By Terrence McCoy
By Scott Fishman
By Deirdra Funcheon
By Allie Conti
By New Times Staff
By Ryan Pfeffer
By Deirdra Funcheon
By Kyle Swenson
The price per pint not only pays for the expensive separating and testing processes but also yields the blood banks an impressive profit. Last year, South Florida Blood Banks made $1.36 million, and Community Blood Centers reported more than $3 million left at year's end. Charities can't legally make money, so blood bank officials say the extra cash will be used to construct processing plants, buy bloodmobiles, and pay staff salaries.
The profits have also allowed the blood banks to give top executives massive raises. John Flynn, who made $124,000 in 1996 to head South Florida Blood Banks, now earns more than double that: $279,000 a year. Rouault's salary at Community Blood Centers jumped 30 percent, from $215,000 in 1996 to $280,000 this year.
The profits have also allowed South Florida Blood Banks to pay its volunteer board of directors consulting fees and salaries totaling at least $312,000. A decade ago, board President Douglas Johansen received $36,000 for serving as a consultant, and the West Palm company paid Admiralty Bank, which Johansen founded, $121,000 to lease computers. Similarly, Flynn paid his brother, Howard, $30,000 to develop a computer program to help the blood bank conform to government regulations. At the time, the firm also had a staff computer technician making $118,000 a year.
Board members say they're no longer being paid for their services. The blood bank in 1993 announced that it had passed rules forbidding such payments. But Rouault and others at Community claim its rival still pays its board -- while Community has never recompensed its directors for their time. Curt Lyman, a financial consultant who joined the South Florida Blood Banks board a year ago, points out that his firm's accusers have something to gain by criticizing. "This board of directors is not receiving any compensation for the job that it does," Lyman says. "We do this to serve the community."
One member of the South Florida Blood Banks board, Laura South, is also listed in state records as a board member of a for-profit corporation called South Florida Blood Banks Services Inc. Speaking from her office as executive director of Moroso Motorsports Park in West Palm Beach, South said in October that she wasn't aware of the listing. Obviously surprised by the fact, South said she would check into it. But in the ensuing weeks, she did not return several phone calls from New Times.
South Florida Blood Banks has one board that oversees its main corporation and another for its foundation, or fund-raising arm. Last year, two members of those boards, Philip Arvidson and Maria Ornelas, also served on the board of the Pheonix Foundation for Children. Some time last year, they convinced their colleagues at the blood bank to donate $50,000 to that charity. Pheonix executive Tom Abrams conducted a Ponzi scheme to scam at least $19 million in charity donations and investments. Abrams is now serving a 25-year federal prison sentence. Ornelas couldn't be reached for comment, and Arvidson, a former PepsiCo executive, didn't return phone calls. After the FBI raided the Pheonix offices in West Palm Beach in October of last year, Arvidson told the Palm Beach Post: "I know the [Pheonix] board is being run right, and everything we collect is going back to the kids."
Furthermore, South Florida Blood Banks has channeled at least $2.3 million into private companies associated with Flynn, according to state records. One of the firms, the Association of Independent Blood Centers, works as a purchasing agent for a group of blood banks. Flynn serves as CEO of that company, which contributes one-fifth of his salary. Another company operating as a for-profit corporation serves as landlord for property owned by South Florida Blood Banks, board member Lyman said, adding that he couldn't recall that company's name. But audits of South Florida Blood Banks, which are supposed to keep track of the charity's money, don't document the use of cash paid to the corporations or their finances. Apparently, not even members of the South Florida Blood Banks board know what happens to the money paid to these corporations. Says Lyman: "I was under the impression that those companies were part of our audit."
Lyman's comments came during an October meeting with New Times.However, South Florida Blood Banks' initial response to questions from this newspaper was an October 14 e-mail from spokeswoman Kristina Krueger that said the blood bank had "decided to not provide interviews." After New Timesbegan contacting board members and employees, Krueger wrote again October 22 that she was "concerned and disappointed by the questions you are raising about South Florida Blood Banks." She agreed to meet to discuss the questions with board member Lyman and Rachele Scholes, a media relations specialist with Newz2use of West Palm Beach. The three provided the blood bank's official response.
Flynn does not respond to interview requests from the press. Lyman says the president and CEO is too busy running the blood bank. Instead, his only words printed in local newspapers in recent years come from a lawsuit filed in September by former employees accusing him of discrimination. "Forget all this nonprofit stuff," he said at the meeting, according to court papers. "Show me the blood, and I'll show you the money."