Charity that had money problems gets new CEO
The San Diego charity found to have mishandled public funds earlier this year has named a new chief executive.
James Callaghan took over this month as chief executive officer at Mental Health Systems, a behavioral-health and substance-abuse nonprofit that collects and spends tens of millions of dollars a year in government contracts.
Callaghan, a real estate and development professional who was serving on the Mental Health Systems governing board as a volunteer, takes over from Kimberly Bond, who left the agency after county investigators cited the charity for practices such as billing taxpayers for expenses that had not been incurred.
Bond and her husband, also an executive at the nonprofit, left the organization this past spring after the former chief financial officer filed a whistleblower complaint alleging they diverted public funds to a money-losing for-profit subsidiary and made other questionable expenditures.
A subsequent county review confirmed many of the problems, and officials were satisfied that the organization would address them.
Mental Health Systems agreed to make Callaghan available for an interview this week, then postponed it to an uncertain later date. A public-relations agency released a statement saying that the group is working to improve practices and focused on clients.
“The company strives to move forward while continuing to provide quality health services in San Diego and throughout California,” the statement said.
A spokesman for San Diego County, which at $35 million-plus a year is the largest Mental Health Systems contractor, said Callaghan has the right experience for the job.
“Mr. Callaghan holds a Masters of Business Administration from Pepperdine University and has previous business and operational experience with a Fortune 500 company,” spokesman Michael Workman said in a statement. “He has participated with San Diego regional groups such as the Independent Taxpayers Oversight Committee and the City of San Diego Chamber of Commerce.”
Workman added, “Critical for all nonprofits is ensuring good business practices, a solid financial foundation, operational efficiencies and focus on delivery of required services,” Workman wrote. “We anticipate this focus will continue to benefit MHS going forward.”
Michael Hawkey, the former CFO whose concerns brought the county’s attention to Mental Health Systems, was critical of the decision to hire Callaghan.
He wrote an Aug. 18 letter to San Diego County and other government officials saying Callaghan had no experience in behavioral health. He also said the new chief executive knew about and condoned the previous improprieties.
“As a taxpayer and concerned citizen with significant insight into Mental Health Systems and their business practices, I am very concerned that this appointment will perpetuate the difficulties MHS has had providing services in compliance with state and federal law and its contract terms,” he wrote.
Hawkey was placed on leave in February and subsequently let go.
In his statement, Callaghan rejected Hawkey’s assertions and, in turn, said Hawkey was responsible for many of the practices he is now criticizing.
“MHS strongly disagrees with the accusations made by Michael Hawkey in a recent letter regarding the company’s new management,” Callaghan’s statement said. “Mr. Hawkey is the former Chief Financial Officer of the company. He put into place many of the fiscal policies which he now criticizes.”
County officials turned over the findings from their audit to criminal investigators at the District Attorney’s Office, which does not comment on potential cases. The findings also were investigated by compliance analysts from other California counties that hold contracts with Mental Health Systems and federal housing officials.
In June, after Bond and her husband were released from the charity, the county issued a statement saying that Mental Health Systems had complied with all of the corrective actions social services officials requested.
The county then extended its contracts with Mental Health Systems on a month-to-month basis in case new problems arose.
Mental Health Systems was founded in the 1970s by two social workers. It has since grown into a charity that employs more than 1,000 people and collects and spends $75 million a year, almost all of it from government contracts.
The nonprofit offers therapy, substance-abuse counseling and other services to thousands of needy families in San Diego County and across California.
