Ex-CFO of Mental Health Hospital Linked to Florida Payday Loan Scheme
By Lindsay Frankel
The former CFO of mental health hospital delivered promising news about the hospital’s finances during the two years he worked there, but his involvement in a payday loan-style Ponzi scheme gave rise to further analysis, which revealed that the hospital was deep in debt.
Before being hired at the center, the CFO worked for a commercial loan firm that allegedly defrauded 3,600 investors of $322 million. The company allegedly disguised its $50 million shortfall with money from new investments, and the CFO lied about the firm’s financial status while claiming that an independent audit deemed that investments would result in a high rate of return. In reality, no such audit had taken place. The CFO was indicted in August shortly after quitting his job at the hospital.
The CEO of the commercial lender allegedly used money from investors to fund an extravagant lifestyle that included luxury cars and vacations. The CFO admitted that he was aware of the CEO’s actions, but he still transferred money from the firm’s accounts. The CFO could serve up to five years in prison and be subject to a fine of up to $250,000 for his crimes. He faces sentencing in December.
The board at the hospital didn’t find out about about the CFO’s involvement in the scheme until after he left the hospital. So far, the center has uncovered no evidence of wrongdoing, but independent financial audits conducted in 2017 and 2018 found weaknesses that could have made it possible for an employee to alter the books undetected.
The hospital does not plan to hire a forensic accountant to determine how they ran out of millions or whether the CFO could have stolen money from the center. The Board Chairman told The Palm Beach Post that the center is more focused on keeping its doors open.
“I still haven’t gone back and done the analysis on what was there. I’ve tried to focus more on all we’ve been dealing with since all this came up,” the Chairman said. “If I can stop the patient from bleeding now, then I can go back and diagnose the disease, process and come up with a plan. But if I can’t stop the patient from bleeding, it doesn’t make any difference because they’re not going to survive anyway.”