PHOENIX — The former CEO of Hacienda, Inc. has pleaded guilty to fraud charges, according to the attorney general's office.
Attorney General Mark Brnovich announced Monday that William J. Timmons pleaded guilty to two felony counts of fraudulent schemes and artifices.
Timmons was indicted by a grand jury in August 2020, along with his longtime chief financial officer, 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," a statement from the attorney general's office said.
Timmons was the CEO of Hacienda from July 1989 to January 2019 agreed to pay $500,000 to the Arizona Health Care Cost Containment System or AHCCCS and $274,500 to the attorney general’s anti-racketeering revolving fund in restitution.
Timmons and O’Malley were accused of intentionally misallocating funds from the Arizona Department of Economic Security’s Division of Developmental Disabilities and AHCCCS by "manipulating costs to avoid repayments of state funds in favor of inflated salaries and bonuses" from 2013 to 2018, the statement said.
Timmons used money set aside specifically for Hacienda’s Intermediate Care Facility to pay for a large portion of costs at Hacienda's other facilities and did not reimburse the state which is required by the contract. This resulted in the state overpaying millions of dollars to uphold the contract for the intermedia care facility.
The indictment also alleged during that same time period South Mountain Health Supply, which was operated under the umbrella of Hacienda, was buying supplies from third-party vendors and reselling the supplies to Hacienda at a 12.5% markup.
Timmons orchestrated the payments for supplies at inflated prices with public funds, the attorney general's office said.
He is scheduled to be sentenced on July 22, 202, and faces between three to 12 years in prison for each count on the indictment or could be put on probation.
The case against O'Malley is ongoing and the trial is currently scheduled for March 8, 2022.
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