Millions of dollars in federal small business loan money was blown on prostitutes, booze, partying and fast cars.
A
The Most of the $4 million, about 85 per cent, lost by the banks in the Scenna case will be paid back to the five banks involved, according to the terms of the loan agreements. The banks include TD Canada Trust, CIBC, Royal Bank, ScotiaBank and Bank of Montreal.
Industry Canada gives the bank the option of running a credit check or getting a credit reference. Scenna, using shell companies, manufactured his own credit references, the RCMP investigation alleges.
Three weeks after applying for the first loan, the federal government and Toronto Dominion Bank (now called TD Canada Trust) issued a $250,000 loan, the maximum amount allowed at the time.
Scenna was able to supply credit references through a fictitious company called Kingsbridge Financial Associates (he lived at the time on Kingsbridge Garden Circle in Mississauga).
In one of the loan proposals — this was for a car-wash service — Scenna submitted a bogus financial review to ScotiaBank by Kingsbridge, showing an Etobicoke address. Had anyone checked, they would have discovered an eclectic shop that sold exotic coffees and artwork.
Another rule of the loan program stipulates banks should only release money if the borrower shows he is purchasing business equipment.
The RCMP alleges that Scenna supplied fake invoices to the banks coming from fictitious suppliers Scenna incorporated with names like “Huge Corporation” and “M-Power Sales and Consulting”.
Invoices for several different loans listed the purchase of a state-of- the-art copier so sophisticated and expensive it is only used by intelligence agencies such as the CIA and the Mossad in Israel. Scenna’s associates never actually purchased the $350,000 copier.
The Star asked all five banks to explain what steps they take to ensure a potential borrower is legitimate. Royal Bank responded saying it “follows a standardized due diligence process when evaluating all credit applications.” TD Canada Trust said its “internal due diligence process assesses many factors, including the client’s personal credit-worthiness, as well as their business plan, history, operations, prospects and financial viability.” The other three banks did not respond.
The Star also found on at least five occasions, Scenna and his associates used the same Brampton office space as a business address on loan applications.
As far as the Star could tell, no banker ever checked to see if there was actually copying equipment in suite 200 at 45 Railroad Ave. in Brampton.
But they did send collection agencies there when the loans went into default and found no signs of the company.
Of the at least 16 loans handed out to Scenna and his group, he was the signing authority on three, according to the RCMP. In one period in 2005, Scenna personally received a $250,000 loan from ScotiaBank (March 4); a $250,000 loan from Bank of Montreal (June 21); and a $250,000 loan from the Royal Bank (Nov. 25). Scenna defaulted on all three loans within a few months, even defaulting on the June 21 loan before applying for the Nov. 25 loan.
The RCMP found frequent and large payments of loan money to Scenna personally.
Visa bills obtained by the RCMP show that in one short time period Scenna paid $38,000 to Neodec Services, a Toronto company that processes credit card receipts from high-end escort agencies.
Two former friends of Scenna said he frequently used escorts and, for his birthday one year during the loan period, he spent $10,000 to have an escort spend several days with him. They said he frequented downtown Toronto clubs including This Is London and Muzik, at Exhibition Place, where the cost of entertaining in a VIP area starts at $225 per bottle of liquor. Muzik requires hosts to reserve a minimum of 10 or 15 bottles depending on the party size.
“There would be 100 people in his booth,” said one man. “He would pay for everybody — thousands of dollars a night.”
Another former friend recalls Scenna dropping $40,000 over a weekend of partying in Montreal during the Formula 1 auto race.
“There was nothing cheap about David,” said Zdravko Galinec, one of Scenna’s former business associates (he was not involved in the loans). “Everything he wore was right out of the pages of GQ.”
Galinec, who joined forces with Scenna in the late ‘90s to start up a software company, called Scenna a “success magnet.”
Galinec said Scenna befriended lobbyists who helped secure meetings with government officials at Human Resources Development Canada, the Department of National Defence and Canada Post.
“I don’t think there was a day gone by when he wasn’t in a night club or a strip club the night before,” Galinec said. When a business plan they worked on collapsed in 2001, Scenna started pursuing small business loans.
By 2005, Scenna and girlfriend Zoe Coop were living in a two-bedroom condominium unit Scenna purchased for $340,000 in west Toronto near the lake. Doormen recall Scenna and his fleet of fine cars and a steady parade of escorts in the early hours of the morning.
One morning, at 2 a.m., building security had to open the door of his sixth-floor unit because water was gushing into the unit below. They found Scenna and two escorts in the overflowing bathtub, drinking and having a “grand old time”, a worker recalled.
Scenna, who by this time had received (with his group) at least $2 million in loans, cheerily paid for all the damage.
Police investigating the case have been unable to find any assets and believe they partied the money away.
His sister, Gabriella (Max Pizzoferrato’s wife), said her brother involved them in the small business loan scheme and bankrupted them.
“We lost big time. We lost everything. We are starting from scratch,” Gabriella said.
“He brought a lot of despair to us. We are a very close family and we supported him and look what happened.”
In her statement to the RCMP, Gabriella said their father “died a pauper” because her brother took all the family’s money.
The Scenna case surfaced when an Industry Canada employee noticed the same address listed on numerous loans that had gone into default.
A media relations spokesman for Industry Canada (the minister is Tony Clement) said “department officials take the potential for fraud very seriously.”
“They carefully review lenders’ claims, monitor compliance and refer cases where fraud is suspected to the RCMP for further investigation,” the spokesman said in a prepared statement.
In the case of the Scenna loans, Industry Canada did not suspect fraud until eight years after the first loan was approved.
The Industry Canada spokesman said the government does not automatically refund banks when fraud is suspected and did not say what repayments were made to banks when each Scenna-related loan defaulted.
Diana Zlomislic can be reached at (416) 869-4472 or dzlomislic@thestar.ca. Kevin Donovan can be reached at (416) 312-3503 or kdonovan@thestar.ca.
http://www.thestar.com/news/article/881639--hookers-and-booze-your-tax-dollars-at-work
The Most of the $4 million, about 85 per cent, lost by the banks in the Scenna case will be paid back to the five banks involved, according to the terms of the loan agreements. The banks include TD Canada Trust, CIBC, Royal Bank, ScotiaBank and Bank of Montreal.
