WRAL Investigates

State reconsidering appointment of mental health director

Posted May 20, 2010

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— State officials are reconsidering the appointment of a mental health advocate to a key position at the Department of Health and Human Services, one day after WRAL News uncovered tax issues at his current job.

Secretary of Health and Human Services Lanier Cansler on Tuesday named John Tote, longtime executive director of the Mental Health Association in North Carolina, as the next director of the Division of Mental Health, Developmental Disabilities and Substance Abuse Services. The current director, Leza Wainwright, plans to retire Sept. 1.

Mental Health Association tax liens Mental health advocate criticizes DHHS for waffling on appointment

On Wednesday, WRAL News uncovered almost $1.5 million in federal tax liens against the association that Tote led for failure to pay employment taxes as far back as 2006. More than $617,000 of the total was assessed Monday.

Neither the IRS nor the state Department of Revenue could say if any of that money has been paid since the liens were filed.

DHHS officials said Wednesday that they didn't know anything about the tax issue before Tote's appointment, but Cansler acknowledged Thursday that he knew about some of the tax liens.

Mental health advocates said the tax troubles within Tote's organization were well-known among other groups serving people with mental illnesses or disabilities.

"I'm surprised the Governor's Office wouldn't have known that," said Dave Richard, executive director of Arc of North Carolina.

Gov. Beverly Perdue said she was in the dark about the matter, and she is reviewing Tote's appointment with Cansler to determine how to proceed.

"Obviously, I don't know everything about every single employee that's suggested to be hired," Perdue said.

"I just happen to be one of those citizens who believe we all have to pay our taxes," she said. "There are many people in North Carolina who are struggling to do just that, and we ought to hold that as a rule for everybody, not just some of the people."

Tote couldn't be reached for comment.

Mental Health Association officials said they never tried to hide their tax troubles, noting that they went to the IRS to report the non-payment of employment taxes.

Richard said he doesn't understand why DHHS has a problem with Tote's appointment when Cansler was already aware about the Mental Health Association's tax troubles.

"If having that on his record was something that could have kept him out of that job, I think they should have told him that upfront and certainly not gone up to this point where (the state job) was offered," he said.

Mental Health Association officials said the state has been slow to reimburse for services in recent years – reimbursements have taken up to six months in some cases. With recent state budget cuts on top of that, officials said, the association's financial troubles were difficult to manage.

Tote's salary almost doubled between 2001 and 2007, from $94,000 to $181,000, and he even received raises in years when the association was in the red, according to tax records.

"Whatever the outcome of this is, John Tote has been and is a good leader for mental health," Perdue said.

46 Comments

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  • stevesmithnc123 May 26, 11:30 a.m.

    John this way to the unemployment line

  • employeenc May 21, 4:57 p.m.

    What do you mean they don't know if any money has been paid? No wonder refunds are behind. They don't know if they have any money.

  • mwagner52 May 21, 3:05 p.m.

    I agree with animal lover and have to say, I know for a fact there are companies that provide mental health services solely to our underserved citizens but still pay their employment taxes. Oh, of course the CEO doesn't get a raise, or even a pay check, until all employees and other monthly expenses have been paid. MHA is a large company and I am sure there are some good caring employees and it was their tax witholding that are where???? Remember this is a non profit organization who is exempt from paying income taxes, so when a short fall arises the tax money witheld from mployees checks are used to pay the CEO.GET REAL!!! NO EXCUSE should be acceptable. And to dsvet4u, I am quite aware that the state privatized Mental Health and no the problem is not getting paid by the state, yes there are problems with state funding but this problem is greed and nacissism. Please don't try to glorify this amoral,money hungry guy. It is ridiculous.

  • UNCfuturealumi May 21, 2:26 p.m.

    KUDOS to Animal Lover. I like you way of expressing this

  • dsvet4u May 21, 12:43 p.m.

    Group if you really knew what you were talking about you would know that the state privitized the MH system and pays private providers to do this work, thus the problem getting paid by the state.The state does NO MH work, so if non-profits like MHA-NC were not here these people would not get served.

  • CestLaVie May 21, 12:40 p.m.

    dsvet: We are not faulting the work & services that perhaps MHA did or is doing. I'm sure many good people who need help are gettting it, or at least they should be.

    We ARE faulting the "longtime executive director" for his role, or lack thereof, in this matter. Been there so long he got complacent....after his power trip took over? It sometimes goes with the territory of "big head"!

    Have you considered the fact that the State might have a big problem with some of the services provided or how they were provided or perhaps they were overbilled or not done properly?

    Fraudulent claims to govt entities are rampant, remember? Public & mental health services seem to be especially freely overbilled. When oversight is lacking, problems can arise.

    Sorry, but when someone in charge takes raises when an organization is in trouble, there's something wrong, either financially or ethically or morally. Methinks immense mis-management here. And now, he's trying to look good.

  • GroupOfPricklyPears May 21, 12:29 p.m.

    Last I read non-profits depending on the state for funding costs tax payers approximately $600,000,000 a year. It is my understanding that many pay high salaries - one that I am aware of paid their CEO/Executive Director in excess of $200,000 a year. Some state supported non-profits were formed decades ago to provide services that the state did not provide; however, times have changed and the state stepped up to provide the same services. There is considerable redundancy going on and it's very costly and totally unnecessary. Interestingly, no one in a position of leadership in this state seems compentent enough or inclined to stop the dependency and so the financial drain continues, unchecked and Tote appears to be blaming everyone else for his inability to manage his organization within its means. Should there be some new state laws and regulations governing the by-laws and accountability of state supported non-profits in NC? You would think after 30 years of state support, som

  • dsvet4u May 21, 12:20 p.m.

    You know if all this was as simple as you guys say it is, why don't you come try to lead a non-profit such as MHA-NC?
    This organization does so much work here in the state of NC, that if it were not here, there would be thousands of mental health patients that would not get served.
    How can any one run a business if it is not getting paid the money they are owed by the person who went into the contract with. The sate has time and time again withheld money or given some of what is owed for services that MHA provided and never got paid for. What is MHA supposed to do? You can not sue the state for that money. The vast majority of people MHA serves are low income people on disability.
    You can pass judgement on John Tote for making some mistakes, but then you also have to pass judgement on the state for not paying its bills also.

  • elterago May 21, 11:38 a.m.

    Well put Animal Lover..... he failed to lead indeed except for leading money into his pocket. Where is 1.5 mil in unpaid Federal taxes????

  • CestLaVie May 21, 10:11 a.m.

    I just finished reading about this in the N&O. It says Tote attributed the financial problems due to State funding cuts. While that may be partially true, the reason for the tax liens is due to unpaid Federal withholding taxes.

    An HONEST group/business sets withheld payroll taxes aside as they are withheld from an employee's paycheck. Once accumulated, the money should be automatically there to pass payment of same on to NCDR and the Feds. Unless of course the money is spent elsewhere. THAT is the crux of the problem. So Tote's organization used the money for other things, which certainly seems to include HIS pay raises when they were unwarranted at various times.

    As a MHA director, did it fall within his "leadership" to be sure payroll taxes were paid promptly, in addition to his salary & bennies? If so, then he failed miserably to LEAD. How many of us know people like this where we work.......people who do ANYTHING BUT lead?????? Probably so.

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