[Updated May 2019] Jonathan Dunning is the former CEO of two non profit clinics for the poor and the homeless. He may soon be homeless himself, unless you call a federal prison cell “home.” Last week FBI and IRS criminal division special agents arrested Dunning after he was indicted on 112 counts of wire fraud, bank fraud and money laundering. All the charges appear related to Dunning’s involvement with the clinics and with the Birmingham Financial Federal Credit Union.
Prosecutors say that during a 7 year period, Dunning’s two nonprofit health care companies received millions of dollars in federal grants. The money was to be used to provide healthcare to the poor and homeless.
The healthcare fraud charges relate to a little known federal agency called the Health Resources & Services Administration. That agency provide healthcare to tens of millions of Americans. The agency provides grants to support healthcare in underserved populations such as the homeless, migrant workers and public housing residents. It also administers funds for miners suffering from black lung disease.
Prosecutors say that Dunning abused his position *as CEO at two different clinics to defraud both the clinics and taxpayers of monies earmarked for healthcare.
In announcing his arrest, Birmingham, Alabama U.S. Attorney Joyce White Vance said, “Criminals don’t get to live lavish lifestyles by stealing federal money meant to provide healthcare to the poor and the homeless. My office will vigorously prosecute health care fraud; working to ensure that these funds go to the people they are intended to help, and to see that criminals go to jail.”
An IRS spokesperson said, “Jonathan Dunning is charged with defrauding agencies that received government funding. He is accused of misusing his authority and laundering money to businesses he controlled. He orchestrated a scheme fueled by greed and deceit that ultimately affects all taxpayers”.
Jonathan Dunning Convicted of Healthcare Fraud Scheme
[Updates] In July 2016, Dunning was convicted by a jury of 98 out 112 charges including conspiracy, bank fraud, wire fraud and money laundering. At sentencing, prosecutors asked for a 27 year sentence. They said,
“The need for medical care and clinical services for the homeless, indigent, and uninsured is well-known in this and other communities. 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.”
Dunning’s lawyers made no sentencing recommendation other than to say the sentencing guidelines shouldn’t be followed. They also recommended that he not be ordered to pay restitution. At one point, Dunning’s lawyers said, “Mr. Dunning faces a substantially harsher sentence for the charged fraudulent scheme than he would had he committed armed bank robbery, aircraft piracy, horrific sexual abuse against a child, or even murder. In fact, under the result the government advocates, he would face a shorter sentence had he been convicted of firebombing, rather than purchasing, the Plaza building.”
In October 2016, Jonathan Dunning was sentenced to 18 years in federal prison. He must also pay $13.5 million in restitution.
After the sentencing, prosecutors were quick to praise the judge and jury.
Birmingham, Alabama’s U.S. Attorney said, “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. Motivated by greed, Mr. Dunning had no regard for the harm he caused others. He earned today’s prison sentence.”
An IRS spokesperson said, “Heartless and appalling are just a few words to describe Jonathan Dunning’s actions. 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.”
Jonathan Dunning appealed his conviction. In August 2018, a three judge appeals court panel unanimously affirmed his conviction. Noted the court, “After years of managing the centers, Dunning told others that he knew he was more “valuable” than the $290,000 annual salary he was being paid by the non-profits, and he had “found a way to make money off the government.” The court found ample evidence to support his conviction.
Whistleblowers and Healthcare Fraud
Most healthcare fraud involves Medicare and Medicaid monies. As this case illustrates, however, healthcare fraud can take many different forms.
This case also illustrates how multiple law enforcement agencies are banding together to fight healthcare fraud. Although Dunning wasn’t charged with tax evasion or other criminal tax charges, IRS special agents still played a major role in the investigation.
Most healthcare fraud cases are brought because of whistleblowers, brave women and men who step up to fight fraud and corruption. In healthcare cases, whistleblowers are truly heroes for their actions often save lives or insure that patients get the healthcare they need.
Under the federal False Claims Act, whistleblowers can earn an award of up to 30% of whatever the government collects from the wrongdoers. In healthcare fraud cases, the average award is nearer to 20%. Because the government can collect triple damages, the awards can be huge. Last year the government paid $435 million in awards.
To qualify, whistleblowers must have inside or original source information.
Need more information? Visit our Medicare fraud whistleblower page. Ready to see if you qualify for a reward? Call us today. We help whistleblowers earn the largest possible awards and stop fraud. For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept in confidence.