January 4, 2019

Middletown foundation: Ex-CEO misappropriated nearly $1.9M

Photo | YouTube, U.S. Pain Foundation
Former U.S. Pain Foundation CEO Paul Gileno.

A Middletown-based nonprofit that provides advocacy and education for pain patients revealed Thursday that its former CEO misappropriated nearly $1.9 million over a three-year period, forcing his previously reported resignation last May.

The U.S. Pain Foundation has been reeling since last April, when it said it discovered Paul Gileno's alleged misuse of funds, which the organization reported to law enforcement in June.

It does not appear that Gileno, who has a listed address in New York, has been arrested or charged with any crime.

Meanwhile, U.S. Pain's charitable solicitation registration in Connecticut, which allows it to accept donations, expired on Dec. 1. It said it's working with the state Department of Consumer Protection to get reinstated.

Pain News Network reported Dec. 12 that Attorney General George Jepsen's office had opened an investigation into U.S. Pain.

The nonprofit alleged in December that Gileno had misused funds, but did not disclose the amount.

The $1.9 million in so-called "excess benefit transactions" are detailed in U.S. Pain's recently filed Form 990 financial filings, which are mandatory for nonprofits, for 2016 and 2017. The foundation posted the overdue reports on its website this week, and said it mailed them to the IRS on Dec. 22.

The foundation said it expects to report additional excess benefit transactions for early 2018, before Gileno resigned, in its 2018 IRS filing later this year. It did not disclose the amount.

According to U.S. Pain, a nonprofit incurs an excess benefit transaction when an economic benefit provided to a person of certain influence over the organization exceeds the value received by the organization. The foundation alleged that Gileno took funds that exceeded the value of his services "for unauthorized purposes and in improper ways."

The Form 990s say Gileno received excess benefit payments "in the form of unauthorized payroll" and "in the form of use of related party vendors and company payment of personal expenses."

Also detailed in the recent filings are a $100,000 loan from U.S. Pain SMJ Homes, a New York residential contractor run by Gileno's brothers, as well as approximately $50,000 in payments Gileno's wife and sister.

The foundation said it has implemented stricter internal controls and is working with legal counsel to seek restitution from Gileno, who could not immediately be reached for comment.

The foundation is hoping it can put the matter in its rear view mirror.

"U.S. Pain fills a vital gap in support for the pain community and refuses to let the actions of one individual impede its efforts to educate, connect, empower, and advocate for those living with chronic pain," the foundation said. "The organization is poised for a 2019 that will

include even more services and events and looks forward to continuing to offer help and hope to

individuals with pain for years to come."

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