Industry Canada gives the bank the option of running a credit check or getting a credit reference. Scenna, using shell companies, manufactured his own credit references, the RCMP investigation alleges.
Three weeks after applying for the first loan, the federal government and Toronto Dominion Bank (now called TD Canada Trust) issued a $250,000 loan, the maximum amount allowed at the time.
Scenna was able to supply credit references through a fictitious company called Kingsbridge Financial Associates (he lived at the time on Kingsbridge Garden Circle in Mississauga).
In one of the loan proposals — this was for a car-wash service — Scenna submitted a bogus financial review to ScotiaBank by Kingsbridge, showing an Etobicoke address. Had anyone checked, they would have discovered an eclectic shop that sold exotic coffees and artwork.
Another rule of the loan program stipulates banks should only release money if the borrower shows he is purchasing business equipment.
The RCMP alleges that Scenna supplied fake invoices to the banks coming from fictitious suppliers Scenna incorporated with names like “Huge Corporation” and “M-Power Sales and Consulting”.
Invoices for several different loans listed the purchase of a state-of- the-art copier so sophisticated and expensive it is only used by intelligence agencies such as the CIA and the Mossad in Israel. Scenna’s associates never actually purchased the $350,000 copier.
The Star asked all five banks to explain what steps they take to ensure a potential borrower is legitimate. Royal Bank responded saying it “follows a standardized due diligence process when evaluating all credit applications.” TD Canada Trust said its “internal due diligence process assesses many factors, including the client’s personal credit-worthiness, as well as their business plan, history, operations, prospects and financial viability.” The other three banks did not respond.
The Star also found on at least five occasions, Scenna and his associates used the same Brampton office space as a business address on loan applications.
As far as the Star could tell, no banker ever checked to see if there was actually copying equipment in suite 200 at 45 Railroad Ave. in Brampton.
But they did send collection agencies there when the loans went into default and found no signs of the company.
Of the at least 16 loans handed out to Scenna and his group, he was the signing authority on three, according to the RCMP. In one period in 2005, Scenna personally received a $250,000 loan from ScotiaBank (March 4); a $250,000 loan from Bank of Montreal (June 21); and a $250,000 loan from the Royal Bank (Nov. 25). Scenna defaulted on all three loans within a few months, even defaulting on the June 21 loan before applying for the Nov. 25 loan.
The RCMP found frequent and large payments of loan money to Scenna personally.
Visa bills obtained by the RCMP show that in one short time period Scenna paid $38,000 to Neodec Services, a Toronto company that processes credit card receipts from high-end escort agencies.
Two former friends of Scenna said he frequently used escorts and, for his birthday one year during the loan period, he spent $10,000 to have an escort spend several days with him. They said he frequented downtown Toronto clubs including This Is London and Muzik, at Exhibition Place, where the cost of entertaining in a VIP area starts at $225 per bottle of liquor. Muzik requires hosts to reserve a minimum of 10 or 15 bottles depending on the party size.
“There would be 100 people in his booth,” said one man. “He would pay for everybody — thousands of dollars a night.”
Another former friend recalls Scenna dropping $40,000 over a weekend of partying in Montreal during the Formula 1 auto race.
“There was nothing cheap about David,” said Zdravko Galinec, one of Scenna’s former business associates (he was not involved in the loans). “Everything he wore was right out of the pages of GQ.”
Galinec, who joined forces with Scenna in the late ‘90s to start up a software company, called Scenna a “success magnet.”
Galinec said Scenna befriended lobbyists who helped secure meetings with government officials at Human Resources Development Canada, the Department of National Defence and Canada Post.
“I don’t think there was a day gone by when he wasn’t in a night club or a strip club the night before,” Galinec said. When a business plan they worked on collapsed in 2001, Scenna started pursuing small business loans.
By 2005, Scenna and girlfriend Zoe Coop were living in a two-bedroom condominium unit Scenna purchased for $340,000 in west Toronto near the lake. Doormen recall Scenna and his fleet of fine cars and a steady parade of escorts in the early hours of the morning.
One morning, at 2 a.m., building security had to open the door of his sixth-floor unit because water was gushing into the unit below. They found Scenna and two escorts in the overflowing bathtub, drinking and having a “grand old time”, a worker recalled.
Scenna, who by this time had received (with his group) at least $2 million in loans, cheerily paid for all the damage.
Police investigating the case have been unable to find any assets and believe they partied the money away.
His sister, Gabriella (Max Pizzoferrato’s wife), said her brother involved them in the small business loan scheme and bankrupted them.
“We lost big time. We lost everything. We are starting from scratch,” Gabriella said.
“He brought a lot of despair to us. We are a very close family and we supported him and look what happened.”
In her statement to the RCMP, Gabriella said their father “died a pauper” because her brother took all the family’s money.
The Scenna case surfaced when an Industry Canada employee noticed the same address listed on numerous loans that had gone into default.
A media relations spokesman for Industry Canada (the minister is Tony Clement) said “department officials take the potential for fraud very seriously.”
“They carefully review lenders’ claims, monitor compliance and refer cases where fraud is suspected to the RCMP for further investigation,” the spokesman said in a prepared statement.
In the case of the Scenna loans, Industry Canada did not suspect fraud until eight years after the first loan was approved.
The Industry Canada spokesman said the government does not automatically refund banks when fraud is suspected and did not say what repayments were made to banks when each Scenna-related loan defaulted.
Diana Zlomislic can be reached at (416) 869-4472 or dzlomislic@thestar.ca. Kevin Donovan can be reached at (416) 312-3503 or kdonovan@thestar.ca.
http://www.thestar.com/news/article/881639--hookers-and-booze-your-tax-dollars-at-work
Kevin Donovan and Diana Zlomislic Staff Reporters
David Scenna is the alleged mastermind of fraud against Canada's small business loan plan
Millions of dollars in federal small business loan money was blown on prostitutes, booze, partying and fast cars.
