By Pat Anson, PNN Editor
The Connecticut Attorney General’s office has opened an investigation into allegations of financial irregularities and embezzlement at the U.S. Pain Foundation, PNN has learned.
“I can confirm that our office has had contact with a representative from the U.S. Pain Foundation and that our office has opened an investigation into this matter. We’re unable to comment further,” said Jaclyn Severance, a spokesperson for Connecticut Attorney General George Jepsen.
U.S. Pain released a statement late Friday accusing former CEO Paul Gileno of misusing funds. Gileno resigned at the request of the non-profit’s board of directors in May and later sent an email to U.S. Pain leadership confessing to the crime.
“I am sad to say that I made some big mistakes over the past few years and took money from US Pain for my personal use. I make no excuses for this,” Gileno wrote.
Until last week no explanation was made to U.S. Pain’s members, volunteers or donors about the reasons behind Gileno’s resignation. The Connecticut-based non-profit has still not disclosed the amount of money stolen, when the thefts occurred, or if others were involved.
“We have been working diligently to rectify the situation. Steps that we’ve taken include alerting the appropriate legal authorities and cooperating fully in the investigation; seeking restitution of the misused funds; implementing a more robust system of checks and balances; and hiring a new interim chief financial officer, new counsel, and a new tax accountant,” U.S. Pain said.
PNN has confirmed the state Attorney General’s Office was recently contact by U.S. Pain, but lawyers there say the non-profit probably should have acted sooner.
“There is no requirement under the law to report embezzlement, but it is typically in their best interest to do so,” said Severance.
U.S. Pain was founded by Gileno in 2011 and has received several million dollars in mostly corporate donations to fund programs that raise awareness about chronic pain.
The Connecticut Department of Consumer Protection, which regulates charities in the state, recently opened a second investigation of U.S. Pain after its registration lapsed on December 1. Without an active registration, U.S. Pain cannot legally solicit charitable donations in Connecticut.
“They have not submitted renewal paperwork. So technically they’re not supposed to be soliciting in Connecticut,” said spokesperson Lora Rae Anderson. “They can’t make phone calls or put ads in Connecticut newspapers. They cannot actively solicit in the state.”
In addition to U.S. Pain’s legal problems, it is in danger of losing its tax-exempt status. The non-profit’s tax returns for 2016 and 2017 have not been filed and are delinquent. Under IRS rules, a non-profit that does not file returns for three consecutive years automatically loses its tax exemption. U.S. Pain’s 2015 tax return was filed in October 2017, over a year overdue.
“Because of the inaccurate and incomplete information provided by the former CEO, it has taken a significant amount of time to compile accurate books and records,” interm CEO and board chair Nicole Hemmenway said in an email to PNN last week.
Hemmenway has been a key member of U.S. Pain since its founding and sources say it is unlikely she was unaware of the financial irregularities that Gileno is accused of.
Tax returns open a rare window into how much money a non-profit has raised and how it was spent. Non-profits are not required by law to disclose who their donors are or the size of their donations, but their tax returns need to provide a detailed account of what was spent on salaries, travel, office supplies, accounting and other expenses. According to U.S. Pain’s 2015 tax return, Gileno was paid a salary of $403,000.