By Pat Anson, PNN Editor
The U.S. Pain Foundation, which is under investigation for financial irregularities and the misuse of funds by its former CEO, has stopped soliciting donations.
In a statement posted on U.S. Pain’s website, interim CEO Nicole Hemmenway said the Connecticut-based non-profit has “ceased soliciting funds.” For many charities this is a key time of year for fundraising, but as PNN has reported, U.S. Pain’s registration with the Connecticut Department of Consumer Protection, which regulates charities in the state, has expired. Without an active registration, U.S. Pain cannot legally solicit donations in Connecticut.
(Update: U.S. Pain’s charitable solicitation registration was renewed by the Connecticut Department of Consumer Protection on January 4, 2019)
In her statement, Hemmenway said U.S. Pain would renew its registration once its delinquent tax returns – known as 990 Returns – for 2016 and 2017 are filed. She blamed former CEO Paul Gileno for the long delay in filing them.
“The delay in filing the 2016 and 2017 Returns can be attributed to inaccurate and incomplete financial records maintained by the former CEO. The delayed preparation of the 990 Returns in turn delayed the renewal of our charitable solicitation registration in the state of Connecticut, which expired as of November 30,” she said.
“We are cooperating with the Connecticut Department of Consumer Protection, which has not opened a formal investigation into U.S. Pain. Once the 990 Returns are available, we anticipate the registration will be renewed. In the interim, we have ceased soliciting funds. In addition to working with the Department of Consumer Protection, we initiated a meeting regarding the former CEO’s actions with the Office of the Connecticut Attorney General.”
To be clear, Hemmenway and U.S. Pain’s board of directors did not contact Connecticut Attorney General George Jepsen’s office until this month, when they became aware that PNN was planning to publish stories about the foundation’s delinquent tax returns and other questionable activities.
Hemmenway and the board have been aware of Gileno’s alleged embezzlement for some time. An internal audit found evidence of “financial irregularities” and possible criminal acts several months ago. The board requested and received Gileno’s resignation on May 29.
On September 5th, Gileno confessed in an email that he “took money from US Pain for my personal use.” The email was sent to over a dozen key leaders at U.S. Pain, including board members Ellen Lenox Smith, Wendy Foster and Suzanne Stewart. Stewart resigned from the board soon afterward, saying she felt “kept in the dark about many things.”
Only recently has any of this been brought to the attention of law enforcement, or U.S. Pain’s members, volunteers and donors.
(Update: In a December 20 press release, U.S. Pain said the financial irregularities were discovered in April and that “appropriate authorities” were notified in early June. Hemmenway has not responded to a request to identify who or what agency was contacted. PNN has been unable to verify any contact between U.S. Pain and law enforcement until early December.)
“It does seem like they will blame it all on me which makes me sad but I guess their legal counsel thought it was the best route for them to take no responsibility and to ignore all of the good I have done and the lives I have changed,” Gileno said in an email to PNN.
“I guess they don’t want to discuss that they all were part of US Pain for over 8 years and Nicole was Vice President since we changed from CT Pain Foundation to US Pain Foundation in January 2011. I took responsibility for any mistakes and worked to rectify it ASAP so the organization I created and founded could continue to help others. I did not hide this and it seems they only brought this out because you discovered it and pressed them.”
PNN has asked Hemmenway if the audit found evidence that others besides Gileno misused donated funds. She has not responded to that and other questions, such as how much money was misappropriated, what it was spent on, and for how long the misuse occurred.
“We did not previously comment on these matters on the advice of counsel, due to the ongoing investigation,” Hemmenway said in her statement.
U.S. Senator Wants Audit Details
U.S. Senator Ron Wyden (D-OR), the ranking member of the Senate Finance Committee, also wants to know if others are involved.
In a letter sent to Hemmenway yesterday, Wyden asked for a copy of the audit and a detailed accounting of whether “any other employees, contractors, board members, volunteers or people otherwise associated with the foundation (have) been implicated in the misuse of funds.”
Wyden also asked for an explanation of why U.S. Pain’s membership was grossly inflated and how a $2.5 million donation from Insys Therapeutics, a controversial drug maker under criminal investigation, was spent on a prescription co-pay program called Gain Against Pain. As PNN has reported, Gileno and Hemmenway — who is board chair — disagree on whether the board even authorized the co-pay program.
“There are conflicting accounts of when the foundation’s board of directors was made aware of Gain Against Pain. Please clarify when the foundation’s board learned of the program’s existence, and when it learned of funding from Insys,” Wyden asked. “Were there any conditions connected to any of the donations from Insys to the foundation or the Gain Against Pain program?”
As Stat News has reported, Wyden and other senators have questioned the relationship that Insys and other drug makers have with patient advocacy groups, saying their donations present a conflict of interest. Over the years healthcare companies have donated several million dollars to U.S. Pain.
In a letter sent yesterday to Health and Human Services Secretary Alex Azar, Wyden suggested that it may be inappropriate for Cindy Steinberg, U.S. Pain’s National Director of Policy and Advocacy, to continue serving on a federal pain management advisory board because of “the legal and financial control issues faced by the U.S. Pain Foundation.”
As PNN has reported, Wyden himself has accepted donations from industries that he helps regulate. According to OpenSecrets, Wyden has received over $2.5 million in campaign donations over the last five years from individuals or PACs affiliated with healthcare and insurance companies.