A California company whose CEO has ties to President Barack Obama was granted nearly $1.3 million to provide health-care navigator services in California and Illinois, despite past allegations of misconduct.
The East Los Angeles Community Union, known as TELACU, was granted $980,000 from Covered California, the state’s Obamacare health-care exchange. The company, which is a nonprofit organization with for-profit subsidiaries, was also awarded a $294,000 grant to provide navigator services for the state of Illinois, though the company has since declined that contract.
Despite being awarded the grants, which requires navigators to inform the public about their health coverage options under Obamacare, the company has been accused of bribery and influence peddling.
In 2009, two San Bernadino city councilors accused the company of trying to sway their vote on a downtown housing project.
“We were offered a bribe,” said former San Bernadino Councilwoman Esther Estrada at the time.
Estrada explained further in an interview with The Daily Caller News Foundation, saying that in 2009 a “henchman” for TELACU’s CEO David Lizarraga approached her saying “that TELACU was ready to do whatever” in exchange for her vote on the project.
“I suspect that if they did that with me then they did that with other people,” said Estrada.
Another San Bernadino city official told TheDCNF that the TELACU’s tactics on that 2009 vote “underhanded” and “distasteful.” Wendy McCammack, a city councilwoman who is also a mayoral candidate, said that a government affairs rep for TELACU offered her and other councilmembers “whatever you need” in exchange for a yes vote on the project.
Despite the bribery accusation, last year Obama appointed Lizarraga to a key position on the Community Development Advisory Board, which falls under the control of the U.S. Treasury Department. The board advises the director of the Community Development Institutions Fund on community development project decisions.
According to OpenSecrets.org, TELACU and TELACU Industries employees gave $55,750 to political campaigns in 2012, including $10,250 to Obama. According to FollowTheMoney.org, in 2006 company employees contributed $1,000 to Rod Blagojevich, the former Illinois governor who is in prison for corruption.
As one of the states that set up its own exchange, California was given nearly $37 million in federal money to help implement Obamacare. Nearly 50 organizations, including TELACU, will use that money to educate Californians about their health care options.
The 36 states that chose to take part in the federal marketplace were given $67 million by the Washington to provide navigator services. Over 100 organizations throughout the country will provide navigator services in those states which include Illinois.
TELACU originally submitted applications for navigator grants for a total of six states on the federal or partnership exchanges. But the company was awarded only the Illinois and California grants, and decided to focus only on its work in California.
“Since this is not what we proposed, and since providing services in Illinois was only a portion of our overall strategy, we declined the Navigators grant,” said Michael Lizarraga, the CEO of TELACU’s industrial segment, in a statement to TheDCNF.
Estrada and McCammack’s accusations against TELACU in 2009 aren’t the company’s only blemish.
In the early 1980s, the Small Business Administration pulled the plug on an investment in TELUCA, accusing the company of self-dealing.
In 1988, TELACU was involved in a pay-for-play scheme involving Los Angeles Councilman Richard Alatorre. Alatorre admitted that he tried to direct a $722,500 contract to TELACU after the company paid him $1,000 to give a speech in Lake Tahoe. He paid a $2,000 fine for the violation.
And in the late 1990s, Alatorre admitted to receiving a $13,200 loan without repayment terms from TELACU for work on the roof of his home. TELACU was in the running for a $65 million transit authority contract and a $2 million contract to build a shopping center at the time of the loan. The company was awarded the latter contract.
The navigator program has drawn criticism. Some have argued that it is a front for a massive voter-registration effort. Others point out that navigators’ backgrounds are not properly vetted, especially since they handle private medical and financial information. These concerns were magnified after Secretary of Health and Human Services Kathleen Sebelius told a Senate panel last week that it was possible for felons to become navigators.
While representatives for TELACU did clear up the status of their navigator grants, they did not respond to the bribery allegations. Covered California declined to comment, and the Centers for Medicare & Medicaid Services did not respond to requests for comment.
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