By Pat Anson, PNN Editor
The founder and former CEO of the U.S. Pain Foundation has been sentenced to a year in federal prison for embezzling $1.5 million from the Connecticut-based charity and failing to report the income on his tax returns.
U.S. District Judge Victor Bolden sentenced Paul Gileno to 12 months and one day of imprisonment, followed by two years of supervised release. Gileno pleaded guilty to wire fraud and tax evasion in June.
The 47-year old Gileno is also required to pay full restitution to the charity and the Internal Revenue Service, as well as tax penalties and interest.
"By engaging in wire fraud and tax fraud, the defendant committed very serious crimes over the course of several years,” U.S. Attorney John Durham said in court documents.
“As the Court is well aware, tax fraud undermines the public’s confidence in the tax system and relies on taxpayers to correctly report all taxable income. As to the wire fraud offense, the defendant stole money from his employer for his own personal gain. As such, the defendant’s conduct is very serious."
Gileno faced up to 25 years in prison, but as part of his plea agreement prosecutors agreed to ask for a lesser sentence. In a sentencing memo, prosecutors said Gileno was in “relatively good physical and mental health” and was a hard worker committed to his family.
"I cannot even express how sorry I am for what have done, I made mistakes, I screwed up majorly, I mismanaged, I was careless and I took money that was not mine, I used it for personal use and I was selfish," Gileno wrote in a letter to the judge. "I took the money and, in my mind, justified it by saying to myself I deserved it at the time and US Pain had it. I justified it in multiple ways."
Gileno's defense attorney also presented numerous testimonies from pain patients and advocates about the help they received from Gileno and his work in patient advocacy.
Gileno will report to prison on January 6, 2020. Until then he is free on bond.
Fraud Went Undetected for Three Years
The money embezzled by Gileno was used to pay his mortgage, car payments, loans to his brothers, and a visit to Universal Studios in Orlando, Florida. The misuse of funds allegedly went undetected for three years.
“I still find it difficult to believe that nobody else who’d been in upper management of the foundation for several years knew anything regarding the going out and coming in of money/funds,” former U.S. Pain board member Suzanne Stewart recently wrote in her blog. Stewart resigned from the board last year because she was concerned about how the charity was being run.
According to an audit and U.S. Pain’s tax returns, Gileno misappropriated over $2 million from the charity from 2016 to 2018. Nicole Hemmenway, the current acting CEO, was vice-president and board chair at the time. Two other longtime board members, Wendy Foster and Ellen Lennox Smith, still serve as directors. And Lori Monarca remains as Executive Office Manager, according to U.S. Pain’s website.
Since Gileno’s resignation, U.S. Pain says it has taken steps to ensure there was more internal control and financial oversight of its expenses and cash flows.
According to U.S. Pain’s 2018 tax return (the organization’s 2016 and 2017 returns were delinquent and filed late), the charity spent over $1.2 million last year on salaries, employee benefits, lawyers, accountants, tax penalties and business losses. That means less than half of the $2.1 million raised by the charity was spent on programs and services for the pain community.
Earlier this month, U.S. Pain announced the appointment of Shawn Dickens to its board of directors, filling the seat vacated by Suzanne Stewart nearly a year earlier. Dickens is the first U.S. Pain board member who was not appointed by Gileno.