Former CEO of Florida Group Home Association Charged with Making False Statements to SSA

From the U.S. Attorney’s Office, Middle District of Florida:

Tampa, FL – United States Attorney A. Lee Bentley, III announced today the return of an indictment charging Richard Lilliston (69, Brooksville) with conspiracy to defraud two Social Security Administration (“SSA”) programs, and to make false statements to the SSA programs. If convicted, he faces a maximum penalty of five years in federal prison and a fine of $250,000.

Three former Hillsborough Achievement and Resource Centers (HARC) employees have previously pleaded guilty to related charges. HARC CFO Frank Pannullo pleaded guilty to conspiracy on June 6, 2016, for his role in the criminal conduct at HARC. Marsha Weisse, a former HARC controller and CFO, pleaded guilty on December 10, 2015, to submitting a false statement to the SSA and is awaiting sentencing. Sandra Shepherd, a former HARC client finance manager, also pleaded guilty to submitting a false statement to the SSA. Shepherd was sentenced on March 24, 2016.

According to Lilliston’s indictment and other related court documents, HARC, formerly the Hillsborough Association for Retarded Citizens, was established in 1953 to positively impact the future for people living with developmental disabilities, such as Alzheimer’s disease and Down syndrome. HARC opened and operated group homes that served its target client population and also spearheaded various community programs for its clients, focused on inclusion activities for youths, adults, and seniors with disabilities.

Many of the HARC clients received SSA benefits from the Supplemental Security Income and the Old Age, Survivors’ and Disability Insurance programs due to various developmental disabilities. For certain HARC clients who lacked the capacity to manage their own SSA program benefits, SSA approved one or more HARC officials to act as a “Representative Payee” to receive the client’s benefits and to use them exclusively for that client’s benefit. As a Representative Payee, the HARC official was required to complete and submit to the SSA a “Representative Payee Report” (or “Form SSA-6234”). The SSA Form SSA-6234 required that basic financial information relating to each HARC client who was an SSA program beneficiary be submitted annually to the SSA. The required financial information included, among other information: (1) how much had been spent for the beneficiary’s food and housing during the relevant period; (2) how much had been spent on other items and services—such as clothing, education, medical and dental expenses, recreation, or personal items—directly for the beneficiary; and (3) how much, if any, had been saved for the beneficiary as of the end of the relevant period.

The indictment alleges that in or about January 2001, through November 2011, the conspirators engaged in a scheme to defraud the SSA. Specifically, in January 2001, HARC opened an account at SunTrust bank, commonly referred to within HARC as the “Endowment Account.” That account was purportedly established to maintain and safeguard the HARC clients’ funds for each client’s relevant needs. However, shortly after the creation of the account, Lilliston and Pannullo, HARC’s CEO and CFO, respectively, began wrongfully diverting HARC clients’ funds from the Endowment Account into the HARC operating account, to cover various expenditures unrelated to any particular HARC client’s personal needs or use. As a result of the diversion of client funds, substantially all of the Form SSA-6234s submitted to the SSA for the affected HARC clients contained false and fraudulent information. Also, early in the conspiracy, CFO Pannullo and one or more conspirators developed an “Endowment Account Worksheet” that purportedly tracked each HARC client’s balance within the Endowment Account. In other words, a HARC client’s Endowment Account worksheet balance was to be increased whenever funds were transferred into the account from that client’s personal bank account (or from any other source) and correspondingly decreased when funds were extracted to pay for that client’s personal needs and use. However, the wrongful diversions by the conspirators from the Endowment Account to the operating account were not recorded in any manner on the Endowment Account worksheet. Thus, while the worksheet made it appear as if funds in the Endowment Account were being maintained and safeguarded—and readily available—for the HARC clients’ personal needs and use, such was not the case.

In another effort to conceal that HARC client funds had been, and were being, wrongfully diverted from the Endowment Account, and to make it appear as if the account had been properly established and maintained since at least 2007, Lilliston directed others at HARC to secure signatures from the developmentally disabled HARC clients on a document titled “Pooled Trust Joinder Agreement.” Many, if not most of, the developmentally disabled clients who signed the document did not have the necessary capacity to understand the full import of the document. Lilliston and others at HARC signed and dated the documents as if they had been executed in April 2007, when in truth they were actually executed in late November 2009.

In June 2013, the U.S. Attorney’s Office filed a Verified Complaint for Forfeiture In Rem in a related case, seeking the forfeiture of $87,000 held in a Synovus Bank account. That complaint raised like allegations—that HARC clients’ SSA benefits had been wrongfully diverted from the clients and used by HARC for other purposes—and was supported by facts contained in the sworn affidavit of a special agent with the U.S. Department of Health and Human Services - Office of Inspector General. On September 30, 2013, the district court entered a Default Judgment of Forfeiture in which the Court ordered the forfeiture of the $87,000 to the United States.       

This case is being investigated by the Social Security Administration - Office of the Inspector General, the U.S. Department of Health and Human Services - Office of the Inspector General, and the Florida Department of Law Enforcement, along with the State of Florida’s Department of Financial Services - Office of Fiscal Integrity. It is being prosecuted by Assistant United States Attorney Jay G. Trezevant.

