By Michael E. Miller
By Allie Conti
By David Villano
By Jose D. Duran
By Michael E. Miller
By Allie Conti
By Kyle Swenson
By Luther Campbell
The price per pint not only pays for the expensive separating and testing processes, but also yields the blood banks an impressive profit. Last year South Florida Blood Banks made a profit of $1.36 million, and Community Blood Centers reported more than $3 million in profits at year's end. Charities can't legally turn a profit, so blood-bank officials say the extra cash will be used in the construction of new processing plants, the purchase of new bloodmobiles, and staff salaries.
The profits have also allowed the blood banks to give top executives handsome raises. John Flynn, who made $124,000 in 1996 as president and CEO of South Florida Blood Banks, now earns more than double that: $279,000 per year. Rouault's salary at Community Blood Centers jumped 30 percent from $215,000 in 1996 to $280,000 this year.
Profits have also allowed South Florida Blood Banks to pay consulting fees and salaries to its volunteer board of directors totaling at least $312,000. A decade ago board president Douglas Johansen received $36,000 for also serving as a consultant, and the blood bank paid Admiralty Bank, which Johansen founded, $121,000 to lease computers. Similarly around that time, John Flynn paid his brother Howard $30,000 to develop a computer program to help the blood bank conform to government regulations, even though the firm also had a staff computer technician making $118,000 a year.
South Florida Blood Banks board members say they're no longer being paid for their services. The blood bank in 1993 announced that it had passed rules forbidding such payments. But Rouault and others at Community Blood Centers claim its rival still pays its board -- while Community has never compensated its directors for their time. Curt Lyman, a financial consultant who joined the South Florida Blood Banks board a year ago, insists he and others on the board are not paid. "This board of directors is not receiving any compensation for the job that it does," Lyman says. "We do this to serve the community."
One member of the South Florida Blood Banks board, Laura South, is also listed in state records as a board member of a for-profit corporation called South Florida Blood Banks Services, Inc. Speaking from the office where she works as executive director of Moroso Motorsports Park in West Palm Beach, South said in October that she wasn't aware of the listing. Obviously surprised by the fact, South said she would check into it. But in the ensuing weeks, she did not return several phone calls from New Times.
South Florida Blood Banks has one board that oversees its main corporation and another for its foundation, or fundraising arm. Last year, two members of those boards -- Philip Arvidson and Maria Ornelas -- also served on the board of the Pheonix Foundation for Children. Sometime last year they convinced their colleagues at the blood bank to donate $50,000 to that charity, whose former top executive, Tom Abrams, is now serving a 25-year federal prison sentence for conducting a Ponzi scheme to scam at least $19 million in charity donations and investments. Ornelas couldn't be reached for comment and Arvidson, a former PepsiCo executive, didn't return phone calls. After the FBI raided the Pheonix offices in West Palm Beach in October of last year, Arvidson told the Palm Beach Post: "I know the [Pheonix] board is being run right, and everything we collect is going back to the kids."
South Florida Blood Banks has also channeled at least $2.3 million into private companies associated with John Flynn, according to state records. One of the firms, the Association of Independent Blood Centers, works as a purchasing agent for a group of blood banks. Flynn serves as the CEO of that company, which contributes one-fifth of his $279,000 salary. Another company operating as a for-profit corporation serves as a landlord for property owned by South Florida Blood Banks, board member Lyman said, adding that he couldn't recall that company's name. But audits of South Florida Blood Banks, which are supposed to keep track of the charity's money, don't document the use of cash paid to the for-profit corporations. Apparently not even members of the South Florida Blood Banks board know what happens to the money paid to these corporations. "I was under the impression that those companies were part of our audit," said Lyman.
Lyman's comments came during an October meeting with New Times.South Florida Blood Banks' initial response to questions, however, was an October 14 e-mail from spokeswoman Kristina Krueger that said the blood bank had "decided to not provide interviews." After New Timesbegan contacting board members and employees independently, Krueger wrote again October 22 that she was "concerned and disappointed by the questions you are raising about South Florida Blood Banks." She agreed to meet to discuss the questions along with board member Lyman and Rachele Scholes, a media-relations specialist with Newz2use of West Palm Beach. The three provided the blood bank's official response.
CEO John Flynn does not respond to interview requests from the press. Lyman says Flynn is too busy running the blood bank. Instead his only words printed in local newspapers in recent years come from a lawsuit filed this past September by former employees accusing him of discrimination. "Forget all this nonprofit stuff," he said at a meeting, according to court papers. "Show me the blood and I'll show you the money."