Lifeway has a history of violations, nepotism and unqualified foster parents

Foster-care empire struggles after death
McLaughlin, Sheila. Cincinnati Enquirer, Dec. 10, 2006, pg. A1.

$15M-a-year company rose from humble beginnings
Shirt-sleeves rolled up and his apron soaking wet from the chest down, Mike Berner - a man earning $225,000 a year - washes dishes Friday and Saturday nights in the kitchen of the quaint cafe he owns three blocks from Wittenberg University in Springfield.

The apron is gone Sunday mornings as the 51-year-old father of three preaches about Jesus and family values to a small congregation at Grace Fellowship Church in New Carlisle, a nondenominational church he and his wife started in 1984.

Berner said he doesn't watch television; doesn't read the newspaper; doesn't have the time.

He has built Lifeway For Youth from a $35,000 federal grubstake in 1994 to a $15 million-a-year company with branches in six states, hundreds of children in foster-care homes and eight relatives on his payroll.

The rosy picture has dimmed since August, when 3-year-old Marcus Fiesel died and Berner became the poster child for Ohio's embattled private foster-care industry.

Lifeway is just one agency in a huge network of nonprofit businesses - taking in $250 million from taxpayers annually - that the state depends on to find homes for abused and neglected foster children.

Since Marcus' death in a Lifeway foster home, the agencies also have operated under increased scrutiny as lawmakers and county child-protection advocates look to plug loopholes and tighten regulations to keep people like Marcus' foster parents from infiltrating the system.

Marcus' foster parents aren't the only one who've prompted questions about Lifeway's placement of children. In the middle of the debate over Marcus' death, another Lifeway foster father, Jaysen Bell, was indicted in Clermont County, accused of sexually abusing two boys who stayed with him.

Berner defends the New Carlisle company he built from scratch 12 years ago. "The Carroll case and what's been looked at recently does not represent what Lifeway is as an agency and what we've done with over 5,000 kids since we've been doing this work," he said.

Berner said he was very surprised by the sexual assault case. "They were respected in the community and had excellent references," he said.

Marcus ignited furor
According to police, Marcus, a developmentally delayed boy from Middletown, died after his Lifeway foster parents, Liz and David Carroll Jr., bound him in blankets and strapping tape and left him in a closet for two days while they attended a family reunion in Kentucky. The Carrolls are jailed on murder and other charges.

The state last week slammed Lifeway's handling of Marcus' placement with the Carrolls, saying Lifeway employees fudged training hours the Carrolls were supposed to receive and didn't adequately check the Carrolls' background before certifying them to become foster parents.

Berner said his business has dropped off significantly since Marcus' death. He faces a $5 million lawsuit filed by Marcus' birth mother, Donna Trevino.

In the meantime, Lifeway's survival lies in the balance.

Foster parents in Greater Cincinnati are leaving the company and going to other agencies. County child protection agencies in Ohio - including Hamilton, Clermont, Warren and Butler, which had custody of Marcus - have refused to place any more kids with Lifeway for now.

The state will decide by Jan. 18 whether problems at Lifeway are too significant and uncorrectable to allow the company to keep its license.

Berner is frustrated.

"Everybody is saying this could have happened to anybody," Berner said. "But, it's just, 'Let's crucify Lifeway.'"

Small beginnings
Things at Lifeway weren't always so complicated.

The company that Berner said he started in 1994 as a ministry to help about a dozen local kids received $35,000 in federal money its first year.

Lifeway since then has grown to a $15 million business that has taken in $46 million in federal dollars since 2000. It's now responsible for close to 900 children in Ohio, Kentucky, Indiana and Virginia.

Typically, foster parents get a little more than half the money the government pays for each child. The middlemen keep the rest to run their businesses. The state allows Lifeway to take 43 percent of the federal money the company takes in.

County foster-care officials in Greater Cincinnati say Lifeway is considered one of the better quality and less expensive private agencies for placing some of the area's most-troubled children.

Lifeway's business is strongest in Ohio, where it has placed 475 children with foster parents - although the agency now has nearly 50 vacancies in its homes because county child protection agencies aren't placing children with it any more. The agency also is among the biggest private foster-care agencies in the state, state officials say.

Berner continues to expand Lifeway.

Berner opened several offices in Kentucky in 2000 and followed with others in Indiana and Virginia. This year, he received licenses to operate in Texas and Georgia, but didn't have any foster children placed in those states as late as October.

A family affair
Lifeway's growth appears to have provided the Berner family with a sliver of the good life.

Berner and his wife, Brenda, the company's assistant director and chief financial officer, draw combined salaries of $385,000 a year from Lifeway.

