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Attorney General’s Charitable Trusts Unit Objects to the Proposed Merger Transaction Involving Dartmouth Health and GraniteOne Health

Attorney General John M. Formella announces the release of the report of the Charitable Trusts Unit objecting to the proposed merger transaction involving GraniteOne Health and Dartmouth Health.

“Free, fair and robust competition is critical to providing employers and patients with options for lower cost and high quality health care services,” said Attorney General Formella. “Our state has experienced significant consolidation in health care over the past several years, and this transaction seeking to combine two of our top four largest systems is unacceptable without appropriate protections for consumers in place.”

The Attorney General worked tirelessly for many months with both systems to arrive at a resolution in the public’s interest. As part of these discussions, the Attorney General proposed remedies that are consistent with remedies used in similar transactions around the country. At this point, despite significant time working with these health care providers to try and find a solution, no agreement has been reached that would satisfy the State’s concerns.

“New Hampshire consumers already pay exceptionally high prices for health care,” said Attorney General Formella. “Our duty is to protect the public and we will use all enforcement tools available to us to do so. Considerable diligence was put forth to reach common ground with both health care systems. Without remedies in place protecting the public from harm and ensuring the combined system delivers on the promised benefits, the transaction as proposed is not something that I can approve.”

The proposal as currently structured would have consolidated two competing health care systems with many hospitals, physician practices and outpatient services, resulting in a single system ultimately to be controlled by Dartmouth Health.

Before the type of transaction involved in this case may take place, New Hampshire law requires the Charitable Trusts Unit to review the proposal and determine whether, among other requirements, the transaction is permitted by applicable law. The Attorney General objects to the combination because the transaction, as proposed, fails this primary requirement.

Part 2, Article 83 of the New Hampshire Constitution requires “free and fair competition in the trades and industries.” In addition, RSA 356, the State’s Antitrust law, and RSA 358-A, the Consumer Protection Act, all protect free and fair competition. After a fact intensive review by the Consumer Protection and Antitrust Bureau, the Attorney General has concluded that the completion of this proposed transaction would violate the law.

Specifically, the transaction, as proposed, would end the existing competition between the two systems that consumers rely on in several health care markets served by both GraniteOne and Dartmouth Health today and, therefore, would violate state and federal law without sufficient remedies to address the anticompetitive harm.

More than ten years ago, Dartmouth-Hitchcock Health attempted to acquire Catholic Medical Center in Manchester, New Hampshire, which is currently GraniteOne’s flagship hospital. In 2010, the Charitable Trusts Unit issued a public report objecting to the transaction, and the parties ultimately decided to abandon the deal.

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Attorney General Ellison secures agreement to strengthen governance of charity serving Cameroonian community

Minnesota Attorney General Keith Ellison today announced that his office has reached an agreement with Minnesota Cameroon Community (“MCC”) related to past neglect of the organization’s primary asset, the Cameroon Community Center. The Assurance of Discontinuance filed in Ramsey County District Court alleges that the directors’ and officers’ inattentiveness and governance violations allowed this important community asset to fall into disrepair.

“Part of my job as Attorney General is to ensure that nonprofit assets are maintained well and nonprofits are governed well,” Attorney General Ellison said. “The Cameroon Community Center is a vital Minnesota resource, but through poor governance, MCC allowed the center to fall into disrepair. All directors and officers have duties to protect nonprofit assets and prevent waste and disrepair. The Charities Division of my Office will keep ensuring that charities provide all the oversight over their operations and assets that the law requires.”

After an investigation by the Charities Division, Attorney General Ellison alleged in the Assurance that MCC’s directors and officers breached their fiduciary duties by neglecting to appropriately manage the Cameroon Community Center. MCC’s directors and officers allowed the community center to deteriorate, failed to properly insure it, and failed to pay outstanding tax liabilities. MCC also failed to use charitable assets in accordance with donor intent when it fundraised specifically to pay MCC’s tax liabilities but failed to use all the funds for that purpose. MCC’s leadership also failed to register the organization with the Minnesota Attorney General’s Office as required by Minnesota law.