Tampa, FL – United States Attorney A. Lee Bentley, III announced today the return of an indictment charging Richard Lilliston (69, Brooksville) with conspiracy to defraud two Social Security Administration (“SSA”) programs, and to make false statements to the SSA programs. If convicted, he faces a maximum penalty of five years in federal prison and a fine of $250,000.

Three former Hillsborough Achievement and Resource Centers (HARC) employees have previously pleaded guilty to related charges. HARC CFO Frank Pannullo pleaded guilty to conspiracy on June 6, 2016, for his role in the criminal conduct at HARC. Marsha Weisse, a former HARC controller and CFO, pleaded guilty on December 10, 2015, to submitting a false statement to the SSA and is awaiting sentencing. Sandra Shepherd, a former HARC client finance manager, also pleaded guilty to submitting a false statement to the SSA. Shepherd was sentenced on March 24, 2016.

According to Lilliston’s indictment and other related court documents, HARC, formerly the Hillsborough Association for Retarded Citizens, was established in 1953 to positively impact the future for people living with developmental disabilities, such as Alzheimer’s disease and Down syndrome. HARC opened and operated group homes that served its target client population and also spearheaded various community programs for its clients, focused on inclusion activities for youths, adults, and seniors with disabilities.

Many of the HARC clients received SSA benefits from the Supplemental Security Income and the Old Age, Survivors’ and Disability Insurance programs due to various developmental disabilities. For certain HARC clients who lacked the capacity to manage their own SSA program benefits, SSA approved one or more HARC officials to act as a “Representative Payee” to receive the client’s benefits and to use them exclusively for that client’s benefit. As a Representative Payee, the HARC official was required to complete and submit to the SSA a “Representative Payee Report” (or “Form SSA-6234”). The SSA Form SSA-6234 required that basic financial information relating to each HARC client who was an SSA program beneficiary be submitted annually to the SSA. The required financial information included, among other information: (1) how much had been spent for the beneficiary’s food and housing during the relevant period; (2) how much had been spent on other items and services—such as clothing, education, medical and dental expenses, recreation, or personal items—directly for the beneficiary; and (3) how much, if any, had been saved for the beneficiary as of the end of the relevant period.

The indictment alleges that in or about January 2001, through November 2011, the conspirators engaged in a scheme to defraud the SSA. Specifically, in January 2001, HARC opened an account at SunTrust bank, commonly referred to within HARC as the “Endowment Account.” That account was purportedly established to maintain and safeguard the HARC clients’ funds for each client’s relevant needs. However, shortly after the creation of the account, Lilliston and Pannullo, HARC’s CEO and CFO, respectively, began wrongfully diverting HARC clients’ funds from the Endowment Account into the HARC operating account, to cover various expenditures unrelated to any particular HARC client’s personal needs or use. As a result of the diversion of client funds, substantially all of the Form SSA-6234s submitted to the SSA for the affected HARC clients contained false and fraudulent information. Also, early in the conspiracy, CFO Pannullo and one or more conspirators developed an “Endowment Account Worksheet” that purportedly tracked each HARC client’s balance within the Endowment Account. In other words, a HARC client’s Endowment Account worksheet balance was to be increased whenever funds were transferred into the account from that client’s personal bank account (or from any other source) and correspondingly decreased when funds were extracted to pay for that client’s personal needs and use. However, the wrongful diversions by the conspirators from the Endowment Account to the operating account were not recorded in any manner on the Endowment Account worksheet. Thus, while the worksheet made it appear as if funds in the Endowment Account were being maintained and safeguarded—and readily available—for the HARC clients’ personal needs and use, such was not the case.

In another effort to conceal that HARC client funds had been, and were being, wrongfully diverted from the Endowment Account, and to make it appear as if the account had been properly established and maintained since at least 2007, Lilliston directed others at HARC to secure signatures from the developmentally disabled HARC clients on a document titled “Pooled Trust Joinder Agreement.” Many, if not most of, the developmentally disabled clients who signed the document did not have the necessary capacity to understand the full import of the document. Lilliston and others at HARC signed and dated the documents as if they had been executed in April 2007, when in truth they were actually executed in late November 2009.

In June 2013, the U.S. Attorney’s Office filed a Verified Complaint for Forfeiture In Rem in a related case, seeking the forfeiture of $87,000 held in a Synovus Bank account. That complaint raised like allegations—that HARC clients’ SSA benefits had been wrongfully diverted from the clients and used by HARC for other purposes—and was supported by facts contained in the sworn affidavit of a special agent with the U.S. Department of Health and Human Services - Office of Inspector General. On September 30, 2013, the district court entered a Default Judgment of Forfeiture in which the Court ordered the forfeiture of the $87,000 to the United States.       

This case is being investigated by the Social Security Administration - Office of the Inspector General, the U.S. Department of Health and Human Services - Office of the Inspector General, and the Florida Department of Law Enforcement, along with the State of Florida’s Department of Financial Services - Office of Fiscal Integrity. It is being prosecuted by Assistant United States Attorney Jay G. Trezevant.