TIFS Investigates: A troubling trend of non-profits engaging in a series of scandals and embezzlements

Recent investigations have unveiled a troubling trend of fraudulent activities within non-profit organizations in Arkansas and Oklahoma. These schemes have not only undermined public trust but also diverted crucial resources away from those in need.

One of the most notable cases involves Preferred Family Healthcare (PFH), a mental and behavioral healthcare non-profit operating across several states, including Arkansas and Oklahoma. The organization has been embroiled in involving Medicaid fraud, embezzlement, and bribery.

Key Figures and Allegations:

• Robin Raveendran, a former executive at PFH, was accused of orchestrating a scheme to obtain Medicaid reimbursements for over 20,000 illegally billed services, amounting to approximately $2.2 million2.

• Former Arkansas state representative Micah Neal pled guilty to conspiracy to commit honest services fraud, admitting to receiving $38,000 in kickbacks from non-profits, including PFH2.

• Jon Woods, a former Arkansas state senator, was found guilty of participating in a kickback scheme that funneled state money to several organizations, including PFH2.

These fraudulent activities have had severe repercussions. PFH has been suspended as a Medicaid provider in Arkansas, affecting thousands of patients who rely on their services for mental health and substance abuse treatment.

The fallout from these scandals has prompted a broader crackdown on non-profit fraud in the region. Authorities are urging the public to report any suspicious activities and are implementing stricter oversight measures to prevent future abuses.

In addition there are laws, rules and conditions for operating a legal non-profit.

Key Steps for Non-Profits in Arkansas:

1. Incorporation:

   • Non-profits must file Articles of Incorporation with the Arkansas Secretary of State. This includes a filing fee and specific information about the organization1.

2. Annual Reporting:

   • Every year, non-profits must submit an annual report to the Secretary of State by August 1st. This report ensures that the organization remains in good standing.

3. Tax-Exempt Status:

   • To obtain federal tax-exempt status, non-profits must apply to the IRS using Form 1023 or Form 1023-EZ. Once approved, they must also file annual tax returns (Form 990) to maintain this status.

4. State Registration:

   • Non-profits that solicit donations must register with the Arkansas Attorney General’s office. This includes providing detailed financial information and ensuring transparency in fundraising activities.

5. Compliance with State Laws:

   • Non-profits must comply with the Arkansas Nonprofit Corporation Act, which includes regulations on governance, record-keeping, and financial reporting1.

6. Employment Regulations:

   • If a non-profit has employees, it must adhere to state and federal employment laws, including withholding taxes, providing workers’ compensation, and following labor regulations.

     
     

Non-profits who do not adhere the regulations should be closed down, but there are still a number that hold "good standing" status with the state of Arkansas that have not filed the proper documentation for as many as five years.

As investigations continue, the community remains hopeful that these efforts will restore integrity to the non-profit sector and ensure that resources are used to genuinely support those in need.