Mental Health Board gives up on $1.4M loan

CRYSTAL LAKE – The McHenry County Mental Health Board officially gave up hope of recouping any of the $1.4 million it loaned to a failed mental health agency.

But conversation could soon turn to whether it can get back any of the just under $1.1 million an audit alleges another shuttered agency improperly billed.

Board members on Tuesday instructed staff to write off the $1.4 million loan to Family Service and Community Mental Health Center, which collapsed last year. A September email from the receiver stated that "there will be no distribution to creditors," according to a staff memo.

But the board could decide to pursue restitution from The Advantage Group, a youth substance-abuse program that closed earlier this month. That talk, however, won't start until the board hires a permanent legal counsel, likely at its next meeting, Acting President Carrie Smith said.

"Truly the discussion was we need more time, and in particular we need time to have permanent legal counsel," Smith said Wednesday.

The Mental Health Board is almost entirely made up of new members in the wake of an ongoing County Board shakeup after years of allegations that it became a top-heavy bureaucracy that spends too much on itself at the expense of its mission to help fund social service agencies who work with the mentally ill and disabled.

Both Family Service and TAG closed because of financial hardship. Existing social service agencies – themselves dealing with years of state short-funding and chronically late state payments – are taking up the slack.

A 2012 audit of TAG identified a significant number of issues with its records, from billing for unapproved services and noncompliance with Medicaid regulations to using taxpayer money disbursed by the Mental Health Board in an inconsistent manner from its funding agreement.

The initial audit report recommended recouping the $1.08 million it alleged was improperly paid to TAG over a three-year period. The agency subsequently filed an unsuccessful federal lawsuit alleging that the Mental Health Board was trying to wipe it out in favor of preferred client agencies.

Several months after a judge dismissed the lawsuit, TAG approached the board – now almost completely different from the one that received the audit a year prior – and requested a $49,000 emergency appropriation to help keep it afloat. But TAG executive director Pat Owens abruptly and tearfully withdrew the request at the August meeting in which the board was poised to approve it.

It was revealed in September that TAG was privately asked to withdraw the request because of allegations that the agency likely violated its 501(c)3 tax-exempt status by endorsing county political candidates on its Facebook page and hosting a luncheon for Republican sheriff's candidate Bill Prim.

One of the reasons why the board lost longtime legal counsel Francis Gosser was over his opposition to the board's intent to float TAG the loan. New board members were actively seeking a new attorney over complaints that Gosser charged for unneeded services at a $250-an-hour rate set last year by the previous board.

The new board moved to fire Gosser after he sent members an unsolicited opinion advising against the TAG loan. Gosser submitted his resignation before the board's vote at the same meeting in which Owens withdrew TAG's funding request.

Board members were in the process of reaching out to TAG to try to settle the unresolved issues with the audit when the agency closed.

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