“That’s by law, and I’m not free to disregard it. So I can neither confirm nor deny the existence of an investigation, but I anticipate a day later this year that I’ll be able to answer your questions more fulsomely. I read the newspaper as well.”
A Dayton Daily News investigation earlier this year revealed the scope of alleged improper spending by Kettering Health executives, leaders in the Seventh-day Adventist Church and their family members.
No charges have been filed. Kettering Health has confirmed an investigation into the health system going on since about 2021.
The AG’s office has a charitable law division that receives hundreds of complaints about Ohio nonprofits each year, but prosecutions are uncommon.
This story compares the Kettering Health case to another high-profile charity investigation by the AG’s office, into misdeeds at the Columbus Zoo and Aquarium.
Unlike in the Kettering Health case, Yost’s office publicly announced an investigation had been opened following allegations involving at least two executives at the zoo.
“Charity may begin at home for an individual, but it’s trouble when an executive for a charitable organization uses company resources for friends and family,” Yost said in an April 1, 2021, press release. “I’m troubled by both the allegations and the lack of transparency here, and this office will get to the bottom of it.”
The executives were indicted two years later.
The Dayton Daily News reached out to the Ohio Attorney General’s Office about why the investigation into former Columbus Zoo officials was announced prior to the filing of charges. Yost’s office did not respond.
The Columbus Zoo is a 501(c)(3) nonprofit organization that also receives levy funds from Franklin County taxpayers, according to the Ohio Attorney General’s Office.
The zoo’s president/CEO and chief financial officer resigned in March 2021 after an internal investigation related to the personal use of zoo assets, according to the attorney general’s office. Both allegedly received improper benefits, according to reporting by The Columbus Dispatch.
Kettering Health is a 501(c)(3) as well that gets most of its revenue from providing health care, a large portion of which is funded through government programs such as Medicaid and Medicare.
Tax records obtained by the Dayton Daily News show former CEO Fred Manchur and his wife, Mary Kaye, received nearly $1.5 million in improper benefits between 2016 through 2022 that they have yet to repay to Kettering Health. Manchur retired at the end of 2022.
The Ohio Attorney General’s Charitable Law Section typically receives about 750 complaints per year, according to its website.
The types of complaints the office investigates include misuse of charitable funds, fraudulent fundraising activities, violations of professional solicitation standards, bingo and charitable gaming issues, nonprofit theft and embezzlement and breaches of fiduciary duty by nonprofit leaders, according to the attorney general’s office.
Columbus Zoo
In the fraud case involving the Columbus Zoo, those charges would eventually be filed in Delaware County Common Pleas Court. The zoo is in Delaware County and much of the criminal conduct found by the grand jury took place at the zoo business office.
As the investigation unfolded, Delaware County Prosecuting Attorney Melissa Schiffel appointed the Ohio Attorney General’s Office as special prosecutor, with Senior Assistant Attorney General Dan Kasaris serving as the lead prosecutor. Marissa Gibson and Matt Klapheke, investigators with the Ohio Auditor’s Office, assisted in the case.
Following the announcement of the investigation, three former executives were indicted two years later on Sept. 18, 2023, for their roles in a scheme to defraud the zoo of more than $2.29 million and use the money for personal benefits, according to a previous announcement from the attorney general’s office.
Former Chief Executive Officer Tom Stalf and former Marketing Director Pete Fingerhut were accused of operating a criminal enterprise and faced charges including engaging in a pattern of corrupt activity, aggravated theft, bribery, conspiracy, money laundering and more related to the misuse of the nonprofit’s funds.
Credit: Jonathan Quilter
Credit: Jonathan Quilter
Also indicted was former Chief Financial Officer Greg Bell, who pleaded guilty a month after his indictment in Delaware County Common Pleas Court to all 14 felony charges he faced, which included aggravated theft, conspiracy and tampering with records.
The September 2023 indictment alleged the former Columbus Zoo executives manipulated credit card and check authorization forms for more than a decade, using the nonprofit’s public funds for personal use. The Columbus Zoo receives about $19 million in taxes annually from Franklin County residents.
The stolen money from the Columbus Zoo was spent on non-zoo related items, including suites and tickets to concerts and sporting events; golf memberships; trips to multiple states and foreign countries; meals, beverages and alcohol; and motor vehicles.
