TAMPA — The man who for years managed the finances of a Hillsborough County program for the disabled said Wednesday that his boss knew they were diverting funds from their clients' Social Security payments to cover operating expenses.
Frank Pannullo, who was the chief financial officer for the now-defunct Hillsborough Association for Retarded Citizens, testified at the federal trial of the agency's former chief executive, Richard Lilliston, who is charged with conspiring to defraud the Social Security Administration.
Pannullo detailed for a jury how the program had persistent cash flow problems. In a discussion about operating costs in 2002, Lilliston instructed him to find a solution, he said.
"He told me to do what I had to do," Pannullo testified.
That was the impetus for the scheme that federal prosecutors say diverted more than $617,435 from residents' Social Security benefits to pay for the program's expenses. Most of the money, Pannullo said, went toward "keeping the lights on."
Pannullo pleaded guilty in federal court last year to his role in the scheme.
HARC, which was known in its later years as Hillsborough Achievement and Resource Centers, once operated group homes and community programs. Lilliston, its highest-ranking employee, was long credited with its success.
The agency also served as a representative payee for clients who received Social Security benefits. Each client had his or her own account. Each year, the agency was supposed to report what had been spent on each individual, along with the final balance, according to Pannullo's plea agreement.
If a client's accumulated savings topped $2,000, he or she was at risk of losing need-based Supplemental Security Income.
So HARC took the excess and put it in a pooled endowment account. That account, Pannullo said, was then used to cover operating expenses.
HARC staff had kept a spreadsheet tracking each client's contribution to the endowment fund, noting deposits and withdrawals. But in court Wednesday, Pannullo said the numbers were falsified.
When the Agency for Persons with Disabilities began asking questions about the endowment fund in 2009, Lilliston e-mailed Pannullo, instructing him to have another employee, Marsha Weisse, get the clients to sign "pool trust agreements." Jurors saw Lilliston's email Wednesday.
Those agreements were an effort to make the arrangement appear legal, Pannullo said.
Weisse also testified Wednesday, saying she approached individual clients, many of whom suffered from profound mental deficiencies, to get them to sign the paperwork.
"I showed them the document, and I knew they couldn't read it," Weisse said.
The residents would often sign the documents with just a scribble or a slash.
"I later said to Frank, 'This isn't going to hold up,' " Weisse said. She said she was told that the program's lawyers just needed the documents signed.
Afterward, she took the documents to Lilliston, who signed them, she testified.
Weisse, who was the program's controller and later CFO after Pannullo's 2011 departure, pleaded guilty to related charges, along with former client finance manager Sandra Shepherd. Shepherd was sentenced to five years of probation. Weisse is scheduled to be sentenced in June.
If convicted, Lilliston could face up to five years in prison.
He maintains he did nothing wrong. He told the Tampa Bay Times in 2015 that he established the endowment fund to hold excess money for future services, "like a 401(k)" for clients. He said he handed it over to Pannullo to operate.
Lilliston's attorney, Mark Rodriguez, attacked Pannullo's credibility, asking questions to get him to admit that he has lied in the past.
Part of Pannullo's plea agreement requires him to cooperate with the government. In return, he may be eligible for a lesser penalty when he is sentenced.
Rodriguez suggested that was a good motive to continue lying and to implicate his former boss.
Contact Dan Sullivan at firstname.lastname@example.org or (813) 226-3386. Follow @TimesDan.