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Disgraced former WellCare exec looking to cash out

in The Bay and the 'Burg/Top Headlines by

In May 2014, former WellCare Chief Executive Todd Farha of Tampa was sentenced to three years in prison after being convicted of defrauding the Florida Medicaid program.

Farha, along with WellCare executives, Paul Behrens and William Kale, former vice president of government and regulatory affairs, had orchestrated a scheme from the summer of 2003 through the fall of 2007 to defraud the state of over $30 million by submitting exaggerated expense reports.

Along with the federal prison term, Farha was fined $50,000. WellCare, having paid over $134 million in compensation to the three convicted executives, sought $365 million in restitution estimating the total cost to the company following the revelations, raid on the company and subsequent legal proceedings at more than $700 million.

However, Farha, now 49, is seemingly looking to sell at least 322,298 shares of WellCare stock he acquired in 2006-2007 one week before the federal raid. At current market price, those shares are worth more than $30 million.

There is one small problem. Farha’s stock certificates contain a “restrictive legend,” which could prohibit the sale of shares in the public marketplace.

According to the April 2016 WellCare Proxy Statement – filed with the United States Securities and Exchange Commission – all 16 of the company’s current officers and directors owned 221,160 shares combined. That’s 100,000 less than the number Farha owns.

Farha recently “demanded” WellCare replace his shares with new, unrestricted certificates, which he alleges he is entitled to do, as he is no longer with the company. Unsurprisingly, WellCare refused.

Now Farha wants the court to force WellCare’s hand. Farha’s lawsuit does not explicitly say that he hopes to sell any of his shares, but it is hard to see what other motivation he has for requesting new, unrestricted certificates.

WellCare itself appears to have put the past behind it. Under new CEO Ken Burdick, the company has seen revenues grow from $6 billion to a projected $14 billion over the last five years employing more than 3,000 people in the Tampa Bay region serving 2.4 million Medicaid members and 1.4 million Medicare members in 15 states.

It is unclear if Farha was ever held in federal prison, and if so, where. According to the Bureau of Prisons as of May 18, 2016, Farha “has not been in the custody” of the BOP. Will

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