a 119-car vehicle fleet.
With a $17.9 million budget, the City of Benson spent $18,000 last year on a third-party audit that is required annually by law.
As the SEABHS board tries to move forward, hire a new CEO and get the company finances under control, there are still questions about how things got so out of control.
Varona, the former mayor of Nogales, and others involved with the investigation have said the problem has been a complete "lack of oversight" from the governing board on how Johnson was managing the non-profit that has grown into a 400-employee corporation.
Long-time board members such as Inman and Hamilton argue that the board should not micromanage, while Varona argues that it is the lack of management that has led to employees being named as suspects in criminal investigations, loans not being repaid and funding providers questioning SEABHS' ability to care for the mentally ill.
Besides Johnson's being named a suspect by the Attorney General and a former SEABHS employee being indicted for embezzlement, another employee is being investigated for vehicle fraud.
Benson Police Chief Paul Moncada confirmed last week that his department and the Nogales Police Department have assisted the Attorney General in investigating numerous employees.
The Arizona Attorney General's office is not the only agency investigating Southeastern Arizona Behavioral Health Services, Inc.'s (SEABHS) business practices.
Neal Cash, president of the Community Partnership of Southern Arizona Regional Behavioral Health Authority (CPSA), said if service changes are not implemented, SEABHS could lose public funding.
CPSA has not yet sent a "Letter of Cure" to SEABHS, but they have many concerns. Cash explained that a "Letter of Cure" would outline corrective measures SEABHS must take to continue receiving CPSA funding.
In the 2008-09 fiscal year, Cash said SEABHS received $35 million from CPSA.
If management of SEABHS operations does not improve, and in a worst-case scenario, the contract was not renewed, Cash said patients would have an alternative. Pantano Behavioral Health Services in Tucson is expanding, and Cash said CPSA is interested in bringing more of those services into communities such as Benson, Willcox, Nogales, Clifton, Safford and Sierra Vista.
If Pantano expands services, Cash said it would create competition for funding with SEABHS.
"SEABHS does receive a significant amount of money each year," Cash said. "We are concerned about the operations and services. We want to be assured that proper care is being provided."
Cash said CPSA has a say in how SEABHS handles the services and delivery of care, but despite concerns, does not have authority over decisions by the non-profit's governing board.
CPSA doesn't feel patients are at risk, Cash said, but has questioned staffing levels at the eight different facilities throughout Cochise, Graham, Greenlee and Santa Cruz counties. CPSA is also concerned about business operations, which has become the focus of an Attorney General's investigation.
Last month, the SEABHS board fired 14-year CEO Dana Johnson, who along with other employees has been named a suspect in the state's ongoing investigation.
The state authority has already indicted one SEABHS employee for allegedly embezzling $30,665 over a four-year period.
Johnson is being investigated for borrowing $150,000 and never repaying it.
Documents obtained by Wick Communications show that Johnson asked an executive committee for the loan in 2004.
Current board members Dick Hamilton and Bill Inman were on the executive committee that approved the original loan in April 2004. Other members of the committee included Walter Mares and Fren Lawson.
In an April 29, 2004 memorandum to the board, Johnson said she was requesting the board's approval for a short-term, fully secured loan for an "investment opportunity that is mutually beneficial."
"For me, I have a minimal risk opportunity that will supplement my income and eventual retirement," Johnson said. "For SEABHS, this is a fully-secured loan; contingency covered by life insurance, and at a significantly higher interest than the funds are currently earning."
A copy of the 2004 promissory note shows that Johnson agreed to make 36 monthly payments of $750, starting June 15, 2004.
The former CEO even agreed to pay a 5 percent fee if the payment was more than 10 days late.
The committee voted unanimously to approve the loan, but with little oversight from the governing board, third-party auditors found three years later that Johnson had made no payments.
It was at that point that Johnson asked the committee for an extension. Records showed that the committee approved the extension on Sept. 25, 2005. Hamilton, along with current board members Kathleen Kruger and Ann Morrison voted for the extension.
Morrison is Inman's wife. The couple represents the Clifton area.
In a Sept. 24, 2008, memorandum, Johnson said, "In April 2004, the board's executive committee approved a secured loan to me in the amount of $150,000. I am requesting that the term of this loan be extended through 2010, although it is my intention to pay down the principle balance, if not fully pay off this obligation well before that."
Similar to the 2004 promissory note, the September, 2008, agreement has Johnson promising to make monthly payments at a 6 percent interest, and a 990 form filed with the IRS in 2007 said she would put up her life insurance policy and pension as collateral.
