Attorney General Mark Brnovich announced Monday that William J. Timmons, the former Chief Executive Officer (CEO) of Hacienda, Inc., pleaded guilty to two counts of Fraudulent Schemes and Artifices, both of which are Class 2 Felonies. A sentencing hearing for Timmons is scheduled for July 22, 2021.
In August 2020, a State Grand Jury indicted Timmons, and his long-time Chief Financial Officer (CFO) Joseph O’Malley, on a series of charges related to their alleged involvement in an elaborate white collar fraud scheme that bilked Arizona taxpayers out of millions of dollars.
As part of the plea agreement with the State of Arizona, Timmons has agreed to pay the following in restitution:
- $500,000 to the Arizona Health Care Cost Containment System (AHCCCS); and
- $274,500 to the Attorney General’s anti-racketeering revolving fund.
Timmons was the CEO of Hacienda from July 1989 to January 2019. The indictment alleged that from 2013 until June 30, 2018, Timmons and O’Malley intentionally misallocated funds from the Arizona Department of Economic Security’s Division of Developmental Disabilities (DES/DDD) and AHCCCS by manipulating costs to avoid repayments of state funds in favor of inflated salaries and bonuses. The DES/DDD contract was with Hacienda’s Intermediate Care Facility (ICF) only. However, Timmons used the money to pay for a large portion of costs at Hacienda’s other facilities and did not reimburse the State as required by the contract. This resulted in millions of dollars of overpayment by the State.
South Mountain Health Supply was operated under the umbrella of Hacienda. The indictment alleged that between July 1, 2013, and June 2018, South Mountain purchased medical supplies from third-party vendors, and then re-sold the supplies to Hacienda at a 12.5 percent markup. Timmons directed the payment of the inflated prices, including a delivery fee (even though the two entities were located at the same address), with public monies.
This criminal investigation of Timmons was led by Special Agents within the AGO Health Care Fraud and Abuse Section with the assistance of investigators from the AHCCCS Office of Inspector General and DES.
Timmons faces between 3-12.5 years in the Arizona Department of Corrections, Rehabilitation and Reentry on each count. Probation is also available. There are no agreements as to Timmons’ sentencing which will be imposed by the Judge on July 22, 2021, at 9 AM.
The case against Timmons’ co-defendant, O’Malley, is ongoing and the trial is currently scheduled for March 8, 2022.
Hacienda Healthcare Settlement
In a related civil case settlement that had been announced on September 2, 2020, Hacienda Healthcare, Inc. had agreed to pay $11,000,000 to resolve the case that had been brought by the Arizona Attorney General’s Office.