In one case, at least 16 loans — more than $4 million doled out $250,000 at a time over eight years -- were given to a loosely associated group of GTA businessmen whose leader’s past included bankruptcy and a poor credit rating.
The businessmen defaulted on each loan, but banks always approved another. Taxpayers’ money usually refunds banks when loans go into default.
federal government does not know how often the loan program is a victim of fraud. About $1 billion a year is lent in small business loans. The number of defaulted loans is steadily increasing. Last year, $106 million of taxpayers money was paid back to banks for defaulted loans. That’s up from $75 million a year in defaulted loans three years before.
Scenna’s loan applications made it seem like he was going to set up legitimate ventures, such as modernizing the funeral memorial business with digital memory albums for grieving loved ones.
Under the Canada Small Business Financing Program, Industry Canada gives banks the job of approving applications
It only sees the paperwork if the loan goes into default.
One of the problems the Star uncovered is there is little incentive for the banks to conduct detailed background checks.
That’s because banks get a guarantee that the federal government will refund up to 85 per cent of the money to the banks if the loan goes into default. The banks typically also take a personal guarantee from the borrower for the remaining 15 per cent.
Millions of dollars in federal small business loan money was blown on prostitutes, booze, partying and fast cars.
In one case, at least 16 loans — more than $4 million doled out $250,000 at a time over eight years -- were given to a loosely associated group of GTA businessmen whose leader’s past included bankruptcy and a poor credit rating.
The businessmen defaulted on each loan, but banks always approved another. Taxpayers’ money usually refunds banks when loans go into default.
federal government does not know how often the loan program is a victim of fraud. About $1 billion a year is lent in small business loans. The number of defaulted loans is steadily increasing. Last year, $106 million of taxpayers money was paid back to banks for defaulted loans. That’s up from $75 million a year in defaulted loans three years before.
Scenna’s loan applications made it seem like he was going to set up legitimate ventures, such as modernizing the funeral memorial business with digital memory albums for grieving loved ones.
Under the Canada Small Business Financing Program, Industry Canada gives banks the job of approving applications
It only sees the paperwork if the loan goes into default.
One of the problems the Star uncovered is there is little incentive for the banks to conduct detailed background checks.
That’s because banks get a guarantee that the federal government will refund up to 85 per cent of the money to the banks if the loan goes into default. The banks typically also take a personal guarantee from the borrower for the remaining 15 per cent.
ELOBRATE FRAUD AGAINST THE GOVERMENT
Industry Canada — allows banks to loan money with lax or no controls.
Toronto Star investigation shows the department managing the program — Industry Canada — allows banks to loan money with lax or no controls.
David Scenna, the alleged mastermind, went on a spending spree that included lavish parties at Toronto’s Muzik nightclub, high-profile charity functions, Porsches and Mercedes cars; and thousands of dollars paid to high-end escort agencies.
David Scenna, the alleged mastermind, went on a spending spree that included lavish parties at Toronto’s Muzik nightclub, high-profile charity functions, Porsches and Mercedes cars; and thousands of dollars paid to high-end escort agencies.
The RCMP, in a document filed in court to obtain banking records, has called the case “an elaborate fraud” against the government.
He partied so hard with two escorts in his condo one night that his bathtub overflowed, damaging the unit below.
One series of Scenna’s credit card bills for hookers was $38,000, according to documents found by a Royal Canadian Mounted Police investigation.
He partied so hard with two escorts in his condo one night that his bathtub overflowed, damaging the unit below.
One series of Scenna’s credit card bills for hookers was $38,000, according to documents found by a Royal Canadian Mounted Police investigation.
Title Text.
Scenna, 38, grew up in Richmond Hill and attended Bayview Secondary School. He dabbled in several businesses before declaring bankruptcy in 1997, owing $105,500 to creditors, mainly credit card and car-leasing companies.
Around that time his short marriage to a local woman collapsed and they divorced.
Through a church group, Scenna hooked up with a man whose Toronto firm made photo plaques to attach to headstones, which gave Scenna the idea of preparing memorabilia albums.
Beginning in June, 2001, Scenna enlisted various businessmen, including friends and his brother-in-law, Massimo “Max” Pizzoferrato.
Scenna’s own credit “was not good” and he asked Pizzoferrato to sign the application for a $250,000 loan on his behalf, according to an allegation filed in court by the RCMP. Scenna did all the paperwork. Pizzoferrato, who cooperated with police, has not been charged.
Scenna and 12 other businessmen are charged with using the money for personal — not business — purposes. The case is before the courts with the next hearing Friday, Oct. 29.
Scenna did not respond to numerous interview requests. The allegations against the men have not been proven in court.
Court documents and Scenna’s business associates say the loan money was advanced through accounts controlled by Scenna.
Around that time his short marriage to a local woman collapsed and they divorced.
Through a church group, Scenna hooked up with a man whose Toronto firm made photo plaques to attach to headstones, which gave Scenna the idea of preparing memorabilia albums.
Beginning in June, 2001, Scenna enlisted various businessmen, including friends and his brother-in-law, Massimo “Max” Pizzoferrato.
Scenna’s own credit “was not good” and he asked Pizzoferrato to sign the application for a $250,000 loan on his behalf, according to an allegation filed in court by the RCMP. Scenna did all the paperwork. Pizzoferrato, who cooperated with police, has not been charged.
Scenna and 12 other businessmen are charged with using the money for personal — not business — purposes. The case is before the courts with the next hearing Friday, Oct. 29.
Scenna did not respond to numerous interview requests. The allegations against the men have not been proven in court.
Court documents and Scenna’s business associates say the loan money was advanced through accounts controlled by Scenna.
If the money allegedly took cannot be found, the US government CAN seek forfeiture of other assets.