Under the terms of the Assurance, MCC will restructure its leadership so that a singular board controls the business and affairs of the organization, instead of its prior fragmented governance structure. MCC must also maintain and comply with internal financial management practices developed in consultation with appropriate professionals, and adopt a conflict-of-interest, whistleblower, and document-retention policy. MCC is also required to properly maintain and insure MCC’s physical property, obtain all necessary licensures, and timely pay all taxes. MCC’s directors and officers are further required to properly maintain all books and records of the organization and adopt policies to ensure that funds are properly spent on the purposes for which they were given.

The Minnesota Attorney General’s Office makes available a number of publications and pamphlets providing information about charitable organizations, charitable trusts, professional fundraisers, and nonprofit organizations generally:

  • “Guide for Board Members” covers fiduciary duties of directors of nonprofit corporations and is meant to assist board members with the important responsibilities they assume when elected to a charity’s board of directors.
  • “A Guide to Minnesota’s Charities Laws” discusses key laws including the Minnesota Nonprofit Corporation Act, the Charitable Solicitation Act, and the Supervision of Charitable Trusts and Trustees Act, among other laws that require certain organizations to register with and provide notice to the Minnesota Attorney General’s Office.
  • “Nonprofit Organization Resources” contains a listing of resources covering charitable solicitation, professional fundraiser, and charitable trust registration, government agency contacts, and training and technical assistance providers.
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Missouri Health Care Charity Pays Over $8 Million to Resolve Federal Embezzlement, Bribery Investigation

Preferred Family Healthcare, a Springfield, Missouri-based non-profit, will pay more than $8 million in forfeiture and restitution to the federal government and the state of Arkansas under the terms of a non-prosecution agreement announced yesterday, which acknowledges the criminal conduct of its former officers and employees.

“Preferred Family Healthcare must relinquish the illegal profits it garnered from a wide-ranging fraud and bribery scheme,” said U.S. Attorney Teresa Moore for the Eastern District of Missouri. “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.”

“Employees of Preferred Family Healthcare used charitable organizations to illegally line their own pockets through fraud and bribery,” said Special Agent in Charge Tyler Hatcher of IRS-Criminal Investigation (IRS-CI). “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 public should not suffer or be responsible for individuals who abuse their leadership positions out of greed for personal financial gain,” said Special Agent in Charge Charles Dayoub of the FBI’s Kansas City Field Office. “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.”  

“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,” said Special Agent-in-Charge Steven Grell of the U.S. Department of Labor, Office of Inspector General. “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.”

Preferred Family Healthcare provides services to individuals in Missouri, Arkansas, Kansas, Oklahoma, and Illinois, including mental and behavioral health treatment and counseling, substance abuse treatment and counseling, employment assistance, aid to individuals with developmental disabilities, and medical services. Most of the charity’s funding comes from federally appropriated funds – the largest portion being Medicaid reimbursement.

As a condition of this non-prosecution agreement, representatives of Preferred Family Healthcare admitted that former officers and employees of the charity engaged in a conspiracy to, amongst other criminal activity, embezzle funds from the charity and to bribe several elected state officials in the Arkansas House of Representatives and the Arkansas Senate. As a direct result of these actions, Preferred Family Healthcare realized a financial benefit. Although Preferred Family Healthcare’s board of directors through lack of proper oversight, allowed its officers and employees to violate federal law.

Under the terms of the non-prosecution agreement, Preferred Family Healthcare will forfeit more than $6.9 million to the federal government and pay more than $1.1 million in restitution to the state of Arkansas related to the misuse of funds from the state’s general improvement fund.

