A woman who oversaw the finances for a Pinellas County nonprofit that receives millions in taxpayer dollars to help people who are homeless or mentally ill is facing a charge that she defrauded her prior employer.
The nonprofit, Directions for Living, would not say what it did to vet the woman and what steps it is taking to determine if any of its public money was put at risk.
Wendy Merson, 62, served as chief financial officer for Directions for Living for about three years, according to public records. She held that job as recently as last month, when she was arrested by Pinellas Park police on a charge of scheming to defraud, a felony that carries up to 30 years in prison.
Police said those schemes took place during Merson's tenure as chief executive officer of Windmoor Healthcare of Clearwater, a psychiatric and substance-use treatment center, and involved kickbacks, fraudulent check-cashing and the illicit purchase and resale of snow crab legs.
During her time at Directions for Living, Merson also faced a lawsuit from Windmoor's insurance company alleging financial fraud and ultimately agreed to pay a half-million dollars.
The criminal fraud investigation began in 2018, at least a year before Merson was hired at Directions for Living, a Pinellas Park police spokesperson said.
Directions for Living spokesperson Summer Gray said last week that Merson isn't currently employed by the nonprofit. The Tampa Bay Times followed up with questions about how the nonprofit vetted Merson prior to her hiring, whether it knew about the civil suit during the course of her work there and whether it had taken any steps in the wake of her arrest to ensure that the money under her purview was used appropriately.
Gray said in an email that the organization wouldn't comment "as it is a distraction from our mission."
"It is the opinion of our legal counsel that these questions are potentially being asked in an attempt to negatively associate Directions for Living with a story unrelated to our organization," Gray wrote.
The criminal case against Merson did not appear in court or jail records until her arrest last month, but a police spokesperson said the investigation began at the behest of Windmoor. Windmoor did not respond to requests for comment by phone and email.
Merson's attorney, Luke Lirot, said the criminal charges came as a surprise. The terms of the settlement Merson reached with Windmoor's insurance company in 2021 should preclude criminal charges, he said. Though it's not uncommon for a civil case to follow a criminal one, he said he'd never seen it the other way around in his four decades practicing law.
"To arrest somebody a couple of days before Christmas on a case they thought was resolved for many, many, many months was shocking," he said.
Merson's arrest report offers few details about the allegations against her. Records in the civil case, filed in 2020, detail a timeline of alleged fraud after Merson became Windmoor's chief executive in 2006.
The trouble, the lawsuit alleged, began in 2012 with kitchen renovations at Windmoor. Unable to prepare meals for residents, Merson had the hospital order meals from a catering company owned in part by a former Windmoor executive; Merson, according to the suit, also had a stake in the company.
Windmoor kept ordering the meals after the renovations were done, even though, the hospital's insurance company later argued, they were more expensive and less plentiful than what the kitchen could produce. It also alleged Merson signed off on invoices for food that didn't exist. The insurance company pegged the cost of the food schemes at more than $700,000.
In 2013, it alleged, Merson and the hospital's business director contracted with a transportation company in exchange for kickbacks of about $10,000 a month. The contract lasted five years, the insurance company said, and the kickbacks totaled more than $400,000.
In 2016, according to the lawsuit, Merson began writing Windmoor checks payable to employees, then had the employees cash the checks and return the money to her. She told the employees the money would be used "to purchase gift cards for employee appreciation projects," according to the suit. Instead, she kept it for herself - totaling at least $82,000.
Merson's final alleged scheme also began in 2016. Merson and the dietary director, the lawsuit said, used hospital funds to buy $163,000 in snow crab legs over the course of two years. They kept the shellfish, gave it away or sold it on the side.
It's not clear exactly when in 2018 Merson left Windmoor, nor under what circumstances. Both the criminal and civil cases allege the fraud continued through February of that year. By that spring, an internal audit by the hospital had found "suspiciously high" food and transportation prices, said Sgt. Alexander Matson, a public information officer for the Pinellas Park Police Department. Detectives took a report and opened an investigation on April 30.
It took four years of witness interviews and subpoenas to put together a criminal case against Merson, Matson said.
In the meantime, Merson found another job. Her predecessor at Directions for Living left in April 2019, according to a LinkedIn profile. Merson had started by the next spring, when Directions for Living named her as chief financial officer on its annual report to the Florida Division of Corporations. She was paid about $106,000 in her first year on the job, according to the nonprofit's federal tax filing that year.
Directions for Living's services range from psychiatry to homelessness outreach. Pinellas County's budget for this year includes eight contracts with the nonprofit plus a grant for roof replacement and solar panel installation at its Clearwater facility, totaling nearly $3.5 million. In the fiscal year between the summers of 2020 and 2021, according to the nonprofit's most recent available federal audit, it received nearly $20 million in federal, state and local funding.
The county "has no reason to think the contract requirements for these programs have not been met" during Merson's tenure, said county spokesperson Barbra Hernandez. "Each one has specific requirements that county staff actively monitor to ensure they are completed according to scope."
Windmoor's insurance company filed its lawsuit in the Middle District of Florida that April, accusing Merson, 10 other people and three businesses of carrying out or benefiting from the fraud schemes.
The insurance company ultimately dismissed some of the defendants and reached settlements with the rest. The terms of such settlements usually aren't public record, but one has been filed as an exhibit in Merson's criminal case: She and her husband, who was also named in the suit, agreed in 2021 to pay $500,000.
Merson was listed on Directions for Living's website as its chief financial officer as recently as Dec. 1, according to a version of the page saved by the Internet Archive's Wayback Machine. When Pinellas Park police took her to the Pinellas County jail four days before Christmas, the arrest report listed her workplace as Directions for Living.
Times staff writer Christopher O'Donnell contributed to this report.