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First on 3: Cuyahoga County settles with company accused of double billing expenses for management of former Medical Mart

BioEnterprise repays $127,000 and foregoes $500,000 in 2019 management expenses sought from taxpayers for work to revive the Global Center for Health Innovation.

CLEVELAND — BioEnterprise, the nonprofit company hired to market and find tenants for the underutilized Medical Mart, agreed in September to repay Cuyahoga County tens of thousands of dollars in disputed charges related to its two-year tenure as the manager of the building now known as the Global Center for Health Innovation.

BioEnterprise, which helps start-up medical companies, agreed to pay $127,000 related to previously reimbursed expenses.

BioEnterprise also is walking away from 2019 management fees and expenses totaling $500,000 that it initially sought from the county as part of the settlement. These details are contained in public records released by the Cuyahaga County Convention Facilities Development Corporation, the public board that manages the convention center and Global Center.

Jeffrey Appelbaum, an attorney with the firm Thompson Hine who is representing the county, credited the convention facilities board’s executive director, George Hillow, with not only flagging questionable expenses but pushing for an aggressive settlement on behalf of taxpayers.

“He deserves a lot of credit for doggedly reviewing the information and uncovering the issues,” Appelbaum said. “In settling this case, we felt the convention board and the taxpayers were fully reimbursed, so we feel restitution was made at appropriate level.”

3News first reported in 2019 that the BioEnterprise’s billings were the subject of Cuyahoga County Grand Jury subpoenas and the subject of an Ohio Attorney General investigation. 3News also first reported in 2020 that Hillow initiated an independent audit of BioEnterprises work.

That audit concluded BioEnterprise double billed tax-supported entities for more than $100,000 in salaries and expenses. It found BioEnterprise sought reimbursement from the convention facilities board and then asked for reimbursement for the same things -- in the same or similar amount -- from JumpStart, a nonprofit that distributes and manages state tax dollars that go to BioEnterprise.

Among items double billed were portions of salaries for two employees and public relations expenses. BioEnterprise's contract with the facilities board and its deal with JumpStart for grant money allowed it to seek reimbursements for certain expenses.

Records released to 3News also show the convention facilities board also asked the Ohio Auditor to examine BioEnterprise’s expenses. The auditor’s office assigned a review to its special investigation unit, which identified $244,073 in expenses, including “direct, consultant, salaries and benefits” that were doubled billed to the county and to JumpStart. You can read a summary below.

The auditor also reviewed money passed through The Ohio Third Frontier, the program that gives money to regional agencies – such as JumpStart – to help grow tech startups. It said that JumpStart passed BioEnterprise a total of $9.4 million to from 2013 through 2019.

BioEnterprise’s deal with the convention facilities board was approved in 2017 and started in 2018. But the company and the county parted ways at the end of 2019 without attempting to renew the deal.

Today, JumpStart largely manages the work of BioEnterprise. JumpStart gave the following statement to 3News: "JumpStart will continue to support work in the bioscience sector on an uninterrupted basis, leveraging the significant expertise of healthcare institutions and startup ecosystem partners."

Appelbaum said the convention facilities board is moving forward with publicly discussed plans to make the Global Center an extension of the convention center. He said that demand for convention space existed before the pandemic and opportunities exist now to grow.

READ: You can see the settlement agreement between BioEnterprise and the Cuyahoga Convention Facilities Development Corporation below.

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