Editor's Note: A previous version of this article misstated the defendant in Voya's lawsuit. Voya is suing TA Associates and James Slattery.
In June 2011, James Slattery, CEO and founder of a fast-growing company called Millennium Laboratories, was awarded the Ernst & Young Entrepreneur of the Year for Life Sciences in the San Diego region, an award presented to "entrepreneurs who demonstrate excellence and extraordinary success in such areas as innovation, financial performance and personal commitment to their businesses and communities."
Slattery's story was unique and inspirational one. He came from the real estate industry with virtually no experience healthcare and established Millennium in 2007. Months prior, he had been diagnosed with a brain tumor, life-altering news that left him at a crossroads.
"At 55 I was forced with the decision to retire, or to fight and recoup, and start the next chapter, which I decided to do," he told the San Diego Source in a May 2011 interview.
After the tumor was successfully removed, he moved to San Diego with "a concept of trying to make a difference in how people are treated for pain and suffering," an idea that was inspired by his wife, a hospice nurse for 40 years.
He also wanted to get involved in a business that was "relatively recession-proof." Millennium's rapid growth was certainly impressive, but Slattery was most proud of the company's culture, calling it "a good and happy place to work."
Behind the scenes, court documents show that Millennium operated in vastly darker shades. Instead of helping people deal with pain and suffering, the company's business model focused on charging patients and insurance companies for obscenely expensive and unnecessary drug tests, while fleecing the government of hundreds of millions of dollars.
A little more than six months after Slattery was recognized for his business acumen, he held a company sales meeting in which he placed $2 million in solid gold coins on stage, according to court documents. Some employees in attendance took the display of wealth as a warning that the company "was willing to use its resources against perceived threats."
What happened next erased any lingering ambiguity. Millennium's general counsel, Martin Price, began a PowerPoint presentation that included logos of competitors, court documents show. Gunfire echoed across the conference room from the loudspeakers, and on the next slide, the logo was riddled with bullet holes. One slide even included a picture of a former employee identified as "Tim" with a bullet hole between his eyes. Another slide showed six bodies in body bags, each tagged with a competitor's name. One tag read "Ed Zicari," a former sales manager who filed claims the company bribed doctors and provided unnecessary tests.
"Don't be a weasel," Price told the employees, according to court documents. "I don't want to be on the other side of litigation from any of you. I hope you don't want to be on the other side of litigation with Millennium."
Emails from a regional vice president suggested a company culture that valued profits above all else. Sales staff received cash incentives for increased drug testing on Fridays and Mondays, and court documents show they responded enthusiastically with replies like, "Pick up the liquid GOLD before liquid goldschlager on Fridays!" and "GOLD RUSH FRIDAYS!"
As far as fraud schemes go, that's bad enough to incite some mild outrage. Apparently though, it wasn't enough to fleece insurance companies and patients with unnecessary drugs tests, as a federal settlement would later reveal. Slattery and Millennium took it one step further, convincing various Wall Street investors to loan the company $1.8 billion in 2014, according to the Palm Beach Post. By then, the company was already facing multiple fraud investigations from the Department of Justice (DOJ) and Florida's Medicaid Fraud Control Unit, a small detail Millennium neglected to mention to its lenders.
It all came to a head in October, when Millennium agreed to a $256 million settlement to resolve DOJ fraud charges. As part of that settlement, Millennium filed bankruptcy, turning the a virtually worthless company over to the lenders. And that $1.8 billion? Most of it ($1.27 billion) had been quickly funneled to TA Associates, a Millennium adviser, and various trust funds belonging to none other than James Slattery.
You might be saying to yourself, "Sure, but now Slattery has to pay off the settlement and face a barrage of litigation, right?"
You'd be so very wrong. In fact, as the Palm Beach Post points out, the bankruptcy filing provided a shield for Slattery. It included a clause that prevented any of the investment firms from suing Slattery or TA Associates, even though some companies argue the loan was provided under "false pretenses." (One of the investors, Voya, has sued TA Associates and Slattery anyway).
Even after paying off the government, TA Associates and Slattery are still left with nearly $1 billion in loans that they funneled to themselves once the loan came through. Slattery gets to keep his mansions, including one in Florida worth $5 million. He gets to keep his extensive collection of vintage airplanes, as described by the San Diego Tribune. All told, he gets to dust himself off and walk away from the entire mess not just unscathed, but with his pockets filled to the brim.
Back in 2011, Slattery admitted he didn't think much of the Ernst & Young award initially. But he quickly realized his story could be an inspiration to "encourage other people who may feel they've had a bad time or been thrown a blow, especially people over 50, that it's not over," he told San Diego Source. "You can still go out there and use your skills, and kick some butt, and good things can happen."
Unfortunately, his inspiration lives on, accompanied by a heavy dose of irony. - Evan (@HealthPayer)