Hard evidence to back this statement up can be found through out the website.....keep reading
CHILD SUPPORT DEBTOR
Account transactions that are inconsistent with DIRECT SPECIFIC FINAL ORDER OF THE BC SUPREME COURT
.”Current Directions in
IMPERIAL SOVERIEGN
Psychological sociopath FINANCIAL Science
Child Support industry is run by soveriegn judicial/CHURCH pedophiles
and ponzie/insurance fraud industry
CANADIAN TARGETED ESTATE VICTIMS AND THEIR AMERICAN/CANADIAN FAMILY ARE being GANG STALKed BY MAXIMUS.
BC NEEDS TO CANCEL THIS US CONTRACTOR CONTRACT AS WELL AS EXPLAIN WHAT HAPPENED TO THE 1988 MIA 1ST BANK OF MONTREAL MORTGAGE THAT WENT INTO MAXIMUS RECORDS AND DATA BASES.
Account transactions that are inconsistent with DIRECT SPECIFIC FINAL ORDER OF THE BC SUPREME COURT
BC Medical Insurance Corporation - Maximus: Under the Liberals, Texas-based Maximus took over the record keeping of BC Medical records. This includes any psychological, psychiatric or addictions treatment performed by any BC health care professional. The cost of this service is higher than had it been kept in house. The cost has jumped 60% since the company took over our records in 2004. Maximus’ profits are up too. More notable than the loss of jobs and capital to the US corporation, however, is the threat to BC citizens’ right to privacy.
Under the USA Patriot Act, all records transported (even digitally) across the border to the US are subject to warrantless searches by arms of the US government which includes the Department of Homeland Security, the FBI and the CIA. Canadian Citizens have no rights in the USA. Maximus does consulting with government bodies in the US. They provide services for the US government. This puts this US-based consulting company in charge of your BC-based documents. Could this be a conflict of interest? Is Big Brother is watching you? Notable is a $30.2 million (US) Medcaid Fraud settlement paid by Maximus. http://thetyee.ca/News/2009/05/06/Maximus/ http://www.maximus.com/corporate/pages/CorporateBios.asp
Under the USA Patriot Act, all records transported (even digitally) across the border to the US are subject to warrantless searches by arms of the US government which includes the Department of Homeland Security, the FBI and the CIA. Canadian Citizens have no rights in the USA. Maximus does consulting with government bodies in the US. They provide services for the US government. This puts this US-based consulting company in charge of your BC-based documents. Could this be a conflict of interest? Is Big Brother is watching you? Notable is a $30.2 million (US) Medcaid Fraud settlement paid by Maximus. http://thetyee.ca/News/2009/05/06/Maximus/ http://www.maximus.com/corporate/pages/CorporateBios.asp
Maximus Awarded NASA Smart Card Contract Tags » Card Technology »
Maximus announced today that it has been awarded a contract by the US GSA for valued at up to $93.6 million to deliver a smart card system to NASA for eventual use by 90,000 NASA employees and contractors.
The "One NASA" smart card will be deployed in compliance with the Government Smart Card Interoperability Specification (GSC-IS), allowing NASA smart cards to be fully interoperable with other Federally issued smart credentials. The system will be piloted at Marshall Space Flight Center in Huntsville, Alabama before being rolled out to the remaining NASA facilities. MAXIMUS primary team member for this project is EDS. Other key team members include: ActivCard, a provider of secure smart card software, Risk Management Associates, a security consulting firm, and ISR Solutions, experts in physical access control. "The NASA smart card award is the latest in our strong history of wins in the smart card integration marketplace, and reaffirms our status as the nation's top integrator of smart card solutions for government," said Dr. David V. Mastran, CEO of MAXIMUS. "However, I want to be perfectly clear on what the task order means to MAXIMUS. This does not mean that this is a contract for $93 million dollars. What this really translates into is that we will do the initial work with NASA and the remainder of the task order will be funded incrementally based upon NASA's needs. So the initial value of the NASA card deployment is probably more in the $10 million range over two years."
Posted: Feb 9, 2004 12:38 PM Pacific | Permalink | | Tweet This http://www.paymentsnews.com/2004/02/maximus_awarded.html
The problem here is that the massive fraud, conspiracy to defraud, and other criminal activities by Maximus Inc. leave these estates and children with nothing. rampant fraud, nepotism, cronyism and LETHAL incompetence.
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1996 Wisconsin to add insult to injury:
The company spent $100,000 of program money on backpacks, coffee mugs, and other promotional fluff. It spent tens of thousands on employee entertainment. It spent $3,000 to take clients roller-skating and $2,600 for professional clowns. Though Maximus later agreed to repay $500,000 to the state and donate another $500,000 to community groups, the true extent of the waste will never be known because the records were in such disarray.
http://rturner229.blogspot.com/2007/02/new-blunt-client-focus-of-grand-jury.html
http://rturner229.blogspot.com/2007/02/new-blunt-client-focus-of-grand-jury.html
1996 Wisconsin "questionable and unallowable expenses" and failed to document another $1.6 million it charged to the taxpayers.
a 1996 Wisconsin state audit indicated the company billed the state for $400,000 in "questionable and unallowable expenses" and failed to document another $1.6 million it charged to the taxpayers. Sunday, February 18, 2007 New Blunt client focus of grand jury investigation A Virginia-based company that already has landed contracts with the St. Louis public school system and the city of Kansas City, is hoping to continue to cash in on the state's push toward outsourcing government responsibilities to outside contractors.
In its efforts to improve its opportunities to land those multi-million dollar contracts, Maximus, Inc. hired Andrew Blunt, the governor's brother, as its lobbyist, according to documents filed with the Missouri Ethics Commission Feb. 12.
Though the company's Missouri work has not created any controversy thus far, it has a long record of difficulties, and according to its own annual report, filed Dec. 13 with the Securities and Exchange Commission, it has been targeted in two investigations, one in Washington, D. C. and one in Illinois...and accusations of providing funding to a relative of a top official was among the reasons the company lost its contract to handle New York City's welfare program.
In addition, a 1996 Wisconsin state audit indicated the company billed the state for $400,000 in "questionable and unallowable expenses" and failed to document another $1.6 million it charged to the taxpayers.
