PREVIOUS COVERAGE | More conflicts of interest at Manatee Rural Health?

Questionable deals uncovered as CEO promises reform

dmarsteller@bradenton.comSeptember 7, 2010 

MANATEE — Manatee County Rural Health Services’ chief executive is promising reforms following a Bradenton Herald investigation into his salary and the agency’s hiring of firms owned by its officials — even as other questionable business dealings are uncovered.

Walter “Mickey” Presha Sr. says the changes will include hiring a procurement director, canceling contracts with two employees’ side businesses and using an outside executive compensation consultant.

“We took it as an opportunity to look at all our parts and pieces and make sure we tightened up on them,” he said. “I don’t want anybody in the world to think we’ve got anything to hide.”

But the Herald’s continuing investigation has found more questionable business dealings and other issues involving high-ranking Rural Health officials. Among them:

n A land deal that netted an $850,000 profit for two top executives and three board members.

n A real estate investment partnership involving Presha and the agency’s board chairman.

n A previously undisclosed $1 million project awarded to a construction company that employed Presha’s daughter as an officer.

n Board members who exceeded term limits, then changed the bylaws so they could remain in office.

n The agency’s chief financial officer has lived in another state since 2001.

Presha strongly defends each one, saying they were legal and either private or in the agency’s best interest. But a non-profit ethics expert says those outside business dealings could impede the agency’s mission of providing health care to the area’s indigent and uninsured.

Consultant sees conflicts

Presha’s promised reforms are in response to an Aug. 23 Herald story on Rural Health’s financial dealings.

The Herald found the nonprofit, tax-exempt agency had paid nearly $2 million in recent years to businesses owned by board members, officers, employees or their relatives. The Herald also reported that Presha long has been the highest-paid CEO among federally qualified community health agencies in Florida, with a fiscal 2009 salary in excess of $433,000.

Agency officials had defended the insider dealings, saying they either were competitively bid or provided needed services and/or expertise at a reduced cost. They also said Presha’s salary was appropriate, given his skills and the organization’s size and complexity.

But Presha, interviewed last week by the Herald, said he asked a consultant — KVJINC LLC Inc. — to review the Herald’s findings and make recommendations to eliminate potential conflicts of interest.

The consultant’s top recommendation: Hire a procurement officer to oversee major purchases and contracts, which now are handled by department heads and a board committee. Presha said the agency began advertising the new position last week and plans to have it filled by the end of the year.

“We are looking for somebody with a lot of experience to guide us along,” he said.

Once a procurement director is in place, Presha said he plans to cancel the agency’s contracts with two companies owned by Rural Health executives and seek new bids. The contracts are with A to Z Complete Property Management Inc. for janitorial cleaning and maintenance services, and with The Lawn Authority of Manatee County Inc. for lawn care maintenance at the agency’s facilities.

A to Z is owned by Chris Mullinex, the agency’s facilities director. Wardell Jackson, the agency’s vice president of support services, is a principal in Lawn Authority.

“It’s not a good idea for staff to get paychecks from this agency and also have the opportunity to bid” for agency contracts, Presha said, adding he has notified both companies that their contracts will be terminated early.

Whether any changes are made in the agency’s dealings with board member-owed businesses will be up to the board, he said.

Rural Health has long employed John Lewis O.D. P.A. for optometry services, and has kept board member Marc Lazarus’ consulting firm R&L Healthcare Advisors on a $4,000-a-month retainer since 2008.

The agency also has paid More Power Properties and Investments LLC, co-owned by board Chairman J. Garry Lowe, for storage of agency files and equipment and the purchase of a modular building.

Another Rural Health contractor with insider connections, Pinnacle Group of West Coast Florida, will continue to be allowed to bid for agency business, Presha said. The company is owned by Trina Presha-Rosier, Presha’s daughter.

Presha also plans to recommend the board begin using an outside consultant to conduct the compensation survey used to set his annual salary. Jeff Zimmerman, Rural Health’s chief financial officer, has been doing the survey — a setup that a compensation consultant told the Herald was “ripe for abuse” because Presha is Zimmerman’s boss.

Officials profit on land deal

But the financial dealings among Rural Health’s top officials extend beyond the agency, the Herald has found.

Presha, Zimmerman and three current board members — Lewis, Lowe and Bradenton attorney Layon Robinson II — paid $250,000 for a vacant 9.5-acre tract on U.S. 301 North in Parrish in 2003, records show. They sold it to a Bradenton couple for $1.1 million two years later, during the peak of the real estate development and price boom.

The still-vacant site borders Rural Health’s administrative offices and its Edgar H. Price Jr. health facility. The five Rural Health officials bought their property a year after Rural Health acquired its land.

