Pubdate: Sun, 20 Jan 2013
Source: Scranton Times (PA)
Copyright: 2013 The ScrantonTimes/Shamrock Communications
Contact:  http://www.scrantontimes.com
Details: http://www.mapinc.org/media/1182
Author: Dave Janoski, staff writer

AT CLEARBROOK, EVIDENCE OF ADMINSTRATORS TREATING THEMSELVES WITH HIGH PAY

In justifying the $2.5 million in compensation he received from
Clearbrook Inc. between 2008-2011, Nicholas F. Colangelo, former CEO
of the nonprofit drug and alcohol treatment agency, cites the singular
focus of some of his heroes and says he is similarly dedicated to
helping people.

"I'll say Gandhi because that's all he was. Mother Teresa. That's all
she was," he said. "All I am is a patient delivery system. I work 365
days a year. I've been on call since I came to Clearbrook, seven days
a week."

But Mr. Colangelo, who continues to draw a six-figure salary as CEO of
the related Clearbrook Foundation and oversee Clearbrook's inpatient
treatment centers in Shickshinny and Laurel Run as a consultant, has
found helping people more lucrative than Mother Teresa ever did.

A three-month investigation of Clearbrook's finances by The Citizens'
Voice found that Mr. Colangelo and other executives at Clearbrook are
paid substantially more than executives at similar nonprofit treatment
facilities in Pennsylvania, and a larger portion of Clearbrook's
revenues goes to salaries for top employees.

The Citizens' Voice, a Times-Shamrock newspaper, shares the parent
company of The Sunday Times.

Mr. Colangelo and Clearbrook President Robert Piccone, who each
receive annual salaries averaging above $300,000, were paid additional
deferred compensation of $1.5 million in 2010-2011 from a fund that
was not accurately reflected in Clearbrook's financial records and
statements, according to an audit.

Some of the trustees on Clearbrook's board, which approved that
compensation, have close family ties to top executives and each other,
according to Clearbrook's annual filings with the Internal Revenue
Service. Mr. Piccone's father, Arthur L. Piccone, is chairman of the
board. Arthur Piccone's daughter and nephew are also board members.
Until last week, Mr. Colangelo's daughter was also on the board.

Other board members have enjoyed profitable business relationships
with Clearbrook in violation of its contract with Luzerne County to
provide treatment to low-income or indigent county residents. Four of
Clearbrook's 12 board members resigned last week after the county
temporarily stopped referring patients there in response to questions
about those business relationships from The Citizens' Voice.

Clearbrook was paid $542,708 in state, county and federal funds for
treating low-income and indigent patients in fiscal 2011-2012, with
$182,733 paid through the Lackawanna County Commission on Drug and
Alcohol Abuse and $304,750 through the Luzerne/Wyoming Counties Drug
and Alcohol Program.

Two board members who served as Clearbrook's medical director and
general counsel and a third board member who runs an ad agency all
received payments for services to Clearbrook in violation of its
Luzerne County contract. They resigned Thursday. Mr. Colangelo's
daughter also resigned from the board last week because her father's
status as a contracted consultant might have made her board service a
contract violation, according to Clearbrook.

The $1 million in deferred compensation paid to Mr. Colangelo came in
2010, when he retired as CEO of Clearbrook Inc. but retained his
oversight over the treatment centers as CEO of the related Clearbrook
Foundation. Robert Piccone received $550,000 in deferred compensation
on top of his salary in 2011, according to documents Clearbrook filed
with the IRS and an annual audit report.

The 2011 report from Clearbrook's auditors states that the deferred
compensation arrangement "was not recorded on its books and records or
the financial statements in prior years," requiring a restatement of
Clearbrook's assets and liabilities for 2009.

The auditing firm, Snyder & Clemente, which has offices in Luzerne and
Lackawanna counties, was replaced after that audit. Mr. Colangelo said
Clearbrook complained the firm was not delivering timely reports and
Snyder & Clemente decided it no longer wanted to work with Clearbrook.

Snyder & Clemente Managing Partner James F. Clemente did not return
numerous phone messages seeking comment on Clearbrook.

Contracts

Mr. Colangelo, 68, said he and Robert Piccone had contracts that
guaranteed them the deferred compensation if they met certain targets.
The money was kept in what Mr. Colangelo called a "restricted fund"
that was not designated as a compensation fund, but was reviewed by
auditors. He said he couldn't recall how the fund was designated on
Clearbrook's books.

Mr. Colangelo said Robert Piccone is his "heir apparent" and Mr.
Piccone's expertise in insurance matters justified the $1.75 million
he was paid in 2008-2011.

Robert Piccone declined to comment.

Other board members and executives at Clearbrook either declined to
comment, could not be reached or referred questions to general counsel
Thomas P. Cummings Jr., who arranged an hourlong interview with Mr.
Colangelo at The Citizens' Voice earlier this month.

