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Justice News

Department of Justice
U.S. Attorney’s Office
Northern District of Alabama

Friday, October 14, 2016

Former Non-Profit Health Clinics CEO Sentenced to 18 Years for Funneling Millions in Grant Money to Private Companies

BIRMINGHAM – A federal judge today sentenced the former chief executive of two non-profit health clinics for the poor and homeless to 18 years in prison for funneling millions in federal grant money to private companies he formed to contract with the clinics. U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Roger C. Stanton, Internal Revenue Service-Criminal Investigation Special Agent in Charge Veronica Hyman-Pillot, and U.S. Department of Health and Human Services, Office of Inspector General, Special Agent in Charge Derrick L. Jackson announced the sentence.

U.S. District Judge Barbara Jacobs Rothstein sentenced JONATHAN WADE DUNNING, 53, of Hoover, for conspiracy, bank fraud, wire fraud and money laundering. The judge ordered Dunning to pay $13.5 million in restitution to the U.S. Department of Health and Human Services, the Health Resources and Services Administration, the Birmingham Financial Federal Credit Union and the non-profit health clinics Birmingham Health Care and Central Alabama Comprehensive Health.

            Dunning orchestrated and led a criminal enterprise for his personal benefit that involved an extensive conspiracy and scheme to defraud HHS, HRSA, the non-profit clinics BHC and CACH, the credit union and others, out of more than $16 million over the course of seven years, the government said in its sentencing memorandum.

 A federal jury in June convicted Dunning on 98 of 112 charged counts related to his involvement with BHC, CACH, BFFCU, and a group of for-profit businesses known as the “Synergy Entities.” Over the years, BHC and CACH received millions of dollars in federal grant funds through HRSA to further their missions of providing healthcare services to underserved populations.

“Jonathan Dunning formed Synergy Entities so he could bleed money away from non-profit clinics meant to provide medical care to the neediest of people and make himself rich by diverting millions of dollars into his personal accounts and businesses,” Vance said. “Motivated by greed, Mr. Dunning had no regard for the harm he caused others. He earned today’s prison sentence.”

“Heartless and appalling are just a few words to describe Jonathan Dunning’s actions,” Hyman-Pillot said. “The impact of his scheme extends beyond monetary loss. Citizens in need of medical attention were deprived of care due to his callous behavior. The judgment against Dunning is the consequence of his greed.”

“Stealing money away from programs that provided health care to poor and homeless people in order to live lavishly is an abominable crime,” Stanton said. “The FBI and its law enforcement partners are committed to joining forces and putting in the hours, and years if necessary, to stop this kind of crime.”

“This is one of the most outrageous fraud cases I have seen,” Jackson said. “Dunning embezzled millions of dollars in federal grant money that diverted desperately needed resources from those who need it most. Today’s sentencing sends a hard message to criminals like Dunning that they will be prosecuted to the fullest extent of the law, to include hard prison time and millions of dollars payable to U.S. taxpayers.”

Dunning was the chief executive officer of BHC and CACH for a period of time and left those jobs to run his for-profit businesses. Even after leaving his post as CEO, however, Dunning continued to exercise control over BHC and CACH. Between October 2008 and October 2011, Dunning served as president, board chairman and loan officer of the Birmingham credit union. From those various positions, he led the conspiracy that defrauded BHC, CACH, their funding agencies, and others.

“The need for medical care and clinical services for the homeless, indigent, and uninsured is well-known in this and other communities,” the government said in its sentencing memorandum. “Through the Synergy Entities, the defendant siphoned more than $16 million in money and property from two nonprofit health centers and the federal agency that funded them. He caused CACH to close its doors, drove BHC to the brink of bankruptcy, cost employees of CACH and BHC their jobs, precipitated the collapse of a credit union, and caused additional harm to others in the process. BHC and CACH had an essential mission of providing health care desperately needed by the communities they served. The defendant thwarted that mission and diverted the money and property to his personal benefit for one simple reason: greed.”

FBI, IRS-CID, and HHS-OIG investigated the case, which Assistant U.S. Attorneys Melissa K. Atwood, Tamarra Matthews-Johnson and John B. Ward prosecuted.


Updated October 14, 2016