Saturday, April 4, 2015

More Behind 21CT's $110 Million Sweetheart Deal

The Texas Health and Human Services Commission conducted an investigation into the unlawful steering of government business to 21CT.  Several questions are not answered in the Commission's investigation.

1.  Why did the Commission allow Jack Stick, a new employee in the Inspector General's office to lead the purchasing of Medicaid fraud detection and analytical services? 
It's clear Jack Stick was part of a culture that viewed government money, federal and state, as something to lavish on friends and insiders.  I'll go one step further and suggest Stick was setting himself up for the big payday post government, private sector employment.  Thus, he needed to be seen as the delivery man.

2.  Who are the people Stick intended on currying favor with via his off road purchasing exhibition?
Austin American Statesman reported 21CT CEO Irene Williams lied about her first meeting with Jack Stick.  The meeting occurred in 2007, not 2011 as she asserted.

What are Mrs. Williams' connections to Texas state government and why would Jack Stick move mountains to get 21CT $20 million in contracts, later adding another $90 million.  The Houston Chronicle identified a web of family ties within the Commission that worked to get 21CT business.   The article did not reveal why this group worked so hard on 21CT's behalf. 

A look at 21CT's roster revealed a familiar last name in Health and Human Service Commission circles, Gilbert.

 Mr. Logan Gilbert serves as CISO and Vice President of Analysis Services at 21CT, Inc. 
Don A. Gilbert served as Commission of Health and Human Services, appointed by Governor George W. Bush in 1998.  I found no information of their relation, but am curious if one exists, given the pair share similarities in resemblance.

21CT board member Fred Chang served as the President George W. Bush's Director of Research at the National Security Agency.  He was once 21CT's President and Chief Operating Officer.

Who's bread was buttered in the deal?  Who hoped to garner future loaves and sticks from tapping state and federal piggy banks for friends?  Those questions remain unanswered for the public.

Insiders, whether they be Red or Blue in political affiliation, know the connections. Their investigations will not reveal relationships or true root causes.  They stop at the first why question when six or seven are required.

Why is this so egregious?  Inspector General's are charged with ensuring rules are followed, not crashing through every one to engorge an unqualified vendor with $110 million in public money.

21CT pursued private equity investment as a past attendee of the Capital Roundtable (CR).  CEO Irene Williams spoke at their April 2013 event which focused on cybersecurity.  CR's promotion of the all day event included:

As Cybersecurity Threats Get Bigger, So Do The Private Equity Opportunities 
P.E. Investing In Middle-Market Cybersecurity Companies

Designed to Meet the Needs of GPs, LPs and Managers of Buyout, Growth Equity, Mezzanine, and Debt Funds, as Well as Independent Sponsors, Operating Partners, Portfolio Company Managers and the Bankers, Lawyers, Accountants and Other Advisors Who Support Them 

The Capital Roundtable offers excellent marketing and business development opportunities to reach the middle-market private-equity community.
There is no public information showing 21CT to be an affiliate of any private equity underwriter (PEU).  However, not all Austin area PEUs reveal their holdings.

21CT CEO Irene Williams wrote her company is "100% self-funded successful technology company with no outside investors." I sense a round of Clintonesque word parsing.  OK, who are the inside investors besides her and Fred Chang?  As there are multiple ways to invest in a company who holds 21CT equity and/or debt? 

There's more behind the 21CT story in relationships and connections.  It may or may not come out as officials try to paint this debacle as a simple purchasing error.  The Government-Corporate Monstrosity, especially the Texas version, undertakes herculean effort to hide its very existence.