Erv Brinker alleged to have sent $510,000 to psychic

EAST LANSING – The criminal case against fired Summit Pointe CEO Erv Brinker rests on what Michigan Attorney General Bill Schuette alleged were fraudulent contracts with a Key West, Fla., man associated with a psychic palm reader.

In a press release after Brinker was arraigned Wednesday on two counts of Medicaid fraud conspiracy and one count of embezzlement by a public official, Schuette said his Health Care Fraud Division's investigation revealed that "Brinker allegedly sent the $510,000 to a Key West psychic palm reader and her husband under the guise of health care consulting."

The press release said "As CEO, Brinker had the authority to contractually bind Summit Pointe without Board approval and he allegedly signed the fraudulent contracts without the consultation of other employees. Additionally, Brinker did not notify the Board of Directors of the alleged contracts."

Before Ingham County District Judge Richard Ball on Wednesday, Brinker, 68, of Delton stood calmly as he was formally charged and his attorneys waived a preliminary examination of the charges. The case was bound over to Ingham County Circuit Court for trial. A pre-trial hearing was set for Aug. 12.

The charges carry maximum penalties of 10 years in jail and a $5,000 fine on conviction.

Brinker attorney Matthew Vicari said the defense has been working with the attorney general's office "for some months now."

Assistant Attorney General Jeffrey Schroder told the judge they were close to a plea-bargain agreement with Brinker.

Brinker was released on a $25,000 personal recognizance bond under two conditions named by Schroder and agreed to by the judge:

The first was that he could not have contact with Summit Pointe or its employees.

"Number two," Schroder said, "That the defendant have no contact with any psychic, fortune-teller or palm reader."

Tommy Eli of Key West was listed as a Summit Pointe contractor; his name was raised at the Feb. 17 meeting in which Brinker was fired.

At the public hearing, Brinker through his lawyer repeatedly refused to ask questions about Eli, declining to speak unless he was assured the information wouldn't be used for potential criminal prosecution.

Summit Pointe's lawyers alleged illusory contract services, saying they were unable to confirm Eli had any professional credentials and that they only found a one-page document as proof of work.

But they did know this: Eli received $510,000 in payments from Summit Pointe. He billed the agency for more than 1,100 hours of work from October 2012 to April 2013, some of which were claimed in invoices to have been conducted in person at Summit Pointe's offices. The last payment — $265,000 — was sent by overnight courier to a Key West address, marked to the attention of Julie Davis.

The address is a psychic business. Davis is a psychic and tarot card reader, according to a business license filed with the city of Key West.

Eli did not return multiple calls from the Enquirer.

In his press release, Schuette was quoted as saying "Ensuring integrity in our health care system is critical to the safety of all Michigan citizens. Anyone attempting to skirt the law at the expense of patients and taxpayers will be identified and brought to justice. I would like to thank Summit Pointe for bringing this case to our attention and providing assistance and full cooperation to ensure this never happens again."

After the arraignment, Summit Pointe sent a press release to the Enquirer saying the agency's leadership and attorneys had worked for months with the Attorney General's office.

Board President Trae Allman was quoted in the release as saying, "When our board was informed of employee concerns about irregularities in contracting and expenditures, we engaged Fraser Trebilcock as independent counsel to conduct a careful, external investigation. What we found through that process increasingly disappointed and alarmed us as a board, and among a series of other necessary actions, we contacted the appropriate authorities. We are appreciative of the efforts of the Attorney General, and the Department of Health and Human Services, and we are relieved that this difficult chapter is finally over."

Summit Pointe's board fired Brinker for cause, alleging he created a defined-benefits pension plan without board approval and for his own personal benefit. Board members also said Brinker had "apparent and actual conflicts of interest" with some of the agency's vendors, and didn't competitively bid million-dollar contracts that were granted to vendors with whom he had outside business ties.

Brinker's termination was the result of a nearly three-month internal investigation by Summit Pointe, which hired Lansing-based law firm Fraser Trebilcock Davis and Dunlap to help conduct the probe. Two other Summit Pointe executives — Chief Operating Officer Bob Lambert and Chief Financial Officer Leon Karnovsky — resigned during the investigation.

After Brinker's dismissal, Summit Pointe has since worked to replace vacancies and rein in finances. The agency has cut off contracts with many vendors named in the lengthy resolution to fire Brinker, and has made changes to its community partnerships, including the discontinuation of running operations as the Custer Greens golf course.

Summit Pointe's annual audit that was presented to the board in early June revealed weaknesses in financial reporting. Auditors didn't issue an opinion because they were unable "to obtain sufficient appropriate audit evidence." They also cited the ongoing investigation.

Meanwhile, a search to find a permanent replacement for Brinker continues. Jeannie Goodrich, director of outpatient services, has headed the organization in the interim.

Summit Pointe reported $117 million total revenue during the 2013-14 fiscal year, a significant drop from the previous budget cycle because the agency is no longer responsible for distributing state funding to the region's other community mental health authorities.

The majority of the organization's funding comes from Medicaid.

Contact Jennifer Bowman at 269-966-0589 or jbowman@battlecreekenquirer.com. Follow her on Twitter: @jenn_bowman. Contact Andy Fitzpatrick at 269-966-0697 or afitzpatrick@battlecreekenquirer.com. Follow him on Twitter: @am_fitzpatrick