State reconsidering appointment of mental health director

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.

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.