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Richard Lilliston convicted in scheme to divert $683,599 from disabled clients of HARC

 
Richard Lilliston, former CEO of the Hillsborough Association for Retarded Citizens, could get up to five years in prison.
Richard Lilliston, former CEO of the Hillsborough Association for Retarded Citizens, could get up to five years in prison.
Published April 20, 2017

TAMPA — Richard Lilliston said he knew nothing about the financial misdeeds that occurred during his tenure as chief executive of the Hillsborough Association for Retarded Citizens.

He didn't know his chief accountant, Frank Pannullo, was diverting their disabled clients' Social Security deposits.

A federal jury didn't buy it.

On Wednesday, jurors convicted Lilliston of conspiring to defraud the Social Security Administration, a crime punishable by up to five years in prison. U.S. District Judge James D. Whittemore scheduled his sentencing for September.

The trial lasted seven days. During testimony Friday and Tuesday, Lilliston, 70, put much of the blame on Pannullo, also 70, for a scheme that prosecutors say diverted $683,599 in Social Security payments.

Lilliston said he hired Pannullo in 1998 to improve HARC's accounting practices. He said Pannullo had some bad habits.

"He had sort of a big shot kind of sense about himself," Lilliston said. "He was always kind of, you know, sort of one-upping people around him. So he needed somebody to watch him constantly. And I did that, but I wasn't there as much as I should have been, obviously."

In the early 2000s, Lilliston and Pannullo had a conversation about Social Security money accumulating in HARC client accounts, according to testimony. If individual savings topped $2,000, a client would be at risk of losing need-based Supplemental Security Income.

To prevent that from happening, Lilliston said he told Pannullo all Social Security funds had to either be spent on the client or returned. Lilliston said he believed the money was indeed being spent on the clients.

He said he never knew Pannullo was putting the extra money in an endowment account. The account was tapped to help pay operating expenses, which included, for three months, an $1,850-a-month car allowance for Lilliston.

Pannullo had testified that Lilliston was aware of the arrangement. When the Agency for Persons with Disabilities began asking questions in 2009, Lilliston, in an email, directed Pannullo and another employee to have clients sign "pooled trust agreements" to make the arrangement appear legal.

But Lilliston offered a different explanation. He said he wanted the trusts created in case clients' future Medicaid payments were cut, reducing their ability to pay for needed services.

"My bottom line was to help clients," he said.

HARC, known in later years as the Hillsborough Achievement and Resource Centers, once operated group homes and community programs for the mentally disabled. Lilliston, its chief executive from 1997 to 2011, was long credited with its successes.

They included expansion and renovation of group homes, along with construction of a $10 million facility for people with Alzheimer's disease and Down syndrome. At its peak, the agency served 500 disabled clients.

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Fundraising galas, drawing local philanthropists, tried to help with the bills. Despite successes, HARC was dogged by persistent cash flow problems.

Pannullo told the jury that Lilliston instructed him to do whatever was necessary to "keep the lights on."

Lilliston denied saying that.

Assistant U.S. Attorney Jay Trezevant told the jury that Lilliston knew exactly what assets the agency had.

In cross-examination, the prosecutor repeatedly asked about the 2009 email Lilliston sent to Pannullo, urging him to get all the clients signed up for the pooled trusts.

The HARC clients, many of whom had profound mental disabilities, signed back-dated legal documents authorizing their participation in the trusts.

Lilliston said he believed the clients would have understood what they were signing.

"That's absurd," Trezevant told the jury in closing arguments.

The prosecutor also asked Lilliston about a 2009 performance evaluation of Pannullo. In an accompanying email, Lilliston praised his efforts and said the evaluation was the best he'd ever written for an employee.

In hindsight, Lilliston said Pannullo's work performance was inconsistent, at best. "Some days, he was great," Lilliston said. "Some days, I could have killed him."

Pannullo pleaded guilty last year to his role in the scheme. Marsha Weisse, who was the program's controller and later CFO after Pannullo's 2010 departure, pleaded guilty to related charges, as did former client finance manager Sandra Shepherd.

Contact Dan Sullivan at dsullivan@tampabay.com or (813) 226-3386. Follow @TimesDan.