The Social Security Administration is investigating the alleged embezzlement of funds from a Cambria County guardianship agency, which handles the finances of incapacitated people under its care.
According to a source close to the matter, more than a quarter of a million dollars has been bilked from the accounts of several dozen wards.
The nonprofit agency, Distinctive Human Services (DHS), serves as legal guardian to elderly and disabled people assigned to its care by the courts because they are unable to handle their own affairs.
A court document from the Cambria County Court of Common Pleas, scheduling a Jan. 3 status conference, said its purpose was “to update the court on the status of the investigation and expected payments on claims made by Distinctive Human Services … as a result of the embezzlement of funds by an employee.”
The claims were made with DHS’s insurance companies to cover the allegedly embezzled funds, according to Johnstown resident Joe Stigers, who was at the status conference in Judge Patrick T. Kiniry’s chambers.
He said the judge, the attorney for DHS and representatives of their insurance companies referred to the amount missing as more than $250,000.
Stigers’ wife was in the care of DHS for about a year and a half, but he is now her legal guardian and looking to recoup funds on her behalf.
Agents with the Social Security Administration’s Office of Inspector General in Pittsburgh and Philadelphia acknowledged an investigation involving DHS, but refused to comment because of the agency’s policy not to talk about ongoing cases.
Ellen Hamilton, executive director of DHS, did not return telephone calls to her home or office, but sent PublicSource an email.
“I cannot talk about any aspects of the business at DHS due to the fact we would be violating confidentiality and HIPAA laws,” she wrote, referring to the privacy rules established by the Health Insurance Portability and Accountability Act.
Stigers said his wife, Deborah, is owed $7,215 in Social Security disability payments that DHS had received as her representative payee.
The court declared Deborah Stigers, 58, incapacitated because of mental-health issues. Stigers said he sought out DHS to be her guardian because of family conflict.
The missing funds are not his only grievance with DHS. Stigers said the agency nearly cost his wife her disability status because appropriate paperwork was not filled out.
He petitioned for and won guardianship of his wife in June.
“I don’t know if my wife or anyone else will ever see this money,” said Stigers, a 57-year-old Air Force retiree. “And I only know about this because I took over my wife’s guardianship. I wonder how many of the other victims don’t know anything happened.”
DHS primarily serves as legal guardian to wards in the counties of Cambria, Blair and Somerset, Hamilton said in a July interview. At that time, DHS was overseeing the care of between 140 and 150 wards in multiple Western Pennsylvania counties, she said.
Peggy Walsh, who had been with DHS since it opened in June 2003, is no longer its director of administration and finance. When reached at her home, Walsh declined to comment.
Eric Hochfeld, a Johnstown lawyer, represents DHS. He did not return phone messages regarding the investigation.
Judge Kiniry’s law clerk said the judge does not comment on his cases.
The insurance companies handling the claims by DHS are Nonprofits Insurance Alliance Group and Nationwide Surety and Fidelity.
A lawyer for the Nonprofits Group said he could not comment. A call to Nationwide was not returned.
Stigers said the judge gave the insurance companies and DHS a 30-day continuance to determine whether the loss of funds would be covered.
If investigators substantiate any wrongdoing, such as embezzlement by an employee, the case would likely be referred to the U.S. Attorney for the Western District of Pennsylvania.
The investigation is not the first of DHS’s troubles.
DHS also served as guardian to a woman whose death became a point of contention for the owner of the Washington County personal-care home where she lived.
Bonita Carter, 47, died in June after refusing kidney dialysis. The personal-care home owner, Garry McGrath, told PublicSource that he felt the guardian did not make enough effort to convince Carter to continue treatment.
He has petitioned the state Department of Public Welfare for a review of the case.
In August, PublicSource published an article about Norma Carpenter’s concerns about her 83-year-old mother, Mary Little, who has dementia and became a ward of DHS.
Carpenter, of Indiana County, said she is unaware of the current state of her mother’s finances.
“I’m concerned about everything,” she said. “This is an absolute travesty, and there’s no control. I’m not alone.”
The Social Security Administration closed nearly 600 investigations of representative payee fraud in fiscal year 2013, according to Tracy B. Lynge, deputy assistant inspector general for external relations.
An embezzlement charge against an employee may not impact the status of the nonprofit, said Tish Mogan, the Standards for Excellence Officer at the Pennsylvania Association of Nonprofit Organizations.
“In many cases, if the nonprofit shows it was making a best effort with everything they were doing and this got well hidden under the radar screen, it’s not going to affect the status of the nonprofit other than the public relations issue they’ll have in the community,” she said.
Reach Halle Stockton at 412-315-0263 or firstname.lastname@example.org.