JUDGMENT DAY: Five Black Business Leaders Sentenced to Over 800 Months in Prison for Federal Crimes

ABOVE: The Varnett Public School disgraced founders Dr. Marian Annette Cluff and husband, Alsie Cluff Jr. (pictured left) and the Cluff estate (pictured right)

809 months in prison. Over 67 years behind bars.

That is how much collective time five prominent local Black business leaders in the Greater Houston area were recently given by federal judges after they were all awaiting sentencing for federal crimes they had been convicted of over last year.

The Forward Times has been following two specific cases for several years regarding the top leaders who led the company Team Work Ready (TWR) and who were at the helm at The Varnett Public School. Needless to say, the final domino fell for the top leaders in both entities and they received no mercy.

Let’s start with Team Work Ready and their fallen leadership team.

The Forward Times has been following the Team Work Ready case since 2016 and reported in July 2017 that two of their local executives from the company, Frankie Lee Sanders and Pamela Annette Rose, had been formally sentenced to a 300-month (25 year) and 120-month (10 year) term, respectively, for conspiracy, health care fraud, wire fraud and money laundering for their roles in a $18 million dollar nationwide Worker’s Compensation fraud scheme.

Well, on June 1, another name was added to the list as the feds saw the top guy at Team Work Ready finally receive his expected hefty sentence.

                                                           Frankie Sanders

The same judge who sentenced both Sanders and Pamela Rose to their lengthy prison sentences came down hard on the CEO of Team Work Ready, Jeffrey Eugene Rose, Sr. in a major way.

U.S. District Judge Ewing Werlein Jr., who presided over the trial for all three Team Work Ready defendants, sentenced Jeffrey Rose to 233 months in federal prison and ordered him to pay $14,537,548.54 in restitution to the Department of Labor (DOL), Office of Worker’s Compensation Program (OWCP) which administered the Federal Employees Compensation Act health care benefit program known as FECA.

“Jeffrey Rose orchestrated a fraudulent scheme to submit more than $18 million in claims for services never provided to injured federal workers to DOL-OWCP using the health care clinics he owned in multiple states,” said Special Agent in Charge Steven Grell of the U.S. Department of Labor (DOL) – OIG. “We will continue to work with our law enforcement partners to protect the integrity of department programs and safeguard taxpayer money.”

In deciding upon the sentence, Judge Werlein considered the seriousness of the offense and the $18,354,971 in fraudulent claims submitted from Jeffrey Rose’s 10 TWR clinics located in Texas, Louisiana, Georgia, Memphis and Alabama, including clinics in Houston, San Antonio, and McAllen.

During the trial, the jury heard testimony from 38 witnesses including former patients of TWR clinics, former employees of TWR clinics, various experts and special agents from USPS-OIG and IRS-CI. According to testimony, TWR submitted millions in false and fraudulent claims for physical therapy services. Patients testified at trial that they did not receive the one-on-one physical therapy services for which DOL-OWCP paid under FECA, but stated they played with the Nintendo Wii game, exercised independently on treadmills, bicycles, elliptical machines and other pieces of exercise equipment. Testimony from former TWR employees revealed that the Houston clinic had as many as 30 to 60 patients a day coming in and employees stated they did not know what patients were doing in the main treatment area because they were busy in the back doing massages, electrical stimulation treatments and ultrasound treatments. Undercover federal agents posed as patients at two of the TWR clinics. The jury watched portions of covertly made recordings that supported the employee and patient testimony about clinic activities. The jury also heard several recordings a TWR employee made demonstrating how the defendants tried to coerce the employee into ordering medically unnecessary treatment so the clinics could profit.

“The health care fraud and money laundering activities committed by Jeffrey Rose and his co-conspirators harms all Americans, as we all have to pay our fair share for government services and protections that we enjoy,” said Assistant Special Agent in Charge Ramsey Covington of IRS-Criminal Investigation (CI). “Our system of health care is founded on the trust of the public in its health care professionals and the outstanding services they provide.”

Pamela Rose was also ordered to pay $14,537,548.54 in restitution, while Sanders was ordered to pay $13,365,525.38. Upon completion of their prison terms, Jeffrey Rose, Pamela Rose and Sanders, will also be required to serve three years supervised release.

Now, let’s move on to The Varnett Public School and their disgraced founders, Dr. Marian Annette Cluff and her husband, Alsie Cluff Jr.

The Forward Times has been following this case since 2015 and reported in November 2017 that the Cluffs agreed to separate plea deals after initially pleading ‘not guilty’ to a 19-count federal indictment with alleged charges of conspiracy, mail fraud, tax evasion and obstruction of justice.

                        Pamela Rose

According to the plea agreements, Marian pleaded guilty to two counts of Conspiracy to Commit Tax Evasion and Mail Fraud, while Alsie pleaded guilty to Conspiracy to Commit Tax Evasion. Also as part of the plea agreements, Marian agreed to a maximum sentence of up to 10 years in prison for both counts and Alsie agreed to a maximum sentence of up to 3 years in prison, with the couple agreeing to pay $4,443,755.69 in restitution prior to sentencing.

Well…judgment day came for the Cluffs on June 15.

After nearly five hours of federal prosecutors and defense attorneys going back and forth about what punishment the Cluffs should receive, U.S. District Judge Melinda Harmon decided to sentence them to the maximum sentences that were outlined in their plea agreements, along with the $4.4 million in restitution.

It is strongly believed that events leading up to the sentencing date may have played a major part in the judge’s final decision.

According to federal prosecutors, upon doing a walk-thru of the Cluffs’ nearly 10,000-square-foot Riverside-area mansion with a two-bedroom carriage house that sits on nearly two acres of land and is appraised at $1.7 million, they found the house to have been practically stripped bare prior to sentencing. Prosecutors believed that the Cluffs were seeking to get rid of as many of their assets as possible prior to their upcoming sentencing date. Upon seeing the condition of the home and its many missing assets, such as expensive furniture, major appliances, artwork, televisions, chandeliers and other intangibles, federal prosecutors filed an emergency motion alleging the Cluffs had violated the terms of their plea agreement by disposing of their assets before sentencing without prior government approval. Judge Harmon granted that motion prior to their sentencing date, barring them from selling any more of their belongings and ordering an immediate freeze on most of their assets. According to federal prosecutors, the couple donated and sold the majority of the items to a number of charitable organizations, as well as to their son, their real estate agent and some unnamed Hurricane Harvey victims.

Judge Harmon did not hold back on her words regarding the Cluffs during sentencing, at one point likening the couple to characters from a Charles Dickens novel who steal from the poor like villains.

The 2015 federal indictment that the Cluffs pleaded guilty to states they embezzled in excess of $2.6 million in funds intended for the operation and function of the charter school and its programs. The federal indictment also charged the couple with tax evasion, alleging they did not pay income taxes to the IRS of approximately $851,845, not including interest and penalties, on the money they received as a result of the scheme.

The federal indictment alleged that the Cluffs used their positions of trust and authority to embezzle money from The Varnett Public School by opening four “off-books” accounts (bank accounts not directly tied to the financial operation of the charter school) in a name similar to the school. The Cluffs were the signatories of the four accounts, according to the federal indictment, and only used the “off-books” accounts for the purpose of diverting money intended for the charter school for their own personal use and benefit. According to federal authorities, Marian and Alsie allegedly concealed the “off-books” accounts from the office manager at The Varnett Public School, as well as from the school’s external accountant and their income tax preparer.

                                               Jeffrey Rose

The federal indictment also stated that the Cluffs embezzled more than $1 million from “money orders” submitted by parents of the students to pay for school field trips and student fundraisers, such as chocolate sales, book fairs, school carnivals and other school related activities. Additionally, federal authorities claimed that the Cluffs allegedly diverted and concealed money received from vendors of the school, insurance companies and federal agencies into the “off-books” accounts. In a separate false invoicing scheme also charged in the federal indictment, federal authorities claimed that the Cluffs directed The Varnett Public School’s building maintenance and landscaping contractor to submit false invoices to the school for payment on work that was never actually performed. The federal indictment alleged that The Varnett Public School paid invoices totaling more than $115,000, and that Marian allegedly instructed the contractor to return the money by writing checks from the contractor to her personally, which she then deposited into her personal bank account. According to the federal indictment, she then told the contractor to make a false statement to the FBI stating that the money was for a “loan” and that she had paid the contractor back in cash.

If the Cluffs would have gone to trial and been convicted of either mail fraud or obstruction of justice, they would have faced up to 20 years in prison, as well as a possible five-year federal prison sentence for the conspiracy and tax evasion charges and a possible $250,000 fine.

The federal indictment of the Cluffs came as the result of the investigative efforts of the FBI, IRS-CI and the U.S. Department of Education-OIG, who stepped in after the Texas Education Agency first dispatched investigators to The Varnett Public School back in March 2011, to look into what they believed was questionable activity, such as American Express statements that showed roughly thousands of dollars spent at a jewelry and souvenir store at Walt Disney World and more than $700 charged at a luxury spa, and much more.

It is safe to say that the feds are closely watching the business dealings of many of our Black business leaders in the Greater Houston area and it is prudent that they properly handle their business affairs with caution and accountability.

Let’s hope the Forward Times won’t have to report about any more of our Black business and community leaders being impacted like this in the near future any time soon, or ever again.