Outrage and an ongoing FBI investigation ensued after the discovery that about $100 million was missing from trust funds for disabled and injured people no longer able to earn a living. But the backlash could grow.
Taxpayers in many states may also have been victimized by Leo Govoni, the Clearwater businessman at the center of the investigation, according to the head of a California nonprofit appointed by federal court to oversee the depleted trust funds.
Will Lindahl, the executive director of the CPT Institute, told the Tampa Bay Times that two-thirds of the money that should have been set aside for medical treatment through Medicare was missing. He said he also believes funds left over after beneficiaries died were kept by Govoni instead of used to reimburse states for treatment paid by Medicaid.
Govoni, who founded and grew the Center for Special Needs Trust Administration, has been accused in federal bankruptcy court of orchestrating the siphoning of money from more than 1,500 medical trust funds as a loan. It was not repaid, forcing the St. Petersburg nonprofit into bankruptcy.
Lindahl, who has more than 26 years experience administering special needs trust funds, was granted access to the center’s accounts after his group was appointed by a federal judge. For more than two decades, he and Govoni were competitors, heading up two of the nation’s largest trust fund nonprofits.
“This makes me sick to my stomach,” he said. “I can’t believe this guy got away with this since 2009 — how the hell does that happen?”
The center oversaw more than 2,000 trusts when it filed for Chapter 11 bankruptcy in February. In most cases, the funds were set up after the awarding of damages to victims of accidents and medical malpractice and for large workers comp awards.
In cases where an award includes money for the future medical care for a person who is on disability or likely to be eligible for Medicare, the federal government recommends money be placed in a dedicated fund. The set-aside fund must be used up before the victim’s treatment can be claimed through the federal program.
Managing Medicare set-aside funds was a service offered by one of Govoni’s other companies, Lindahl said. It appears those funds were placed with a fake set-aside company.
“Many other (set-aside funds ) are missing,” Lindahl said.
The abuse of those type of funds is not surprising, said Charles David, a probate attorney with the Gainesville-based Florida Probate Law Group.
The law establishing the set asides was intended to protect Medicare but lacks an enforcement mechanism, he said.
“If nobody is asking for or looking for this money, some people will take advantage of that,” David said. “There’s no oversight that I’m aware of — there should be.”
Lindahl said he also has concerns that trust fund money leftover after a beneficiary dies was misappropriated.
For some trusts, leftover money goes to the named trust beneficiaries after any Medicaid liens have been paid. In others, the remains are shared between the state’s Medicaid agency and the nonprofit group that administered the trust.
Lindahl said that center staff he interviewed were not allowed to wind down trusts. Instead, that was handled by John Staunton, an elder law attorney who co-founded the center with Govoni.
The center managed trust funds for individuals in 40 states but Lindahl said he could find no records of repayments to any state Medicaid programs.
State’s Medicaid agencies and Medicare “got screwed,” he said.
Staunton, 72, graduated from Stetson University’s law school in 1997. He is a longtime business partner of Govoni’s with the pair co-owing several companies, state records show.
The university in 2008 named a suite housing its elder law center after the pair, who also paid for an endowment toward the cost of a faculty position teaching elder law. The suite has since been relocated and no longer bears their name.
Staunton is named as a defendant in two lawsuits filed in federal court on behalf of trust fund holders whose money is missing. The Florida Bar has an open investigation into Staunton, according to spokesperson Jennifer Krell Davis.
Telephone numbers listed for Staunton on his Florida Bar profile page and voter registration are no longer in service. He did not respond to multiple requests for comment sent to his email.
Daniel Nicholas, an attorney representing Staunton in the center’s Chapter 11 bankruptcy proceedings, said he could not comment on allegations he is unfamiliar with. He pointed out that Staunton resigned as a director of the center in 2009.
The trustee appointed to handle the winding down of the center recently asked a federal judge to approve a summary judgment against Govoni as the guarantor of the unpaid loan. Based on the conclusions by a forensic accountant, Govoni and his Boston Finance Group owe $120 million to the bankruptcy estate, the motion states.
Attorneys representing Govoni from the Tampa firm Trenam Law asked the court to accept his debt totaling about $30 million. Those attorneys then withdrew as his counsel a little more than a week ago citing “irreconcilable differences.”
The judge has yet to rule on the amount of the debt.
The CPT Institute is one of the largest non-profit trustees in the nation. Lindahl said his firm will do everything it can to help each trust fund holder and their families. It has waived setup fees for all 2,000 trusts and CPT support Counsel Kevin Urbatsch has recruited 40 volunteer attorneys to assist with the work of reviewing and moving trusts to the institute.
But Lindahl said his review of the accounts shows that the number of trusts that lost money is higher than the 1,500 originally reported in court records. He fears there will be little left for medical care and expenses for the disabled and injured people whose families fought for years to win settlements.
“These aren’t just people that are disabled, these are people unable to earn a living,” Lindahl said. “This is all they have and they were swindled by this guy.”