However, documents show Johnson never followed through with her promise. The beneficiary named on her 401K plan is spouse Lee Dapper, and not SEABHS. Dapper is also listed as the beneficiary to the life insurance policy signed by Johnson on June 20, 2008.
Marcelino Varona Jr., a new board member, has been pushing for changes, and at the Dec. 9 board meeting called for the board to take action to protect the company if Johnson does not repay the full $150,000 with interest.
The board approved a measure for Legal Director Rose Weston to take the necessary steps to go to court if necessary.
CPSA has also raised concerns over the company's loaning Johnson money.
In Nov. 25, 2008 letter, Cash told Johnson the Arizona Department of Health Services (ADHS), Division of Behavioral Health Services, Office of Integrity had been alerted about the loan, and CPSA requested information on their behalf.
However, Cash said CPSA did not have the authority to require SEABHS to disclose the documents being requested.
ADHS asked that SEABHS provide all documentation regarding Johnson's loan from meeting minutes and promissory notes to the employee's background.
Roberto Rivera, of the ADHS Office of Program Integrity, said in November 2008, that they have concerns about the loan and with how it was reported to the IRS in the 2005 and 2006 990 forms.
An email sent to a SEABHS auditing board on Nov. 25, 2008, shows Johnson was not surprised by the ADHS inquiry.
"Hey folks. Well, here is 'the other shoe.' I have been expecting this for awhile," she said. "I am going to have a conversation with our attorney just to make sure we are indeed OK with this, as I expect we will have to be responding in some way so CPSA is Ok with this BHS. Goodness . . ."
With SEABHS expenditures coming under scrutiny from ADHS and the Attorney General's office, auditing costs for the agency are skyrocketing.
In an Oct. 29 report, SEABHS Controller of Finance Heriberto Contreras said the board was told at one point that auditing costs were around $300,000 in 2008-09. But after checking, Contreras found that the non-profit had paid the KLK accounting firm $499,343.29 between July 2008 and June 2009.
Contreras said there was some confusion as to how much SEABHS actually spent because KLK was listed in the accounts under two different names.
Last year, besides half a million in auditing fees, SEABHS spent $650,000 managing a 119-car vehicle fleet.
With a $17.9 million budget, the City of Benson spent $18,000 last year on a third-party audit that is required annually by law.
As the SEABHS board tries to move forward, hire a new CEO and get the company finances under control, there are still questions about how things got so out of control.
Varona, the former mayor of Nogales, and others involved with the investigation have said the problem has been a complete "lack of oversight" from the governing board on how Johnson was managing the non-profit that has grown into a 400-employee corporation.
Long-time board members such as Inman and Hamilton argue that the board should not micromanage, while Varona argues that it is the lack of management that has led to employees being named as suspects in criminal investigations, loans not being repaid and funding providers questioning SEABHS' ability to care for the mentally ill.
Besides Johnson's being named a suspect by the Attorney General and a former SEABHS employee being indicted for embezzlement, another employee is being investigated for vehicle fraud.
Benson Police Chief Paul Moncada confirmed last week that his department and the Nogales Police Department have assisted the Attorney General in investigating numerous employees.
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| School administrators: SEABHS ignored calls for help |
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Reader Comments
The following are comments from the readers. In no way do they represent the view of bensonnews-sun.com.