Several former executives from the charity, former members of the Arkansas state legislature, and others have pleaded guilty in federal court as part of the multi-jurisdiction, federal investigation, including the following:

  • Former Chief Executive Officer, Marilyn Luann Nolan of Springfield, Missouri, pleaded guilty in November 2018 to her role in a conspiracy to embezzle and misapply the funds of a charitable organization that received federal funds. A sentencing hearing has not been scheduled.
  • Former Director of Operations and Executive Vice President Robin Raveendran, of Little Rock, Arkansas, pleaded guilty in June 2019 to conspiracy to commit bribery concerning programs receiving federal funds. A sentencing hearing has not been scheduled.
  • Former executive and head of clinical operations Keith Fraser Noble, of Rogersville, Missouri, pleaded guilty in September 2019 to concealment of a known felony. A sentencing hearing has not been scheduled.
  • Former employee and head of operations and lobbying in Arkansas, Milton Russell Cranford, aka Rusty, of Rogers, Arkansas, was sentenced to seven years in federal prison without parole after pleading guilty to one count of federal program bribery.
  • Political Consultant Donald Andrew Jones, aka D.A. Jones, of Willingboro, New Jersey, pleaded guilty in December 2017 to his role in a conspiracy from April 2011 to January 2017 to steal from an organization that receives federal funds.
  • Former Arkansas State Senator Jeremy Hutchinson, of Little Rock, Arkansas, pleaded guilty in June 2019 to conspiracy to commit federal program bribery. A sentencing hearing has not been scheduled.
  • Former Arkansas State Representative Eddie Wayne Cooper, of Melbourne, Arkansas, pleaded guilty in February 2018 to conspiracy to embezzle more than $4 million from Preferred Family Healthcare. A sentencing hearing has not been scheduled.
  • Former Arkansas State Senator and State Representative Henry (Hank) Wilkins IV pleaded guilty to conspiracy to commit federal program bribery and devising a scheme and artifice to defraud and deprive the citizens of the State of Arkansas of their right to honest services. A sentencing hearing has not been scheduled.

As part of the federal investigation, the former chief operating officer and chief financial officer of the charity were indicted by a federal grand jury on March 29, 2019. They pleaded not guilty, and are awaiting trial, which is scheduled to begin on Oct. 3.

The separate criminal cases are being prosecuted by Senior Litigation Counsel Marco A. Palmieri and Trial Attorney Jacob Steiner of the Criminal Division’s Public Integrity Section, 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.

IRS-Criminal Investigation, FBI, and the Offices of the Inspectors General from the Departments of Justice, Labor, and the Federal Deposit Insurance Corporation (FDIC) investigated the cases.

This is a combined investigation with the Criminal Division’s Public Integrity Section, the Western District of Missouri, the Western District of Arkansas, and the Eastern District of Arkansas.

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CONSUMER ALERT: Watch out for charity scams seeking to profit from the crisis in Ukraine

Attorney General Bob Ferguson is warning Washingtonians to be on the lookout for scammers targeting donations to aid Ukraine and Ukrainian refugees amid Russia’s ongoing invasion. Ferguson is asking Washingtonians to report suspicious solicitations to his office.

“During this tragic humanitarian crisis, many of us are looking for ways to help,” Ferguson said. “Unfortunately, scammers may prey on Washingtonians’ good will. My office is on the lookout for charity scams. If you see any suspicious or fraudulent solicitations, file a complaint with my office.”

You can protect yourself from scams by doing the following:

  1. Research the charity before giving. Ensure the charity is registered with the Washington Secretary of State at www.sos.wa.gov/charities. If the charity is registered, you can review a summary of its financial records and tax status. You can also check the charity’s rating on Charity Navigator at www.charitynavigator.org or Guidestar Nonprofit Directory at www.guidestar.org.
  2. Don’t give in to high-pressure tactics. If is someone is demanding immediate payment or sensitive personal information, it’s likely a scam.
  3. Report any suspicious activity to the Attorney General’s Office. If you suspect a charitable solicitation might be a scam, report it to the Attorney General’s Office. To file a complaint about a charity or commercial fundraiser, visit the Attorney General’s website at www.atg.wa.gov/file-complaint. If you receive a suspicious robocall asking for a donation, file a robocall complaint at https://www.atg.wa.gov/robocall-and-telemarketing-scams.