MINNEAPOLIS — A federal court judge appointed a receiver Friday to oversee the assets of Evergreen Recover and its owners – a week after an FBI raid on the company – and extended an order to freeze its bank accounts.
The order came despite a tirade in the courtroom by Evergreen Owner David Backus. He berated the Assistant U. S. Attorney handling the case and claimed everything in the FBI affidavit filed in the case is a “lie.”
“We haven’t done anything wrong,” Backus told the judge, adding the government is “trying to portray us as monsters.”
Attorneys representing Evergreen Co-owner Shawn Grygo and another employee also denied the government’s allegations.
Despite his denials, U. S. District Court Judge Katherine Menendez ruled “it is more likely than not” that Evergreen “engaged in an illegal and fraudulent scheme to bill Medicaid for substance abuse treatment services not provided” and in an “illegal and fraudulent kickback scheme” in violation of federal law.
An affidavit by the FBI Special Agent in charge of the case estimated the “fraudulent conspiracy” totals “at least $28 million.”
Judge Menendez appointed Twin Cities attorney Ranelle Leier to act as receiver – with the power to make financial decisions about Evergreen’s assets as the company winds down.
However, she warned there likely will not be enough assets to make everyone Evergreen Recovery owes money whole.
Lavish lifestyle
The government action comes in the wake of KARE 11's multi-part "Recovery Inc." investigation which exposed Evergreen owners Backus and Grygo living a lavish lifestyle – with expensive cars and travel on private jets – as their company billed millions of dollars to taxpayer-funded Medicaid for services clients and employees said were not always provided as claimed.
KARE 11 documented other examples of questionable billing at Evergreen. Both workers and clients accuse the company of improperly billing taxpayers for treatment never provided, falsely billing group activities as if they were a series of individual interactions and overstating the time spent on van rides to and from recovery treatment.
In seeking to seize control of Evergreen, the government claimed Evergreen “routinely adds client names who did not attend group counseling” to attendance logs used to bill Medicaid.
What’s more, the government says Evergreen billed meals they served as “group counseling” by claiming the meals provided “therapeutic recreation.”
According to an FBI affidavit, investigators estimate that “between 30 to 40 percent” of the hours Evergreen billed for group counseling “are falsified.”
Wage theft investigation
In court Friday, the government disclosed that the Minnesota Department of Labor has received a hundred complaints by former Evergreen employees accusing the owners of wage theft totaling $800,000.
More than half a dozen of those employees attended the court hearing. Sarah Gorr says several of her paychecks bounced during the two months before the federal raid and she’s owed roughly $6,000.
“My electricity has been cut off, my rent hasn’t been able to be paid,” she told KARE 11, adding she even had to go to a food shelf to get pet food for her dog.
Despite the hardships employees are facing, Gorr says the bigger concern is Evergreen’s hundreds of cast-off clients.
Earlier this week, KARE 11 reported on former clients who felt abandoned and afraid – left largely without treatment and medication.
“The outcome for all of our clients – which is sad – is that they’re out there wandering the streets and not having places to go, and they’re scared,” Gorr said.
“You’re a clown”
As they arrived at the courthouse Friday, KARE 11 reporter A. J. Lagoe asked Evergreen’s owners what they had to say to the hundreds of clients and employees who feel let down.
“You know what, you’re a clown and after this you and me are going to get into it later. Ok?” David Backus told Lagoe.
“You’re accused of stealing tens of millions of dollars,” Lagoe said.
“And you’re accused of putting 300 clients on the street because you want to stand outside,” co-owner Shawn Grygo replied.
“We didn’t steal millions of dollars bro – read the state statute. Have a good f*** life,” she continued.
“Everything you’ve said is false,” Backus added. “Everything you said is slander, and it will be unveiled in court. I can promise you that.”
In court, Assistant U.S. Attorney Emily Peterson said a simultaneous criminal investigation of Evergreen – which could result in indictments – is still on-going.