Millions of dollars disappeared from the staff retirement account of a Palm Beach island nonprofit organization that runs a preschool for kids with disabilities. Now an adviser and former board member faces federal fraud charges for allegedly stealing the money in a scheme which went undetected for more than two decades.
Founded in the 1940's, the Rehabilitation Center for Children and Adults provides injury rehab services, as well as occupational therapy, speech training, and support for people with disabilities. The center has earned praise from locals for helping elderly patients bounce back from surgery and teaching kids early-learning skills in the special needs preschool program.
Former board member William H. Minor Jr. is facing charges that he secretly siphoned off the nonprofit organization's funds for 25 years while working as its pension manager. Prosecutors say Minor made fraudulent orders for pension checks and then diverted the proceeds to himself. They say he drained the Transamerica pension account of at least $2 million from 1991 until 2016. Minor is scheduled for a Sept. 20 plea hearing on a mail-fraud count.
The nonprofit organization's suspicions were finally aroused when staffers found that its pension tax reports hadn't been filed for four years. They contacted Transamerica in mid-2016 and discovered the organization only had $1,200 in its retirement account, and that its staff's life insurance policies had lapsed. The disappearance of the money was reported to the FBI and Town of Palm Beach Police Department shortly after the revelation.
"The investigation revealed an elaborate scheme of alleged fraudulent activities committed by William Minor. We cooperated fully with the Palm Beach Police Department, the FBI, and the U.S. Attorney’s Office for the Southern District of Florida," the center's president, Cater Randolph, says.
Minor's alleged MO was straightforward: Prosecutors say he would first make fraudulent requests for checks from the plan issuer, Transamerica, supposedly for pension payouts to staff. Then he'd divert the money for his own use, instead of forwarding it to the plan-holders named on the checks, according to the charging document.
A director for the organization often signed off on the bogus pension-payout checks "based on [Minor's] false representations" that he would forward the money to the plan-holders, prosecutors say. In other instances, Minor allegedly forged the director's signature outright. After he opened an account at CBC National Bank in 2011 under a generic trustee name which matched the pension checks, he was able to altogether sidestep the need for the director's sign-off on the checks, prosecutors claim.
"Minor deposited approximately 48 Transamerica checks into the CBC account but never issued any checks to the former employees... Instead, Minor used the monies in the CBC account to benefit himself and his family," the charging doc reads.
The Rehabilitation Center also has a civil lawsuit pending against Transamerica, alleging that the company, which issued the center's life insurance and pension plan, failed to take action when signs surfaced that Minor was diverting the retirement money. Given that there were only about 30 participants in the plan, the lawsuit claims, Transamerica should have realized Minor was sending a suspiciously high number of requests for lump sum pension payments. The account balance was "totally depleted" on a constant basis, despite the center sending $250,000 annually, the lawsuit alleges.
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According to the suit, Minor was allowed to sell and manage Transamerica products despite having been accused of misconduct by another organization for which he worked in the early 1990's. The Rehabilitation Center cites a 1994 civil claim in which South County Mental Health Employee Pension accused Minor of churning its investments and insurance policies so he could collect inflated commission. That case was settled by financial firm Jefferson Pilot, according to the court documents
The Rehabilitation Center for Children and Adults tells New Times it is in the final stage of restoring its employees' pensions, which were allegedly wiped out in Minor's latest scheme.
"Our board took several immediate steps to add... layers of security to further tighten financial controls at the organization in order to prevent any future malfeasance to the extent possible," Randolph says. "We are now in the process of seeking reimbursement from Transamerica and from our insurance carrier." He adds, "the funds to reinstate the plan fully are escrowed and earmarked," and that the organization is awaiting IRS approval.
Minor's public defender has not responded to a request for comment. Minor served as a volunteer member on the Rehabilitation Center's board since 1973 and managed its pension since 1978.