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The IRS "wanted to leave the agency intact, and they felt that if Susan was to remain there, she would have to be tightly controlled," says Ploutz.
The agreement placed a dollar figure on Telli's wrongdoing. She was ordered to repay $15,000 to Hospice Care as part of the agreement. Telli, who makes more than $100,000 in salary and benefits annually, also had to pay the federal government $4442 in tax, penalties, and interest on the $15,000 as part of the settlement.
The president of the Hospice Care board at the time of the IRS audit, Jonathan Teeter, says Telli was kept at the hospice because she was invaluable to it and he feared that if she were fired, Hospice Care would go belly-up. Her networking skills in the "political and business arenas" were crucial to Hospice Care's success, he says.
"She, to use an expression, 'worked the room very well,'" Teeter says. "She could get Governor Chiles on the phone, or any number of political heavyweights for that matter. Buddy MacKay is another one. If Susan would have departed as a result [of the IRS probe], the organization would have ceased to exist within 18 to 24 months."
As for Telli's financial improprieties, Teeter says: "At no time did I ever believe or suspect there was any malice or aforethought or criminal intent involved." He adds that he can't explain some of the expenditures, but writes them off as poor judgment.
On June 12, 1996, the IRS and Hospice Care met to hammer out particulars of the agreement. In attendance were board members Teeter and Marti Mehallis, and Gent, Ploutz, and hospice comptroller John Harkins. Representing the IRS was Agent Judith Stark. Also present were accountants Tom Carpenter and Brian Pinnell, of Keefe, McCullough & Co.
The financial structure of the hospice was revamped. An audit committee would be formed to review agency finances each year. Strict controls were put on purchase orders, credit cards, and the hospice checkbook. All future travel had to be approved by Ploutz and Gent, except in the case of Telli. Her travel would have to be approved by the entire board of directors. Bonuses were outlawed. A good deal of the meeting dealt with Telli. According to Gent's notes taken at the meeting: "Susan Telli:
*Will not have ability to sign checks.
*Will not have ability to approve expenses.
*Will not have any responsibility for day-to-day operations of the agency.
*Will not have ability to fire or hire staff.
*Will have only one direct [subordinate] which is her administrative assistant."
The IRS, according to Gent's notes on the meeting, was very clear about what would happen if the rules weren't followed: "If and when the IRS returns for a future audit, if any one of these requirements [is] not being met, the agency will lose its tax-exempt status."
Telli's job title was changed to executive director -- which Ploutz says was deemed more appropriate than chief executive officer for a nonprofit hospice -- and her job description was rewritten. Her new role was to "develop, coordinate, and direct public relations activities for Hospice Care."
The written agreement was signed by Hospice Care board member Roland Molinet on September 24, 1997. The IRS included a clause noting that Hospice Care "agrees that no public statement will be made with respect to this Closing Agreement... without prior approval of the Internal Revenue Service." The pact is still secret, as far as the IRS and the hospice are concerned. "We can't verify it," said IRS spokesman Dom LaPonzina.
Skiff says he'd "love to talk about it" but can't. He says he issued the order that no one at the hospice speak to New Times "simply because there would be a breach of our agreement with the IRS."
But according to most of the high-ranking employees who have resigned or been dismissed from Hospice Care, Telli and Skiff are violating the spirit of the IRS agreement, if not the letter. Ploutz and Gent also have documentation supporting their contention that Telli has broken the agreement outright on a few occasions.
The management staff of Hospice Care has been gutted in the past six months. Just about everyone with intimate knowledge of the IRS agreement is gone. And that leaves Telli -- who both Ploutz and Gent say is intent on regaining her old power -- with little to stand in her way.
Most insiders trace the purge of employees to the departure of Teeter, who left in February of this year for a new job in California. Teeter was widely regarded as highly diligent in adhering to the IRS agreement and commanded a great deal of respect from other board members. "Most assuredly, unequivocally, I felt a duty to uphold the agreement," Teeter says. When it came to Telli getting her former powers back, Teeter says, "She knew and understood it wasn't going to be permitted."
But Telli, say several former staffers, simply refused to obey the rules handed down by the IRS. In July 1996, for instance, Telli signed a contract with Imperial Point Medical Center, which both Gent and Ploutz considered a direct violation of the IRS mandate that she not authorize hospice money to be spent.