Board chairman Arthur Piccone, a senior partner in the law firm
Hourigan, Kluger & Quinn, declined to answer any questions on Clearbrook.

"My general counsel has reviewed everything with me and I'm satisfied
with what we've done," he said.

Mr. Colangelo said he earned his deferred compensation through his
role in expanding Clearbrook since he joined the agency in 1990. He
became CEO in 1998.

Mr. Colangelo said Clearbrook's single treatment center "was almost a
condemnable camp" 30 years ago, when Arthur Piccone stepped in as
chairman of the board to help save it from bankruptcy.

"When I started, it was at, I'm going to say, $1.9 million or just
under $2 million. =80| We're approaching a $15 million company," Mr.
Colangelo said. "The places have been rebuilt virtually debt-free."

Mr. Colangelo had 15 years' experience in the drug and alcohol
rehabilitation industry in New Jersey, Louisiana, Texas and
Pennsylvania before joining Clearbrook.

He became a drug and alcohol counselor after what he described as an
alcohol addiction ruined his early success in developing real estate,
bars and taverns in his native New Jersey following his graduation
from Boston University.

"Addiction crushed me," he said. "Just freaking brought me to my
knees."

Path to Clearbrook

Before joining Clearbrook, Mr. Colangelo was president of Marworth, a
treatment center in Waverly Twp. owned by Geisinger Health System,
from 1982 through 1989, when he was fired.

Mr. Colangelo said the firing was "without cause," but declined to go
into details. His wife, Patricia, who also worked at Marworth, was
terminated at the same time.

The Colangelos filed a notice that they planned to sue Geisinger in
Lackawanna County Court, but a complaint was never filed and the
action was eventually withdrawn.

Geisinger Health System Vice President for Public Affairs David Jolley
issued a statement saying Geisinger and Marworth "do not terminate
anyone's employment without cause."

"Our policy, however, is to not discuss details regarding a specific
employee who has been separated from the organization," Mr. Jolley
said.

Mr. Colangelo said his years of experience and success at expanding
Clearbrook make comparisons of his salary with those of CEOs at
similar treatment centers unfair.

"Apples aren't apples," he said. "If you go to the grocery store, you
can say, 'They're all apples.' If you look closer, they are not. We
are who we are. We don't compare ourselves to other people, never
have. Our competition is, we compete from where we started=80|

"I'm a rare talent, I think. I am one of the rare talents in
not-for-profit. Other people will attest to that."

Comparing

Mr. Colangelo said he should be compared to Douglas Tieman, president
and CEO of Caron Treatment Centers in Wernersville, Berks County, whom
he called his "mentor."

Mr. Tieman was paid $705,306 in 2010 to head an organization with
nearly $80 million in revenues and 647 employees. In 2010, Mr.
Colangelo was paid $344,425 plus $1 million in deferred compensation
to run Clearbrook, which had 145 employees and revenues of $10.6 million.

Mr. Tieman declined an interview request through a media
representative for Caron.

Neither the IRS nor Pennsylvania places absolute limits on executive
compensation at nonprofits, but the IRS requires that nonprofits
examine compensation in similar organizations when setting salaries.
It also requires that nonprofits reveal the types of family
relationships that exist between executives and board members at
Clearbrook on their annual filings.

If an IRS audit determines compensation is excessive, it can revoke a
company's nonprofit status, but that is rare, IRS spokesman David
Stewart said. The IRS can also impose excise taxes on an employee who
receives excess compensation or a board member or executive who
approves it.

Mr. Stewart said information on excise taxes in such cases would be
confidential.

Mr. Colangelo said the IRS has not questioned compensation levels at
Clearbrook.

Several states have recently imposed or considered caps on CEO
salaries at nonprofits with government contracts.

New York and New Jersey limit the amount of money from government
contracts that can go toward executive salaries at nonprofits dealing
with social service agencies.

In Pennsylvania, the state House voted in September to authorize a
study of nonprofit salaries. A report from the Legislative Budget and
Finance Committee is expected in April.

The sponsor of the resolution authorizing the study, Bucks County
Republican Scott Petri, R-178, Richboro, said the study is aimed at
transparency: "If you have a state contract and are receiving state
funds, should people be allowed to know the amount top-end executives
make?"

Mr. Petri said the impact of service budget cuts in Harrisburg have
fallen largely on "the social workers who are doing the work" rather
than on the administrators and executives who head the nonprofit agencies.

"There's really two functions - an administrative level, which is
necessary - and there is the function where the services are actually
performed. What I want to do is protect that function," Mr. Petri said.

"I don't know what we're going to find. I wouldn't be surprised at all
if we found most agencies are operating thin and lean from top to
bottom. I wouldn't also be surprised if we found that's not
universally true.

"It's taxpayer dollars. People have a right to know."
- ---
MAP posted-by: Jo-D