Washington D. C. investigation
Maximus described its problems with Medicaid fraud allegations in its annual report:
In October 2004, MAXIMUS received a subpoena from the Criminal Division of the U.S. Department of Justice acting through the U.S. Attorney’s Office for the District of Columbia. The subpoena requested records pertaining to the Company’s work for the District of Columbia, primarily relating to the preparation and submission of federal Medicaid reimbursement claims on behalf of the District. The U.S. Attorney’s Office is investigating issues pertaining to compliance with the federal laws governing Medicaid claims. We are fully cooperating with the U.S. Attorney’s Office in producing documents in response to the subpoena and making employees available for interviews, and we have conducted an internal review of this matter through independent outside legal counsel. Based on the probable legal costs of the internal review, we recorded a charge of $0.5 million in connection with this matter in the quarter ended December 31, 2005. We are unable to quantify the probability or magnitude of any other expenditure, fine, penalty, or settlement amount we may incur in connection with this matter at this time.
Illinois investigation
The annual report featured the following description of the Illinois investigation:
In June 2005, MAXIMUS received a subpoena pursuant to the Illinois Whistleblower Reward and Protection Act from the Office of the Attorney General of Illinois in connection with a purported whistleblower investigation of potential false claims. The subpoena requested records pertaining to the Company’s work for agencies of the Executive Branch of Illinois State Government. Discussions with the Attorney General’s office have indicated that MAXIMUS was one of nine contractors that received such subpoenas and that the investigation is primarily focused at this time on the procurement and contracting activities of the Illinois Department of Central Management Services. Although there can be no assurance of a favorable outcome and we are unable to quantify the probability or magnitude of any expenditures we may incur in connection with this matter, the Company does not believe that this matter will have a material adverse effect on its financial condition or results of operations, and the Company has not accrued for any loss related to this matter.
Problems in Wisconsin
Maximus' difficulties in Wisconsin occurred after the welfare reform act of 1996. Wisconsin outsourced its Wisconsin Works program to Maximus and it was a disaster from the start.
The September 2004 Washington Monthly included an article examining the program:
In pitching welfare privatization, Maximus had promised to outdo government with "a professional work environment that is more conducive to employee productivity." Michael thought the place was coming unglued. At least two caseworkers were addicted to crack. Another was hospitalized for job-related stress. A Fep with whom he shared an office went off on gambling jags, staying out at a casino all night, then sleeping at her desk. "Baby, I gotta take a little nap," she'd say, locking the door. He wondered if he were just a magnet for misfits, but the memo traffic in the bosses' suite showed a broader turmoil. Leutermann, the office chief, warned one caseworker was "going off the deep end lately," causing "all kinds of problems about his behavior in the bathroom." Another Maximus worker chased his supervisor from his office when she told him to clean up his files. "I am a Marine combat veteran that deals with Post Traumatic Stress Disorder," he wrote. "I lost my head." A flirtatious caseworker, rebuffed by a colleague, walked into his cubicle and bit him.
The article indicates the Maximus operation was a hotbed of nepotism:
Maximus encouraged the hiring of family and friends, calling it an effective way to lure and keep talent. As head of the office, Leutermann certainly practiced what he preached. He put his wife, his son, and his niece on the payroll, along with his mistress and his mistress's mother. The gossip about the boss's affair reached the point that Leutermann urged subordinates not to mention it in front of his wife. In a memo labeled "Rumors and Soap Operas," Leutermann wrote: "Our office continues to suffer through a problem of useless, superfluous, and often insidious rumormongering… MAXIMUS does not have time to fixate on this type of drivel." Leutermann's girlfriend, a senior Maximus manager, was pregnant with his child when he hired her; at the time he circulated the memo complaining about rumors, they had an eight-month-old son. The woman who rose to the number-two job in the Maximus office, Paula Lampley, had her son on the payroll, too, until he drew thirty years for reckless homicide.
http://rturner229.blogspot.com/2007/02/new-blunt-client-focus-of-grand-jury.html
In its efforts to improve its opportunities to land those multi-million dollar contracts, Maximus, Inc. hired Andrew Blunt, the governor's brother, as its lobbyist, according to documents filed with the Missouri Ethics Commission Feb. 12.
Though the company's Missouri work has not created any controversy thus far, it has a long record of difficulties, and according to its own annual report, filed Dec. 13 with the Securities and Exchange Commission, it has been targeted in two investigations, one in Washington, D. C. and one in Illinois...and accusations of providing funding to a relative of a top official was among the reasons the company lost its contract to handle New York City's welfare program.
In addition, a 1996 Wisconsin state audit indicated the company billed the state for $400,000 in "questionable and unallowable expenses" and failed to document another $1.6 million it charged to the taxpayers.
Washington D. C. investigation
Maximus described its problems with Medicaid fraud allegations in its annual report:
In October 2004, MAXIMUS received a subpoena from the Criminal Division of the U.S. Department of Justice acting through the U.S. Attorney’s Office for the District of Columbia. The subpoena requested records pertaining to the Company’s work for the District of Columbia, primarily relating to the preparation and submission of federal Medicaid reimbursement claims on behalf of the District. The U.S. Attorney’s Office is investigating issues pertaining to compliance with the federal laws governing Medicaid claims. We are fully cooperating with the U.S. Attorney’s Office in producing documents in response to the subpoena and making employees available for interviews, and we have conducted an internal review of this matter through independent outside legal counsel. Based on the probable legal costs of the internal review, we recorded a charge of $0.5 million in connection with this matter in the quarter ended December 31, 2005. We are unable to quantify the probability or magnitude of any other expenditure, fine, penalty, or settlement amount we may incur in connection with this matter at this time.
Illinois investigation
The annual report featured the following description of the Illinois investigation:
In June 2005, MAXIMUS received a subpoena pursuant to the Illinois Whistleblower Reward and Protection Act from the Office of the Attorney General of Illinois in connection with a purported whistleblower investigation of potential false claims. The subpoena requested records pertaining to the Company’s work for agencies of the Executive Branch of Illinois State Government. Discussions with the Attorney General’s office have indicated that MAXIMUS was one of nine contractors that received such subpoenas and that the investigation is primarily focused at this time on the procurement and contracting activities of the Illinois Department of Central Management Services. Although there can be no assurance of a favorable outcome and we are unable to quantify the probability or magnitude of any expenditures we may incur in connection with this matter, the Company does not believe that this matter will have a material adverse effect on its financial condition or results of operations, and the Company has not accrued for any loss related to this matter.
Problems in Wisconsin
Maximus' difficulties in Wisconsin occurred after the welfare reform act of 1996. Wisconsin outsourced its Wisconsin Works program to Maximus and it was a disaster from the start.
The September 2004 Washington Monthly included an article examining the program:
In pitching welfare privatization, Maximus had promised to outdo government with "a professional work environment that is more conducive to employee productivity." Michael thought the place was coming unglued. At least two caseworkers were addicted to crack. Another was hospitalized for job-related stress. A Fep with whom he shared an office went off on gambling jags, staying out at a casino all night, then sleeping at her desk. "Baby, I gotta take a little nap," she'd say, locking the door. He wondered if he were just a magnet for misfits, but the memo traffic in the bosses' suite showed a broader turmoil. Leutermann, the office chief, warned one caseworker was "going off the deep end lately," causing "all kinds of problems about his behavior in the bathroom." Another Maximus worker chased his supervisor from his office when she told him to clean up his files. "I am a Marine combat veteran that deals with Post Traumatic Stress Disorder," he wrote. "I lost my head." A flirtatious caseworker, rebuffed by a colleague, walked into his cubicle and bit him.
The article indicates the Maximus operation was a hotbed of nepotism:
Maximus encouraged the hiring of family and friends, calling it an effective way to lure and keep talent. As head of the office, Leutermann certainly practiced what he preached. He put his wife, his son, and his niece on the payroll, along with his mistress and his mistress's mother. The gossip about the boss's affair reached the point that Leutermann urged subordinates not to mention it in front of his wife. In a memo labeled "Rumors and Soap Operas," Leutermann wrote: "Our office continues to suffer through a problem of useless, superfluous, and often insidious rumormongering… MAXIMUS does not have time to fixate on this type of drivel." Leutermann's girlfriend, a senior Maximus manager, was pregnant with his child when he hired her; at the time he circulated the memo complaining about rumors, they had an eight-month-old son. The woman who rose to the number-two job in the Maximus office, Paula Lampley, had her son on the payroll, too, until he drew thirty years for reckless homicide.
http://rturner229.blogspot.com/2007/02/new-blunt-client-focus-of-grand-jury.html
2000 New York contract conflicts of interest
Roadblock in New York
Maximus' deal with the Rudolph Giuliani administration to run New York City's welfare program in 2000 ended in accusations of conflicts of interest. A seven-page memo issued on Dec. 28, 2001, by the city's Department of Investigations indicated Maximus had a hidden financial dealwith Commissioner Jason Turner, the man responsible for choosing which company received the contract to run the welfare operation, and received information to help it make the winning bid. The conflicts were outlined in a 2003 investigation by the New York weekly, The Village Voice:
Investigators discovered a previously undisclosed financial tie between Turner and Maximus, according to the report. The problem was serious enough to jeopardize federal funding for the contracts, investigators wrote. They were right. Months later, after city officials wrestled with the findings, Maximus was eased out of its city deals. Sources said the probe may also have cost Turner a high-profile job in Washington.
The conflict, in brief, was this: A top Maximus manager, while negotiating with Turner in early 1999 for city business, had simultaneously agreed to provide financial backing for a $50,000-a-year education contract with Milwaukee's public schools won by Turner's wife, Angela.
The Milwaukee project was rooted in the same conservative philosophy that guided the welfare-to-work schemes that had made Turner a national figure when he headed Wisconsin's workfare program. It called for the Center for Self Sufficiency—a for-profit company founded and owned by Turner and later headed by his wife—to provide counseling on sex abstinence to students in Milwaukee's schools. The contract required, however, that matching funds be contributed by a third party. Investigators learned that after being approached by Angela Turner about participating, Maximus had pledged to contribute up to $60,000 over a two- to three-year period, the report said.
The new finding was even more problematic because the Maximus aide who spoke to Angela Turner about the project was George Leutermann, at the time a vice president and head of the company's welfare reform division. Leutermann had already publicly acknowledged another embarrassing episode involving the Turners, whom he had known for years from welfare and job programs in Wisconsin: After a separate talk with Angela Turner, he had hired her father as a Maximus consultant. This too occurred at the same time he was negotiating with Jason Turner in New York. http://rturner229.blogspot.com/2007/02/new-blunt-client-focus-of-grand-jury.html
Maximus' deal with the Rudolph Giuliani administration to run New York City's welfare program in 2000 ended in accusations of conflicts of interest. A seven-page memo issued on Dec. 28, 2001, by the city's Department of Investigations indicated Maximus had a hidden financial dealwith Commissioner Jason Turner, the man responsible for choosing which company received the contract to run the welfare operation, and received information to help it make the winning bid. The conflicts were outlined in a 2003 investigation by the New York weekly, The Village Voice:
Investigators discovered a previously undisclosed financial tie between Turner and Maximus, according to the report. The problem was serious enough to jeopardize federal funding for the contracts, investigators wrote. They were right. Months later, after city officials wrestled with the findings, Maximus was eased out of its city deals. Sources said the probe may also have cost Turner a high-profile job in Washington.
The conflict, in brief, was this: A top Maximus manager, while negotiating with Turner in early 1999 for city business, had simultaneously agreed to provide financial backing for a $50,000-a-year education contract with Milwaukee's public schools won by Turner's wife, Angela.
The Milwaukee project was rooted in the same conservative philosophy that guided the welfare-to-work schemes that had made Turner a national figure when he headed Wisconsin's workfare program. It called for the Center for Self Sufficiency—a for-profit company founded and owned by Turner and later headed by his wife—to provide counseling on sex abstinence to students in Milwaukee's schools. The contract required, however, that matching funds be contributed by a third party. Investigators learned that after being approached by Angela Turner about participating, Maximus had pledged to contribute up to $60,000 over a two- to three-year period, the report said.
The new finding was even more problematic because the Maximus aide who spoke to Angela Turner about the project was George Leutermann, at the time a vice president and head of the company's welfare reform division. Leutermann had already publicly acknowledged another embarrassing episode involving the Turners, whom he had known for years from welfare and job programs in Wisconsin: After a separate talk with Angela Turner, he had hired her father as a Maximus consultant. This too occurred at the same time he was negotiating with Jason Turner in New York. http://rturner229.blogspot.com/2007/02/new-blunt-client-focus-of-grand-jury.html
2002 New Jersey Employee Fraud
Maximus Employee Pleads Guilty to New Jersey Medicaid FraudSubmitted by Robin Mathias on Mon, 12/16/2002 - 5:21pm. Fraud Cases | Medicaid Fraud Cases
Rayonne Clark pleaded guilty to Medicaid fraud for her role in fraudulently obtaining admission into the Medical Family Care Program. She worked for Maximus, a contractor hired by New Jersey to assist eligible residents obtain health insurance and other medical benefits.
Seven other Maximus employees were also indicted: Ifeanyi Akemelu, Kattia Bermudez, Victor Cordero, Lenora Grant, Iris Sabree, and Akbar Oliver.
Clark admitted that she enrolled herself and family members into the Medicaid Family Care Program by providing false applications and personal information.
“The investigation determined that the defendant was hired to assist those in desperate need of health insurance. Instead, she abused her position and enrolled herself into programs she was not eligible for,” said Insurance Fraud Prosecutor Greta Gooden Brown. “The defendant withheld the fact that she was gainfully employed to make herself appear in need of assistance.”
The Consequences
Rayonne Clark will be sentenced in February 2003. She was found guilty of 3rd degree Medicaid fraud, which is punishable by up to five years in state prison and a criminal fine of up to $15,000.
The other Maximus employees who were indicted must serve 50 hours of commity service as part of a Pre-trial Intervention Program.
Source: New Jersey Insurance Fraud Press Release December 15, 2002
http://mathiasconsulting.com/cases?from=130
Rayonne Clark pleaded guilty to Medicaid fraud for her role in fraudulently obtaining admission into the Medical Family Care Program. She worked for Maximus, a contractor hired by New Jersey to assist eligible residents obtain health insurance and other medical benefits.
Seven other Maximus employees were also indicted: Ifeanyi Akemelu, Kattia Bermudez, Victor Cordero, Lenora Grant, Iris Sabree, and Akbar Oliver.
Clark admitted that she enrolled herself and family members into the Medicaid Family Care Program by providing false applications and personal information.
“The investigation determined that the defendant was hired to assist those in desperate need of health insurance. Instead, she abused her position and enrolled herself into programs she was not eligible for,” said Insurance Fraud Prosecutor Greta Gooden Brown. “The defendant withheld the fact that she was gainfully employed to make herself appear in need of assistance.”
The Consequences
Rayonne Clark will be sentenced in February 2003. She was found guilty of 3rd degree Medicaid fraud, which is punishable by up to five years in state prison and a criminal fine of up to $15,000.
The other Maximus employees who were indicted must serve 50 hours of commity service as part of a Pre-trial Intervention Program.
Source: New Jersey Insurance Fraud Press Release December 15, 2002
http://mathiasconsulting.com/cases?from=130
2004,contractor fraud-medicaid
Washington D. C. investigation
Maximus described its problems with Medicaid fraud allegations in its annual report:
In October 2004, MAXIMUS received a subpoena from the Criminal Division of the U.S. Department of Justice acting through the U.S. Attorney’s Office for the District of Columbia. The subpoena requested records pertaining to the Company’s work for the District of Columbia, primarily relating to the preparation and submission of federal Medicaid reimbursement claims on behalf of the District. The U.S. Attorney’s Office is investigating issues pertaining to compliance with the federal laws governing Medicaid claims. We are fully cooperating with the U.S. Attorney’s Office in producing documents in response to the subpoena and making employees available for interviews, and we have conducted an internal review of this matter through independent outside legal counsel. Based on the probable legal costs of the internal review, we recorded a charge of $0.5 million in connection with this matter in the quarter ended December 31, 2005. We are unable to quantify the probability or magnitude of any other expenditure, fine, penalty, or settlement amount we may incur in connection with this matter at this time.
http://rturner229.blogspot.com/2007/02/new-blunt-client-focus-of-grand-jury.html
Maximus described its problems with Medicaid fraud allegations in its annual report:
In October 2004, MAXIMUS received a subpoena from the Criminal Division of the U.S. Department of Justice acting through the U.S. Attorney’s Office for the District of Columbia. The subpoena requested records pertaining to the Company’s work for the District of Columbia, primarily relating to the preparation and submission of federal Medicaid reimbursement claims on behalf of the District. The U.S. Attorney’s Office is investigating issues pertaining to compliance with the federal laws governing Medicaid claims. We are fully cooperating with the U.S. Attorney’s Office in producing documents in response to the subpoena and making employees available for interviews, and we have conducted an internal review of this matter through independent outside legal counsel. Based on the probable legal costs of the internal review, we recorded a charge of $0.5 million in connection with this matter in the quarter ended December 31, 2005. We are unable to quantify the probability or magnitude of any other expenditure, fine, penalty, or settlement amount we may incur in connection with this matter at this time.
http://rturner229.blogspot.com/2007/02/new-blunt-client-focus-of-grand-jury.html
2005, Illinois potential false claims
Illinois investigation
The annual report featured the following description of the Illinois investigation:
In June 2005, MAXIMUS received a subpoena pursuant to the Illinois Whistleblower Reward and Protection Act from the Office of the Attorney General of Illinois in connection with a purported whistleblower investigation of potential false claims. The subpoena requested records pertaining to the Company’s work for agencies of the Executive Branch of Illinois State Government. Discussions with the Attorney General’s office have indicated that MAXIMUS was one of nine contractors that received such subpoenas and that the investigation is primarily focused at this time on the procurement and contracting activities of the Illinois Department of Central Management Services. Although there can be no assurance of a favorable outcome and we are unable to quantify the probability or magnitude of any expenditures we may incur in connection with this matter, the Company does not believe that this matter will have a material adverse effect on its financial condition or results of operations, and the Company has not accrued for any loss related to this matter.
http://rturner229.blogspot.com/2007/02/new-blunt-client-focus-of-grand-jury.html
The annual report featured the following description of the Illinois investigation:
In June 2005, MAXIMUS received a subpoena pursuant to the Illinois Whistleblower Reward and Protection Act from the Office of the Attorney General of Illinois in connection with a purported whistleblower investigation of potential false claims. The subpoena requested records pertaining to the Company’s work for agencies of the Executive Branch of Illinois State Government. Discussions with the Attorney General’s office have indicated that MAXIMUS was one of nine contractors that received such subpoenas and that the investigation is primarily focused at this time on the procurement and contracting activities of the Illinois Department of Central Management Services. Although there can be no assurance of a favorable outcome and we are unable to quantify the probability or magnitude of any expenditures we may incur in connection with this matter, the Company does not believe that this matter will have a material adverse effect on its financial condition or results of operations, and the Company has not accrued for any loss related to this matter.
http://rturner229.blogspot.com/2007/02/new-blunt-client-focus-of-grand-jury.html
2007,contractor fraud
$32 million fraud scheme
money laundering, mail fraud, bankruptcy fraud, perjury and obstruction of justice.
consulting company,
Maximus Inc., based in northern Virginia
August 11, 2007, 8:08 pm Romney Fund-Raiser Resigns
By MICHAEL LUOAMES, Iowa–A top fund-raiser for Mitt Romney who was indicted this week in Maryland on a $32 million fraud scheme has resigned from his position with the campaign as a national finance committee co-chair, a
spokesman for Mr. Romney said.
A federal grand jury in Maryland unsealed its 23-count indictment of the fund-raiser, Alan B. Fabian, 43, on Thursday for money laundering, mail fraud, bankruptcy fraud, perjury and obstruction of justice.
Mr. Fabian, who had been one of 35 co-chairs on Mr. Romney’s national finance committee, allegedly ran up $32 million in fake purchases with his consulting company, Maximus Inc., based in northern Virginia, and
pocketed the money for himself.
He became a “bundler,” one of those who commit to bringing in large sums through their own networks of donors, for Mr. Romney’s campaign back in January, having previously served as a major fundraiser for
George W. Bush.
Mr. Fabian contributed the maximum of $2,300 to Mr. Romney’s candidacy. The campaign will be returning his contribution, said Eric Fehrnstrom, a Romney campaign spokesman.
“We have accepted Mr. Fabian’s resignation from his unpaid, volunteer position on the national finance committee,” he said in a statement.
http://thecaucus.blogs.nytimes.com/2007/08/11/romney-fund-raiser-resigns/
spokesman for Mr. Romney said.
A federal grand jury in Maryland unsealed its 23-count indictment of the fund-raiser, Alan B. Fabian, 43, on Thursday for money laundering, mail fraud, bankruptcy fraud, perjury and obstruction of justice.
Mr. Fabian, who had been one of 35 co-chairs on Mr. Romney’s national finance committee, allegedly ran up $32 million in fake purchases with his consulting company, Maximus Inc., based in northern Virginia, and
pocketed the money for himself.
He became a “bundler,” one of those who commit to bringing in large sums through their own networks of donors, for Mr. Romney’s campaign back in January, having previously served as a major fundraiser for
George W. Bush.
Mr. Fabian contributed the maximum of $2,300 to Mr. Romney’s candidacy. The campaign will be returning his contribution, said Eric Fehrnstrom, a Romney campaign spokesman.
“We have accepted Mr. Fabian’s resignation from his unpaid, volunteer position on the national finance committee,” he said in a statement.
http://thecaucus.blogs.nytimes.com/2007/08/11/romney-fund-raiser-resigns/
2007 Missouri Ethics Commission
Maximus, Inc. hired the governor's brother, as its lobbyist,
accusations of providing funding to a relative of a top official was among the reasons the company lost its contract to handle New York City's welfare program.
Sunday, February 18, 2007
A Virginia-based company that already has landed contracts with the St. Louis public school system and the city of Kansas City, is hoping to continue to cash in on the state's push toward outsourcing government responsibilities to outside contractors.
In its efforts to improve its opportunities to land those multi-million dollar contracts, Maximus, Inc. hired Andrew Blunt, the governor's brother, as its lobbyist, according to documents filed with the Missouri Ethics Commission Feb. 12.
Though the company's Missouri work has not created any controversy thus far, it has a long record of difficulties, and according to its own annual report, filed Dec. 13 with the Securities and Exchange Commission, it has been targeted in two investigations, one in Washington, D. C. and one in Illinois...and accusations of providing funding to a relative of a top official was among the reasons the company lost its contract to handle New York City's welfare program.
http://rturner229.blogspot.com/2007/02/new-blunt-client-focus-of-grand-jury.html
In its efforts to improve its opportunities to land those multi-million dollar contracts, Maximus, Inc. hired Andrew Blunt, the governor's brother, as its lobbyist, according to documents filed with the Missouri Ethics Commission Feb. 12.
Though the company's Missouri work has not created any controversy thus far, it has a long record of difficulties, and according to its own annual report, filed Dec. 13 with the Securities and Exchange Commission, it has been targeted in two investigations, one in Washington, D. C. and one in Illinois...and accusations of providing funding to a relative of a top official was among the reasons the company lost its contract to handle New York City's welfare program.
http://rturner229.blogspot.com/2007/02/new-blunt-client-focus-of-grand-jury.html
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