Cardinal Innovations Monday sued former CEO Richard Topping in an effort to recover the nearly $1.7 million in severance he received last fall on the same day state officials took over the agency.
At the same time, a former federal prosecutor hired Cardinal said Topping "stole" proprietary information, destroyed agency data and engaged in "a pattern of self-enrichment . . . at the expense of Cardinal."
"I think (Topping) was trying to find the key that would unlock the treasure chest," CEO Trey Sutten said.
Topping could not be reached.
Last fall state health officials took the unusual step of taking over the Charlotte-based Cardinal, which manages a treatment network for people with disabilities, mental health needs and substance abuse in 20 counties including Mecklenburg, and firing its board.
State officials demanded that Cardinal Innovations repay $3.8 million in "unlawful" severances to its ousted CEO and three executives, even though they'd already received the money.
Monday's lawsuit and last fall's takeover capped a tumultuous period for the agency.
Last May, State Auditor Beth Wood ripped Cardinal for spending on CEO pay as well as on lavish Christmas parties and board retreats, charter flights for executives and "questionable" credit card purchases, including alcohol.
Then in October, an auditor for the Department of Health and Human Services released a 17-page report that criticized the severance packages Cardinal was offering Topping and his team. in November DHHS took over the agency, firing the board and barring Topping from the premises.
Monday's suit could be just the first step in trying to recover some of the severance money through the courts. Officials left the door open to further legal action against former executives and even members of the former board of directors.
"Everything's on the table at this point," Sutten said.
On Monday morning, Cardinal invited reporters for a nearly 90-minute presentation by attorney Kurt Meyers, a former assistant U.S. attorney. In a presentation, he laid out an extraordinarily detailed case against Topping using documents, emails and text messages gleaned from other sources. He sought to show how Topping repeatedly sought higher compensation.
For example, after the board — under state pressure — reduced his pay from $635,000 to $205,000, he persuaded them to restore it — retroactively.
"He lost, in the end, not a penny," Meyers said.
Through emails and documents found in Topping's office, Meyers also described how he appeared to be planning a new business venture while at Cardinal. Topping, Meyers said, "contemplated how he was going to enrich himself from Cardinal."
Meyers said evidence shows Topping was erasing data from his Cardinal-provided devices after he learned the state was coming in.
State Sen. Tommy Tucker, a Union County Republican and longtime critic of Cardinal management, said he "smelled a rat" years ago.
"What I saw this morning didn't really shock me when you're dealing with a narcissistic personality like Mr. Topping," he said after watching the presentation Monday.
Meyers portrayed a board that appeared to offer Topping more support than oversight. For example, he shared emails that appeared to show that Topping wrote the script for board chair Lucy Drake and another member for the meeting when the board fired member Bryan Thompson, who had been critical of the salaries. That was just before the board authorized the severances.
Drake said Monday that Topping helped with the script because she "didn't know how to word it."
Thompson has since been named chairman of the new Cardinal board.
Charlotte's Carmen Hooker Odom, a former DHHS secretary and vice chair of the new board, said she hopes the investigation and the lawsuit show that Cardinal's new management is pursuing "rigorous and responsible oversight."
"Cardinal Innovations has to rebuild and rectify its public trust," she said.