The circumstances of their purchase —including whether the seller first approached Rural Health — could not be determined. The attorney who had represented the estate that sold the parcel has since died, and his office said its records do not reflect how the transaction was initiated. And the five Rural Health officials aren’t talking.

“This has nothing to do with Rural Health, and I’m not going to comment on it,” Presha said. “I’m a private person. My life is mine. Whatever deals I’ve made are legitimate.”

When Lowe was reached on his cell phone last week seeking comment, the recently retired Palmetto police chief said he was on the other line with a law-enforcement officer and would call back. He did not, nor did he return follow-up calls.

Presha and Lowe also have been involved in another real estate venture: G&M Properties & Investments LLC. It primarily buys and sells single-family homes and lots through Manatee County.

Presha said the business is a sole proprietorship.

“That business belongs to me 100 percent,” he said. “He (Lowe) never had any shares or anything like that. I made all of the decisions.”

But the partnership listed Lowe as a “managing member” — someone who has authority to act on the partnership’s behalf — on an annual report filed with the Florida Division of Corporations in July 2004. Two months later, Lowe joined Rural Health’s board. Also, a partnership affidavit filed in Manatee County in December 2004 identified Lowe and Presha as “managing partners” in G&M.

Presha-Rosier, who had incorporated G&M in 2003, replaced Lowe as a managing member on the partnership’s 2005 annual report, records obtained by the Herald show.

Daughter’s Pinnacle ties

Presha-Rosier also has had more extensive business dealings with Rural Health than the agency has reported on its tax returns, building permit and incorporation records show.

She was vice president of Pinnacle Group of Sarasota Inc. in 2005 and 2006, when it was building Rural Health’s $1 million Parrish facility.

As a 501(c)(3) not-for-profit organization, Rural Health is obligated to disclose on its annual tax filings any business dealings with “interested persons” such as board members, officers or their families. But the Parrish construction contract was not mentioned on the agency’s 2005 or 2006 filings.

Presha said that was because his daughter did not have an ownership stake in Pinnacle Sarasota.

“She had no stake in that company at all,” Presha said. “We didn’t know anything about her being vice president. But she had no shares or ownership in that company.”

An IRS spokesman declined to comment on this specific case. In general, however, the agency considers a company’s “interested persons” to include vendors’ and contractors’ corporate officers, he said.

Presha-Rosier later obtained her general contractor’s license and launched her own firm, which operates under the Pinnacle West Coast name. It has been paid more than $536,000 by Rural Health — according to Rural Health’s tax returns — and now has demolition permits to make way for a new Rural Health facility on Manatee Avenue West in Bradenton.

Broken bylaws

The Herald also has learned that some board members have served longer than their bylaws once allowed.

Until 2006, the agency’s bylaws limited board members to three consecutive three-year terms. Once they reached the limit, board members had to be off the board for two years before they could rejoin.

When the board revised the bylaws that year to eliminate the term limit, at least two board members — Lewis and Juanine Lowery — had been on Rural Health’s board for more than 20 years each. They did not return calls seeking comment.

Presha said the term limit was handicapping Rural Health’s ability to retain knowledge.

“I know of no company ... that takes off experienced board members and replaces them with people who have no idea about the corporation,” he said. “You want to keep somebody on the board who’s knowledgeable.”

But an expert on ethics and governance in the non-profit sector said board term limits are common, and for good reason.

“It helps the organization stay fresh and become aware of new perspectives,” said Patricia Harned, president of the Ethics Resource Center in Arlington, Va. “But it also prevents the type of situation where board members have been on the board so long that they start to develop these outside business relationships that could detract from the organization’s mission.”

Long-distance commute

Another expert raised similar distraction concerns about the agency’s top financial officer living 900 miles away.

Zimmerman lives outside of Oakland, Ill., about 90 miles east of Springfield. He moved there in 2001 and operates an accounting practice in the town of roughly 900 people.

Presha said he never considered hiring a new CFO to replace Zimmerman, who has been with Rural Health since 1987.

“Jeff is a guy who’s been with me a long time,” he said. “He knows everything about Rural Health. I think sometimes it helps him being away by giving him a different perspective.”

Zimmerman said the distance does not hinder his Rural Health job performance. He said he keeps in constant contact with Rural Health by phone, fax and e-mail, and travels to Manatee at least once a month for up to a week at a time at his own expense.

“I’ve had four conference calls today (Friday) already,” he said. “I’m very much in the loop.”

Pete Smith, a compensation consultant in McLean, Va., said Zimmerman’s $185,000 salary is “not unreasonable for a full-time CFO.”

“But if the organization’s size and complexity justifies that salary, you need to be there,” Smith said. “You can’t run a business from somewhere else where you’ve got other businesses competing for your attention.”

Duane Marsteller, transportation/growth and development reporter, can be reached at 745-7080, ext. 2630.

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