What a load wrote on Dec 19, 2009 10:24 PM:
" As someone who also has a loved one who is mentally ill, (and who doesnt!??) Thelma Grimes does no more than offer a sacraficial offering to people who are already angry. Instead of reporting BALANCED and ACCURATE news she offers pieces and the most negative of those at that, as if to say there was nothing good offered at SEABHS. My whole family have benefited from the services at SEABHS and because of her one-sided reporting the front line staff are having to deal with overwhelming negativity, and for what??? You call this "Persistance"? I am sure in a past life Thelma was also a persistant reporter in Salem, Mass around 1692, she probably even prepared the rope and rocks!! "
former employee wrote on Dec 23, 2009 8:46 AM:
" Thank you Thelma Grimes, now someone
needs to see that the money is used for
programs to help the clients, not use it
for company cars and free gas. These managers are being paid well for the jobs they do, they shouldnt be getting a company car and company gas too. This is a perfece example of why our economy is so poor. "
needs to see that the money is used for
programs to help the clients, not use it
for company cars and free gas. These managers are being paid well for the jobs they do, they shouldnt be getting a company car and company gas too. This is a perfece example of why our economy is so poor. "
Current SEABHS employee wrote on Dec 23, 2009 11:32 AM:
" I disagree with the "former employee" that "these managers are being paid well for the jobs they do." I have been with SEABHS nearly six years. I have a Master's degree, yet I make less money than a teacher with the same experience does, far more than a rookie cop or deputy sheriff, and even less than my counterparts at CPSA. I do what I do because I have a lifelong history of dysthymia (chronic, low-grade depression) and I am fortunate enough to have private insurance through my wife's job that ensures quality care. I do what I do because I care, not to get rich. And, yes, I drive a take-home company vehicle, a 2006 Jeep Liberty, primarily because I am on call 24/7. Last weekend I transported two SEABHS clients home from Compass detox to Safford -- on a Saturday, which technically is my "day off." I do not drive the Jeep for personal business. I am proud to be an employee of SEABHS, and hope to work for them for many years to come. "
Joe Taxpayer wrote on Dec 23, 2009 12:05 PM:
" Poor Neal Cash. In an October 12, 2007 article, the Arizona Daily Star reported that his 2005-06 income was $340,501, with another $54,543 in benefits. By comparison, the same year, Dana Johnson at SEABHS earned $100,829, while her counterparts made much more. Mark Clark, head of COPE Behavioral Health Services had to live on a meager $170,000, while Dan Ranieri at La Frontera Center takes home $208,800. Those are 2005-2006 salaries, so my guess is they've gone up even more. Meanwhile, the average front-line case manager with a college degree at any of the behavioral health agencies (including SEABHS) makes anywhere from about $22,000 to $30,000 max, while non-degreed "behavioral health techs" make $8-10 per hour. "
Missing a vital component wrote on Dec 23, 2009 2:09 PM:
" What I do not understand is why the board of directors are not being investigated and implicated as well as the former CEO of SEABHS. They approved a personal loan using federal dollars!!!!!! Am I the only one that sees that the responsibility of a board of directors is to MONITOR the CEO and approve the budget. Leave it to the Benson community to only see one piece instead of looking at the whole picture. "
Current SEABHS employee wrote on Dec 24, 2009 8:09 AM:
" Correction: In my third sentence I said I make less money than a teacher with the same experience, far MORE than a rookie cop or deputy sheriff -- that should be far LESS than a rookie cop or deputy sheriff... Thanks -- and Happy Holidays to everyone! "
John Q. Public wrote on Dec 24, 2009 8:45 AM:
" In response to Mr Master's degree in mental health, sound stewardship of public funds is the standard. You may have a master's but is there not a question in one's mind that these funds are for the operations and treatment of the mentally ill of this community. You compensation is stated and if not negotiated when you begin the job/profession, so now your heart has changed from caring to greed? When did this occur? You want to be compensated what a master's level should compared to other civil servants. Your question is answered, see the department of labor for the answer. So as to address the sad state of compensation of Mental Health-care Professionals, should this question not have been made when you matriculated? I ask that you be a professional and no longer air this public forum. "
Another current employee wrote on Dec 24, 2009 12:33 PM:
" As a supervisor of one of the clinics within the SEABHS company, I am saddened that the good services SEABHS staff deliver is being discounted. I am also disappointed that the writer of the past months articles has failed to present the "whole" picture. Yes, we make mistakes (as does the schools, city government, etc.,) , but dispite the serious allegations made by a handful, the company continues to deliver quality services to more than 1200+ clients every week. Their jobs are most often stressful; they worry, they care, and they offer support. Clients come with crisis situations, with medication issues, with family issues and school issues; all serious issues to them and the staff works hard at helping clients deal with these issues. I am sad that what we try to do everyday gets overlooked and even demeaned. "
cdg wrote on Dec 25, 2009 10:47 AM:
" "Currrent SEABHS employee" wrote "... I drive a take-home company vehicle, a 2006 Jeep Liberty, primarily because I am on call 24/7. Last weekend I transported two SEABHS clients home from Compass detox to Safford -- on a Saturday, which technically is my 'day off.' I do not drive the Jeep for personal business...."
According to IRS regulations, commuting to and from work from your place of residence is "personal use" of a vehicle. Any personal use of a vehicle is taxable income (calculated at the lesser of the standard mileage rate or actual vehicle cost per mile). You are required to keep a detailed log of all business and personal mileage, and to declare the "income" from personal use of the vehicle on your annual tax return. Did you?
Being "on call 24/7" is a pretext. Incidental transportation of "clients" is not "being on call", especially when free vehicles and gas are supplied to senior members of staff who NEVER transport "clients".
A taxi would be cheaper than providing each member of senior staff with a free vehicle "just in case" they were asked to transport a "client".
And a $150,000 interest-free loan taken by a CEO, and not repaid, speaks for itself.
