Guest Post by Mara Zebest
Leo Villani was supposed to be a $46,000-a-year financial analyst working out of an office for the University of Massachusetts Medical School. After the UMass worker died in a car crash, it was discovered that Villani set up a dummy corporation and diverted state funds for years—stealing nearly $3.4 million from payments intended for the state Medicaid insurance program.
The Boston Globe reports the following:
He was a $46,000-a-year financial analyst in an obscure office of the University of Massachusetts Medical School who somehow managed to drive a Porsche, collect Salvador Dali paintings, and build a palatial home for himself. When people asked about his sudden, showy affluence, Leo Villani would explain that he had inherited money.
But it turns out that Villani came into his wealth quite another way: He stole it, quietly siphoning off nearly $3.4 million from payments intended for the state Medicaid insurance program over the past five years, an internal investigation has found. It may be the biggest theft by a state employee in more than a decade.
Officials at the Worcester medical school discovered the alleged scam only after Villani died in a one-vehicle accident in late December and a review of his work found discrepancies in the account where he was supposed to deposit checks for the Medicaid program, called MassHealth. They eventually learned that Villani had set up a dummy corporation to which he had been diverting state funds for years.
But the fact that the alleged theft went on for so long without being detected is raising troubling questions about how well UMass Medical safeguards its vast public resources. Villani’s office, part of the school’s Commonwealth Medicine division in Shrewsbury that provides consulting services, collected more than $500 million on behalf of MassHealth over the past decade. [...]
So far, one Commonwealth Medicine supervisor has been dismissed while several other workers have been disciplined, and the medical school has called in an outside auditor to figure out what went wrong. Not since employees of former state treasurer Joe Malone allegedly stole $9.4 million in the 1990s has there been such a large alleged theft of public resources by state employees.
But a prominent watchdog said that MassHealth, which provides insurance for the poor and nursing home residents, shares in the blame because it hired Commonwealth Medicine to do its collection work without a competitive bid.
Gregory Sullivan, who served as the state’s inspector general for 10 years until last fall, said one of many debt collection companies might have done a better job of protecting the money.
“A legitimate open competitive bidding process would have protected the public against this kind of theft,” said Sullivan, who has raised concerns about Commonwealth Medicine’s cozy relationship with MassHealth. Four of the top eight leaders at Commonwealth Medicine formerly worked for MassHealth, according to their online biographies.
“A contract like this should have been opened to . . . competitors who could have provided security and double and triple checks against theft,” said Sullivan, now research director at Pioneer Institute, a nonprofit policy think tank.
A person with direct knowledge of Commonwealth Medicine’s collection techniques said the agency’s methods lag behind private asset recovery companies that have moved away from paper checks to electronic payments and meticulously separate the jobs of handling the money and accounting for it.
However, a MassHealth spokesman defended the no-bid contract with Commonwealth Medicine, saying it was an example of cooperation between two parts of state government that is “in accordance with state law.” State officials also say they hope to recover some of the stolen money from Villani’s widow. [...]