U.S. Pain Foundation Issues Release Outlining Former CEO’s Misuse of Funds

U.S. Pain Foundation Issues Release Outlining Former CEO’s Misuse of Funds

By Staff.

Recently, National Pain Report ran a story regarding the “financial irregularities involving the former CEO of U.S. Pain Foundation” that were discovered during an internal audit.

In an effort to be proactive and transparent as they “correct the issues,” U.S. Pain Foundation sent the following email which outlines the scope of the former CEO’s misappropriation of funds, as well as the response and ongoing efforts being undertaken by US. Pain Foundation to correct and stay the course in 2019.

The following email was received January 3rd, 2019:

U.S. PAIN FOUNDATION DOCUMENTS MISUSE OF FUNDS BY FORMER CEO IN FILED 990 FORMS FOR 2016 & 2017

MIDDLETOWN, CT, Jan. 3, 2019 – The U.S. Pain Foundation has filed and publicly shared its 2016 and 2017 Form 990 Information Returns. The Returns show misappropriation of U.S. Pain’s funds by the founder and former CEO, totaling almost $1.9 million over the course of three years, from 2015 to 2017.

The 990 Returns show excess benefit transactions attributable to the former CEO’s misuse of funds for the following years:

2015 – $403,901
2016 – $693,557
2017 – $791,900

Additional excess benefit transactions will be reported on the 2018 990 Return for the period of 2018 prior to the former CEO’s suspension. This 990 Return is due May 15, 2019.

Under the Internal Revenue Code, an excess benefit transaction occurs when an economic benefit provided by a tax-exempt organization to a person in a position to exercise influence over the organization exceeds the economic value received by the organization. “While the former CEO did not take a salary prior to 2017, he took funds that exceeded the value of his services, for unauthorized purposes and in improper ways,” according to a statement by the U.S. Pain Board of Directors posted on their website today.

Discovery of Misuse of Funds

The misuse of funds first came to the attention of the Board of Directors on April 23, 2018, when U.S. Pain’s attorney informed several members of its Board that the interim Chief Financial Officer had discovered probable misappropriation of funds by the former CEO. At a special meeting on April 26, 2018, the Board suspended the former CEO and retained another law firm experienced in such matters to conduct an investigation.

After receiving the report from this law firm and its forensic accountant that confirmed the misappropriation of funds, the Board demanded the former CEO’s resignation on May 25, 2018. The former CEO resigned on May 29, 2018, and the misuse of funds was reported to federal authorities on June 1, 2018. Through counsel, the organization has fully cooperated with authorities and is also working with counsel to obtain restitution.

New Financial Controls

In the statement the Board says they are, “…especially appalled that the founder and former CEO diverted funding intended to support the pain community.” It goes on to say, “The former CEO was widely respected and beloved in the pain community, and took advantage of that trust in him. He was able to do this by both withholding key information and providing dishonest information that deceived staff and volunteers in leadership positions.”

“The Board of Directors recognizes that the organization should have had stronger financial controls in place and has instituted a robust system of checks and balances,” the statement continues. The statement outlines those new financial controls:

  • The Board established detailed requirements for the reimbursement of expenses
  • Both the interim Chief Financial Officer and Chairman of the Board must approve all disbursements
  • The Board and the interim Chief Financial Officer instituted separation of duties and internal controls surrounding all banking transactions
  • The Board receives cash flow reports and financial statements on a regular basis.

According to the Board’s statement, “With these checks and balances in place, the organization is stronger than ever before.”

Financial Accounting

The organization was founded in 2006 by the former CEO, and until late April 2018, he controlled the organization’s operations, finances, records and bank accounts, as well as the Board process. His mismanagement and dishonesty left the records in disarray. Under the former CEO’s management, the 2015 990 Return was filed 11 months late (after extensions), and at the time of his departure, the 2016 990 Return was five months late (after extensions) and far from ready to file.

To correct these issues, under the direction of the Board, the interim Chief Financial Officer undertook a challenging and lengthy process that involved: conducting a review of the 2015 990 Return and the associated financial reports prepared by a former accounting firm; retrieving the 2016 records from a former accounting firm and organizing those records; creating financial statements that meet customary standards for both 2016 and 2017; controlling current disbursements; maintaining accurate records for 2018 and implementing the critical controls adopted by the Board of Directors outlined above.

While the interim Chief Financial Officer worked with the Board to collect, review and organize financial records, the Board also hired a new independent tax accounting firm to prepare the 2016 and 2017 990 Returns. On December 22, 2018, both the 2016 and 2017 Form 990 Returns were mailed to the IRS.

In just eight months since the Board of Directors removed the former CEO and assumed leadership of U.S. Pain, the organization has:

  • Produced three years of professionally prepared unaudited financial statements that meet customary standards
  • Filed two years of back-990s with the IRS
  • Begun the process of retaining an independent accounting firm to prepare the 2018 990 and is preparing for a full audit for 2018.

The misappropriated funds are reported on the 2016 and 2017 990 Returns (Part VII, Section A, Column F) as “Other Compensation” and on Schedule L of the 990 as “Excess Benefit Transactions.” The 2015 Form 990 prepared under the former CEO’s direction did not report the $403,901 misappropriated in 2015 as excess benefit transactions. Therefore, the funds originally reported on the 2015 990 Return as “Reportable Compensation” have been reclassified on the 2016 Form 990 as an excess benefit transaction.

“U.S. Pain continues to work with law-enforcement authorities to resolve this matter and is also working with the Connecticut Department of Consumer Protection to renew its charitable solicitation registration, which expired on December 1, 2018, as soon as possible,” according to the statement.

2018 Accomplishments and Plans for 2019

“Despite the misuse of funds by the former CEO, the organization’s dedicated staff and volunteers ensured 2018 was its most successful year of programs and services,” notes the statement, which points to some of U.S. Pain’s 2018 activities:

  • Producing four editions of the INvisible Project magazine, which tells the courageous stories of people with pain to help improve disease understanding
  • Hosting two support group leader trainings and growing support groups nationally
  • Celebrating the appointment of two staff members to federal committees
  • Producing 12 educational webinars
  • Organizing our most robust Pain Awareness Month campaign to date
  • Hosting two daylong educational events and two state advocacy days
  • Holding our first-ever pediatric pain retreat for children and families.

The statement concludes: “U.S. Pain fills a vital gap in support for the pain community and refuses to let the actions of one individual impede its efforts to educate, connect, empower, and advocate for those living with chronic pain. The organization is poised for a 2019 that will include even more services and events and looks forward to continuing to offer help and hope to individuals with pain for years to come.”

About U.S. Pain Foundation

The mission of the U.S. Pain Foundation is to empower, educate, connect, and advocate for individuals living with chronic illness that causes pain, as well as their caregivers and clinicians.

Through our multiple programs and services, it works to enhance the quality of life for people with pain, improve patient outcomes, address access and affordability issues, and increase public awareness and empathy for the issue of pain. The U.S. Pain Foundation is a nonprofit organization, tax exempt under Section 501(c)(3) of the Internal Revenue Code.

Subscribe to our blog via email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Authored by: Staff

11
Leave a Reply

2000
11 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
11 Comment authors
  Subscribe  
newest oldest
Notify of
Bonnie

I never quite get the “fact”that addicts started by stealing grannys meds ,ridiculous !
Medicine was made for the sick not for someones thrill .Why is it that people who need these specific meds be made out to be addicts ?
Why doesn’t the medical establishment stand up to government instead of shivering with fright in the corner after all THEY went to medical school ,not the bureaucrats ?why do I have to be ashamed that I need certain meds .Certainly I would LOVE not to need them ,I would LOVE to be normal for just one day ………

Norma Gonzales

This is the kind of mishandling or stealing that has been happening everywhere not only by the US Pain Foundation. I agree with what everyone that is express how they feel. I am also a severe chronic pain patient and for a long time I been speaking up for myself. When doctors call me an addict I quickly correct them and tell my traumatic head an neck injury that happened at work in the scope my duty to an emergency. That there was another issue about non-subscribed employers inTexas. After a long wait in court room I was awarded nothing and a head injury inthe state of Texas is a life long settlement. My neck was operated. So now I have a metal brace with srews and pins. I developed complex-partial seizures, vertigo, high- blood pressure, fibromyalgia, allodynia, severe chronic pain syndrome resulting from the head injury, cervicalgia, cervical spondylosis with myelopathy, displacement of thoracic intervertabral and now herniation to my S-1,L-5. My life constist of being able to do nothing but the very little bare essentials with the help of pain medication. First came anti-inflammatories then lyrica I had to quit after 12 yrs on it and gain over 200 lbs and started to develop cysts fill with water. I had to stop that pill. Also going to psychiatrist that tried a lot of more dangerous black box warning medications and none worked and only drove me really aweful. A forensic psychiatrist proved my case was not to do with my mind or depression because as bad as things got I nevere got depressed but prayed to our almighty GOD. I slowly started on tyenol #3 after one year stil enduring excuriating pain my doctor started trying different morphines which I tried for awhile and still enduring excuriating pain I started using hydromorphone. I feel some relief when I do not have to do nothing with pain starting up again. WeI need people to learn awareness and unfortunately many people need their pain meds. May the lord all help us quickly in helping chronic pain patients.

Where US Pain failed, was in trying to win Government handouts of money to help patients. This was a mistake because it left agencies like the DEA and VA with Immunity for the vast harm that they continue doing to patients, in the hope that tiny grants of federal money might undo the harm later.

A real solution makes the regulators responsible for the harm that they do.

JaneF

The Government taking charge of the pain community didn’t have anything to do with who might be in office, this has been going on for several years, and it’s not one person. It’s a group of “professionals”, with their own agendas, such as operating Rehab facilities, professionals that think they can save people from themselves, like drug addicts doing stupid things with their lives; very similar to the prohibition era. The thing about it, stupid people will continue to do stupid stuff, like illegal drugs/alcohol/cold meds/anything that they can find that elusive “high”, but the people that NEEDS the meds to be able to get out of bed and take care of themselves and live a “somewhat” normal life are being punished for the sins of others. PUT HEALTHCARE BACK IN THE PHYSICIAN’S PRACTICES AND STAY AWAY FROM CONTROLLING EVERYTHING, you can’t fix “stupid”, but you can hurt patients that have been living in “hell on earth-CHRONIC PAIN”.

William Dorn

I am a 65 year old retiree with multiple spine conditions including having two nerve roots compressed. I am in unbearable pain 24/7 and pain medicines are all that help me. Our government should be able to battle illegal drugs ( the cause of the problem) without torturing and killing chronic pain patients. Also the media should stop being the governments puppet and check out the real facts about what is causing this crisis ( illegal drugs) and start being real news reporters.

With funds like these that were stolen, it seems that the United States Pain Foundation could do a lot more than they are. For example, run commercials on television that use real people that live their lives day in and day out in chronic pain to tell their stories. Chronic pain patients to tell the other side, the so-called dark side of the opioid injustice. The United States Pain Foundation should also be making the public aware of the suicides committed by those who could no longer live their life in severe chronic pain due to this injustice. Just one woman’s opinion but apparently what they’re currently doing is just not enough, especially with funds as great as those that were stolen.

Marty

Another slap in the face of pain patients across the country. But we can’t dwell on what’s already done. Today and tomorrow are our true concerns. Many of us are still in the fight, till the end. Hopefully it’s not mine.

Debbie Nickels Heck, MD

Excellent work done in a timely fashion

Marie Gafney

It is near impossible to get pain medication for chronic pain that I have gotten over the past several years. My dr. is now afraid to prescribe it because of malpractice. I am 70 years old and riddled with arthritis. I have no quality of life without medication. I cannot even do my own grocery shopping. The government is now telling drs how to treat their patients. The government draft is full of lies and misinformation. Drug addicts on the streets will always get their fix. This is deplorable and unacceptable. I can barely get out of bed, enjoy my grandkids, and don’t go out of the house.

Bill Summers

Please, somehow shut the presidents’ crazy idiocy down. One thing we know is that it hasn’t been started as of yet.

Happy New Year,Everybody….
First,is there anything members,supporters and friends of U.S. Pain can,or should do?
Second, the alleged crimes committed by this person are in the hands of law-enforcement. Will we be kept “up to speed” on the progress of his prosecution,and,hopefully informed of the final legal consequences of his action?
In otherwords,his punishment.
It turns my stomach to see people in a position of trust STEALING from a non-profit.
There are still cultures that would cut off his hand.
That would be sweetly ironic,as he’d have trouble getting pain meds.
We wish you the best with your Non-Profit status.
Billy