Does SEABHS do good work for its "clients"? That appears to depend upon who you ask. Some patients and their families appear to be satisfied. Others are not.
But no matter how good a job SEABHS does, this doesn not justify or even rationalize the widespread misuse of public funds to provide illegal or excessive benefits. "
According to IRS regulations, commuting to and from work from your place of residence is "personal use" of a vehicle. Any personal use of a vehicle is taxable income (calculated at the lesser of the standard mileage rate or actual vehicle cost per mile). You are required to keep a detailed log of all business and personal mileage, and to declare the "income" from personal use of the vehicle on your annual tax return. Did you?
Being "on call 24/7" is a pretext. Incidental transportation of "clients" is not "being on call", especially when free vehicles and gas are supplied to senior members of staff who NEVER transport "clients".
A taxi would be cheaper than providing each member of senior staff with a free vehicle "just in case" they were asked to transport a "client".
And a $150,000 interest-free loan taken by a CEO, and not repaid, speaks for itself.
Does SEABHS do good work for its "clients"? That appears to depend upon who you ask. Some patients and their families appear to be satisfied. Others are not.
But no matter how good a job SEABHS does, this doesn not justify or even rationalize the widespread misuse of public funds to provide illegal or excessive benefits. "
There is a difference... wrote on Dec 26, 2009 4:06 PM:
" It is one thing and agreeably a bad thing for a not-for-profit to behave as a banking institute. I do not believe anyone can argue this otherwise. The person who calls into question the B.O.D. is correct in doing so because of their bad practices and leadership. The 10 vehicles that are assigned to upper management is a sperate issue from the ones actually used for transport, but just as the story is worded they are lumped in together. It is the same for those who are not involved in the B.O.D.'s dealings who are getting disrespected and/or insulted, because they work (and work hard!) for this agency. It is not fair for this reporter to not even attempt to show the good with the bad but to envenom those who for whatever reason alreadly had issue with this agency. It is pure sensationalism and that is what truly is upsetting. You can see the effects of this kind of reporting when people start refering to SEABHS as if it is ONE person and not a whole behaviroal health community of people who are equally if not more so impacted by this style of reporting. "
Here Is The Math wrote on Dec 28, 2009 3:18 PM:
" Assuming the statements of the load and the promissory note are correct, here are some figures that are worth noting.
“Johnson is being investigated for borrowing $150,000 and never repaying it.”
” A copy of the 2004 promissory note shows that Johnson agreed to make 36 monthly payments of $750, starting June 15, 2004.”
A $150,000 loan repaid in 36 equal at 1% interest would have a monthly payment of $4,231.21.
Repaying the loan at $750 for 36 months is $27,000.
And she defaulted on the loan! Now that is something to think about. "
“Johnson is being investigated for borrowing $150,000 and never repaying it.”
” A copy of the 2004 promissory note shows that Johnson agreed to make 36 monthly payments of $750, starting June 15, 2004.”
A $150,000 loan repaid in 36 equal at 1% interest would have a monthly payment of $4,231.21.
Repaying the loan at $750 for 36 months is $27,000.
And she defaulted on the loan! Now that is something to think about. "
Concerned wrote on Dec 28, 2009 5:04 PM:
" Hello to everyone. After reading this story, as well as all the other stories that are published on the newspaper website. I find it sad that everyone puts their two cents in on all the stories about this person or that person. Did anyone check out the story about the high schoolers that are just graduating? Did anyone say congratulations to them? Yes, a lot of the news is sensationalism... that's what the people want. Nobody wants to hear about the kids in the community doing good, or anyone else doing good. It's all about the headlines that sell. It's really sad. "
Reply To Concerned wrote on Dec 29, 2009 8:49 AM:
" This is a story about a private company that has misplaced the public trust, and money. There are other stories in this news paper about how well the high schoolers are doing. I think the paper is doing a very good job reporting things we need to know to keep track of our neighbors who might not have the best interest of the community in mind. Turn the page to get what you want. "
Current SEABHS employee wrote on Dec 30, 2009 9:38 PM:
" To John Q. Public: I am not complaining about my salary -- merely stating the facts. I knew when I came into this field that I would make less than a teacher, police officer, carpenter, welder, etc.
I believe I have every right to "air this in public" under the First Amendment. Who are you to tell me I cannot discuss the pay given to employees? I will say what I want, when I want, and if you disapprove, then, well, deal with it. "
I believe I have every right to "air this in public" under the First Amendment. Who are you to tell me I cannot discuss the pay given to employees? I will say what I want, when I want, and if you disapprove, then, well, deal with it. "
Diana Greer wrote on Dec 19, 2009 9:42 AM: