Probe Finds $286G in Improper Expenses at LifeLinks in Chelmsford

January 30, 2018 GMT

CHELMSFORD -- A comprehensive internal investigation at LifeLinks Inc. uncovered about $286,000 in unsubstantiated expenses over eight fiscal years that were previously charged as reimbursable program costs to the state, according to an Internal Revenue Service filing.

The unsubstantiated expenses in fiscal 2016 alone totaled $75,650, according to the organization’s 990 form for 2015, filed in 2016. The 990 is an annual tax form required of nonprofit organizations.

LifeLinks is a Mill Road-based nonprofit affiliated with The Arc of Greater Lowell that provides services and supports to Greater Lowell adults and children with intellectual and developmental disabilities and their families.

The funds were allegedly stolen by an employee who was fired shortly after other staff members discovered accounting irregularities in August 2016. Of the $286,000 the former employee allegedly misappropriated for personal and family use, $228,455 was state funds and the remainder was LifeLinks’ money, CEO Jean Phelps said Monday.


“Management has since reissued the uniform financial reports (UFR) for fiscal years 2009 through 2015 to properly categorize these expenditures as non-reimbursable program costs,” the IRS filing states. “The restatement of the UFRs resulted in a liability to the commonwealth totaling $165,637.”

“In addition, the unsubstantiated expenses for fiscal year 2016 totaled $75,650 and are reflected as unsubstantiated expenses,” the filing continues. “These amounts increased the liability due to the commonwealth by $62,818 to $228,455 as of June 30, 2016.”

Phelps said it’s frustrating the whole situation “can taint the public perception of who we are, but it doesn’t change our values or our history.”

“It doesn’t define who we are and we’ve got to move on,” Phelps said. “We continue to have a mission and people who need services. We’ve attended to the things we need to attend to and met all the obligations.”

LifeLinks engaged in a several months-long process, working with the state Department of Developmental Services, the Secretary of State’s Office and the Operational Services Division to agree on that number, Phelps said.

She said LifeLinks repaid the state for all of the stolen funds from its reserves. According the IRS filing, LifeLinks filed a claim with its insurance provider for the loss.

As of Monday, Phelps said LifeLinks is still negotiating with the insurance company and “may not actually see that money until and unless” the former employee is prosecuted.

Chelmsford police initially investigated the incident before handing it over to the state Attorney General’s Office.

The Attorney General’s Office declined to confirm or deny the existence of an investigation into the former employee in September and again on Monday.


Following the discovery, LifeLinks hired audit firm CBIZ Tofias to do a specialized review of its internal procedures and make recommendations to improve certain processes, Phelps said. From that, a corrective action plan was approved by the state Department of Developmental Services, she said.

Phelps said LifeLinks has done everything that was required of the organization under the plan. She said CBIZ Tofias will be back to certify a year’s worth of clean transactions.

As many controls as an organization can put into place to mitigate the possibility of something like this happening again, nothing is 100 percent foolproof, Phelps said.

A triennial accreditation review by the Commission on Accreditation of Rehabilitation Facilities occurred in the midst of the investigation. In its report, CARF praised LifeLinks’ handling of the situation and awarded the organization its second perfect review in a row.

When reached Monday afternoon, Pamela Anastasi, a senior vice president of Enterprise Bank and president of LifeLinks’ board of directors, referred all comment to Phelps.

Follow Alana Melanson at or on Twitter @alanamelanson.