WRAL Investigates

Lawsuit claims mental health execs misused money

Posted April 22, 2011

— A year after financial troubles forced the Mental Health Association of North Carolina to close and led its former executive to withdraw from a state appointment, a lawsuit claims that the official misused money from the organization's health plan.

Donna Hoffer-McCoy, a former Mental Health Association employee, alleges in the federal suit that former executive director John Tote and Larry Lackey, the group's former financial chief, spent money on themselves, leaving the group's health plan unfunded and forcing former workers to pay for medical expenses that should have been covered by insurance.

The Mental Health Association shut down last July after it lost its accreditation and was unable to line up enough credit to continue providing service.

The group once billed itself as the oldest and largest nonprofit serving people with mental illness in North Carolina. It had 27 affiliates statewide to provide resources for consumers and professionals in the treatment and prevention of mental illness.

Almost $1.5 million in federal tax liens were filed against the organization in recent years for failure to pay employee withholding taxes.

Association officials blamed their financial troubles on state budget cuts and delays in being reimbursed by the state for mental health services. Reimbursements sometimes took up to six months, they said.

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

More than $617,000 of the tax liens was assessed last May, one day before Secretary of Health and Human Services Lanier Cansler named Tote to lead the state Division of Mental Health, Developmental Disabilities and Substance Abuse Services.

Cansler said at the time that he knew about some of the tax liens when he offered Tote the state job. But the publicity about the tax troubles Tote was leaving behind at the nonprofit prompted state officials to reconsider the appointment.

Tote withdrew his name from consideration days later.


This story is closed for comments.

Oldest First
View all
  • shergero Apr 25, 2011

    Good Luck!! This is Criminal.

  • mcoonan Apr 22, 2011

    DHHS is a hotbed of cronyism at every level. Yes, its a lot of who you know, but it's also about whether you are`willing to go along with the corruption. If you are, you're in. Doesn't matter if you don't know the job. It's OK if you haven't even been employed by the State for 5 years, because you can still be bumped ahead of long-time employees who have poured heart & soul into the job. They are left behind in favor of people who came here from other states who call us hillbillies and think we are all stupid. Something's wrong with this picture. Cansler knew Tote had run MHA into the ground but was stll willing to hire him. He would have gotten away with it if the media hadn't exposed it. And the more they talk about transparency the more behind closed doors conversations are happening. What a farce.

  • Qwerty27807 Apr 22, 2011

    Amazing how some folks in the government (and semi-private agencies) always fail their way into a promotion.

  • mandblang Apr 22, 2011

    I am one of those former MHA employees who ended up owing almost $5,000 in medical bills because of testing and procedures done during the time the company was not funding the health care plan. Wish I had known I was no longer insured, I would not have made those doctor visits. Sign me up for the lawsuit

  • spentrounds-full auto Apr 22, 2011

    Lanier Cansler is a long, long time political appointee of the democratic run state government. He has been appointed to numerous positions in different agencies within NC state government. He needs to go. He truly is a "Good Ole Boy"

  • commonsensical Apr 22, 2011

    Remember - nonprofit doesn't mean that the managers and directors don't pad their pockets in order to remain non-profit.

  • paulinnc Apr 22, 2011

    I used to audit Not-For-Profit mental health providers in NYS and this was par for the course - a bunch of organizations largely run by greedy executives who ONLY got into this racket to fill their pockets with State money at the expense of those in need and the underpaid employees trying to do good work and serve at-risk populations. TNorth Carolina needs to deploy WAY more auditors to chase down, shut down and prosecute this type of abuse.

  • luckn4u2 Apr 22, 2011

    The state don't hire on what you know,it's who you know..That has been going on for years..It just take's years for the corruption to come out, and it's not the state that investigates it's own, it's the feds..

  • mulecitybabe Apr 22, 2011

    Cansler, protecting his cronies again.

  • ratherbnwpb Apr 22, 2011

    Why in the world would the state consider hiring this guy?

    At the time the lien was against the organization, not him.