Local News

12/31/2013

State uncovers misuse of funds at Gateway

By MICHAEL HALL The Brunswick News

When the state took over Gateway Behavioral Health Services in July, it showed Glynn County that deep seeded problems of misuse of state funds and conflicts of interest can find roots even in a community service board created more than 30 years ago to help those who do not have the means to help themselves.

The Department of Behavioral Health and Developmental Disabilities stepped in July 17 and installed an interim manager to operate Gateway after the organization had operated at a more than $3 million loss for several years.

Within two months of taking over, interim chief executive David Crews released a report that detailed how former CEO Frank Bonati, who retired June 30, had overseen the diversion of state funds intended for mental health care to a bottling plant in Camden County that continually lost money, gave contracts to members of the board of directors that created conflicts of interest and paid more than $1 million for a property Crews said was not worth that much.

Crews said in his report that:

* Gateway had been diverting around $350,000 a year from state contracts intended for other purposes to prop up the Gateway Employment and Manufacturing, GEM, bottling plant in Kingsland that operated as a sheltered workshop for developmentally disabled clients.

* Gateway had only $244,000 in cash as of Aug. 31, leaving it unable to fully pay the $1.4 million it had in outstanding bills. About $1.2 million of that was owed to a company that supplies staffing to Gateway, raising concerns Gateway would not be able to provide services to mentally ill and developmentally disabled people.

* Gateway operated at about $3.8 million in the red the previous four fiscal years, with no apparent steps taken to correct the problem.

* Gateway administrative costs were about 17 percent of its more than $30 million annual budget. The salary of Bonati rose from $125,000 in 2003 to more than $211,000 in 2010.

* Bonati claimed he was set to receive an annual retirement contribution of $15,000 in addition to his normal contributions during his last two contracts, plus $396,500 in post-retirement payments, unused leave and other payments when he retired.

* Former Gateway board member Matt Cardella was paid 1.35 percent of all contributions to employee retirement accounts in 2011 as the financial adviser who serviced the accounts at his Hinesville office of Edward Jones, a national financial firm. When Cardella offered to resign from the board in 2011, Gateway's then lawyer told him he did not need to resign because of conflict of interest. He resigned this past Aug. 31 after Crews brought in a new lawyer.

* The company of Gateway board chairman and former Glynn County Commissioner Howard Lynn, Lynn Electric, was paid about $63,000 over three fiscal years for work at the GEM bottling plant. Lynn was asked to resign from the board and did.

* Gateway has owed Glynn County $33,972 a month in rent since January on its Coastal Village campus at Brunswick, which was built with a $5.3 million bond issued in 2010. Gateway owes an annual total of more than $407,000 in rent on the property.

* A note for $953,000 is due to be paid in May 2014 for property Gateway purchased on Lodge Road in Glynn County that it uses as a women's home. The property was purchased in 2009 for $1.4 million by one of Gateway's nonprofit organizations, Distinctive Housing Solutions. Glynn County tax records at the time of purchase listed the market value of the property at $350,000.

* The Gateway board adopted a policy in 2012 to not accept anonymous complaints from employees unless a complaint involved an emergency, creating a "chilling effect on staff reporting corporate compliance issues," Crews wrote. Non-emergency anonymous complaints were to be destroyed under the policy.

In addition to the information in Crews' report, allegations have been raised by former employees that Bonati settled a sexual harassment claim against him in 2011 by paying the woman more than $65,000 through an agreement that was not approved by the board.

As 2013 comes to a close, Crews has said the state has guaranteed Gateway will continue operating and offering mental health services to all eight counties it serves -- Camden, Glynn, McIntosh, Liberty, Bryan, Chatham, Long and Effingham counties -- and that all companies and bond holders who are owed money will get paid.

Crews also said he and the department of behavioral health are working to find a new full-time chief executive and are addressing the ailments that have been plaguing the organization like poor medical record keeping.

Part of that process includes Gateway's petition in October for a judgment in Glynn County Superior Court saying that Gateway does not owe Bonati the more than $400,000 he says is due him in severance under his employment contract. Gateway contends in court filings that it does not owe Bonati because the board that approved the employment contract in 2011 was illegal due to the conflicts of interest by Lynn and Cardella. At most, Gateway contends Bonati may be owed a little more than $43,000.

Bonati says conflicts of interest do not void the contract and that he is owed the severance package regardless.

A judge has not yet ruled on the petition for a declaratory judgement filed by Gateway.

* Reporter Michael Hall writes about public safety, environment and other local topics. Contact him at mhall@thebrunswicknews.com, on Facebook or at 265-8320, ext. 320.