Kettering Health
In the allegations Kettering Health has faced, 46 people — including former Kettering Health executives, board members and some of their family members — received more than $3.2 million in improper “excess benefits” from the hospital from 2016 through 2022, according to hospital tax records obtained by the Dayton Daily News.
Examples of such benefits included a $12,124 whale watching trip in Maui, a $21,250 spa retreat, thousands of dollars of decorations for the Manchurs’ private home, travel and lodging in Europe and Hawaii, and thousands of dollars in personal gifts, according to additional records obtained by the Dayton Daily News.
“These funds represent, among other things, the value of trips, meals, gifts, and/or other items that in the course of the investigation, were deemed to be excessive or not have a legitimate business purpose,” a previous statement from Kettering Health reads.
The hospital network reported to the IRS that most people paid the money back.
“It is important to note that multiple individuals listed in the tax filings did not realize they received funds inappropriately until they were notified at the conclusion of Kettering Health’s internal investigation,” Kettering Health’s statement reads.
In several instances, people were led to believe these were legitimate business activities or acceptable gifts, according to Kettering Health, which added those people “had no reason to believe they were not appropriate.”
“However, the internal investigation determined that some funds were misused, clearly falling outside of the stewardship principles of a not-for-profit organization. We are thankful that the vast majority of individuals chose to repay the funds back to Kettering Health,” Kettering Health’s statement reads.
‘Let today’s sentence be a warning’
The Columbus Zoo investigation led to prison sentences for the three executives, along with heavy fines and restitution. A purchasing agent and an assistant also faced charges related to the case.
Former CFO Greg Bell was the first to be sentenced. He received three years in prison on Aug. 19, 2024, for his role in the scheme that defrauded the zoo of more than $2 million.
“Greg Bell caved to temptation to enrich himself and his family at the zoo’s expense,” Yost said in a press release. “Let today’s sentence be a warning to those who would dare to rip off taxpayers.”
Fingerhut pleaded guilty July 2, 2024, to 16 felony counts and one misdemeanor, including aggravated theft, conspiracy and more related to tampering with records and fraud.
Fingerhut was sentenced to five years in prison Oct. 28, 2024. As a part of the sentence, Fingerhut was ordered to pay $639,297.33 in criminal restitution to the zoo, state of Ohio and the Internal Revenue Service.
Stalf pleaded guilty July 23, 2024, in Delaware County Common Pleas Court to 15 felonies, including individual felony counts of aggravated theft, conspiracy and telecommunications fraud. Stalf also pleaded guilty to 12 counts of tampering with records.
Stalf was sentenced to seven years in prison for his role on Oct. 14, 2024.
As part of the plea agreement, Stalf agreed to pay $315,572.65 in criminal restitution to the Columbus Zoo, state of Ohio and IRS. This amount is in addition to the $400,000 of restitution already made on his behalf in 2021.
‘A unique responsibility’
In Bell’s case, prosecutors emphasized in their sentencing memo the ripple effects that occur when charitable dollars are misused.
“Charities and nonprofits play a crucial role in the state of Ohio, and those entrusted with the operation of these organizations have a unique responsibility to ensure that charitable assets are safeguarded and used to promote the charitable mission of an organization,” a statement from the Ohio Attorney General’s Office reads.
“When these assets are exploited for the personal benefit of executives and high-ranking employees at a nonprofit, particularly a nonprofit that receives taxpayer money, it erodes the trust that the public has in charitable organizations in the state and frustrates the missions of those organizations.”
A hospital system like Kettering Health receives public funds in the form of direct reimbursement through Medicare and Medicaid for patient care. Its payer mix for 2024 included 39% from Medicare, 10% from Medicaid, 50% from commercial or third-party sources and the remainder from self-pay or other sources.
Hospitals may also get competitive grants and tax-exempt financing.
During the COVID-19 pandemic, hospitals across the country were eligible for different types of federal assistance, such as provider relief funds distributed through the CARES Act.
Kettering Health reported receiving $46.3 million in provider relief funds in 2020 and $13.3 million in 2021. Kettering Health also received $15 million in 2022.
In addition to provider relief funds, the Federal Emergency Management Agency awarded additional funds. Kettering Health reported receiving $19 million in FEMA funds in 2021 and $950,000 in 2022.
Kettering Health is made up of 14 medical centers and more than 120 outpatient locations throughout western Ohio, as well as Kettering Health Medical Group — with more than 700 board-certified providers. Kettering College, a division of Kettering Health Main Campus, is a fully accredited college that specializes in health science education.