The Berners own a $337,000 home on 1.6 acres in New Carlisle, another 25 acres with a farmhouse close by, a four-seat Cessna plane and a shiny white baby grand piano in their formal living room.

The couple's salaries have more than tripled since 1998, federal tax records show.

Other family members also profit from Lifeway
The Berners, their two daughters and other relatives make at least $600,000 from Lifeway each year, according to state documents and federal tax statements that nonprofit companies are required to file. Lifeway's 53 caseworkers in Ohio average about $31,000 a year, according to data the company supplied to the Ohio Department of Job and Family Services.

Berner said he views Lifeway as a family business similar to others in the foster-care industry.

Berner said his and his wife's salaries are set by a board of directors he has recruited from the community.

Berner said he did not influence the board's decision to set the couple's salaries. Instead, he asked the board to consider national surveys comparing the salaries top administrators earn in nonprofit organizations.

"My request to them was to consider bringing my salary up. We were underpaid," Berner said. "My request was to keep us in the average and they did."

Wanted to be a cop
Berner, with a master's degree in counseling and a Ph.D. in ministry, started college wanting to be a police officer. After figuring that he still would be too young - younger than 21 - to qualify for a law enforcement job by the time he graduated from Urbana College, he said he took on a second major in social rehabilitation.

An internship led to a job as a caseworker. Berner said he landed a state position as an administrator at the now-defunct Ohio Veterans Children Home, a residential home for troubled children. He left about four years before the state shut it down to start Lifeway.

Berner portrays himself as a simple man who has devoted his life and much of his personal finances to social services, at times drawing against the equity in his own home to keep the business running in its early years.

Tim Snapp, a New Carlisle horse breeder who is on the Lifeway board, met Berner about seven years ago through the local Rotary Club. He has served on the Lifeway board for three or four years.

"It just seems like everything has been negative in the news," Snapp said. "He's very caring, sincere, and he's honest."

Berner says he's not as astute in business as some of his contemporaries who work in private foster care.

But, state records and others in Clark County show his business savvy goes beyond running Lifeway and managing nearly 200 employees and at least $2.6 million in the company's real estate.

Berner recently was licensed in Ohio for another venture called Lifeway SOLO, a for-profit company he said will teach living skills to mentally retarded adults. He said he hasn't had time to develop the business in the aftermath of Marcus' death.

He owns Cecil & Lime cafe in Springfield with its full bar and menu offering anything from prime rib to lasagna or a simple chicken salad sandwich.

Berner calls it a "half-baked" cafe that couldn't possibly support his family.

His son Micah, a musician and the only one of his children who doesn't work at Lifeway, manages the restaurant. Berner put it up for sale more than a year ago because it wasn't drawing enough customers to make money. It's still open while he tries to sell it for $425,000.

Times are tough for the restaurant, which is why Berner says he can be found washing dishes and busing tables on weekends.

There's also the real-estate investment firm Berner runs out of his home, and used this year to sell a rundown bar and a house in Springfield to his foster-care company.

Berner said the house and bar - formerly Pete's Place - will be renovated into a home for teenage boys to prepare them for living alone and being emancipated from the foster-care system when they turn 18.

The Clark County auditor's Web site shows Berner bought the property for $82,500 in November 2005 and sold it to Lifeway for $92,000 four months later.

Berner said he didn't profit from the sale. "I sold the property for what I had invested in it," Berner said. "We actually lost money."

Lifeway was one of 27 private foster-care agencies that weathered a scathing review by the Ohio Auditor's Office three years ago.

A subsequent report called for more state oversight, criticized the agencies for nepotism and said some of them collectively overbilled the foster-care system a total $14 million in improper expenditures.

The head of one agency even went on a cruise and other trips, and bought a camera and tickets to a Rolling Stones concert with federal money.

The 2003 report accused Berner of improperly using federal money to buy cigarettes, diet pills and flowers for staff; and pay $10,000 for his daughter's college tuition and for employee dental work that wasn't covered by insurance.

Berner said he has resolved those spending issues and quit doing business that way.

"We've made a couple less-than-arm's-length transactions since we ran Lifeway," he said. "We know how important it is to avoid all appearances of impropriety and we try to do that."

Now, Berner spends his time trying to salvage his company's image and his reputation.

He doesn't like how he has been portrayed since Marcus died.

He said he's waiting, like everyone else in the industry, to see how state legislators and foster-care officials strengthen the screening process in the wake of the Carrolls' arrest.

He's cautiously confident the state won't shut down Lifeway.

"We really are not planning for that event," Berner said.

"Looking for someone to (blame) this on is the wrong approach."

A CLOSER LOOK AT LIFEWAY

The Lifeway lineup
Nine relatives and nine members of Mike Berner's Grace Fellowship Church draw salaries from Lifeway. They include:

--Michael Berner, executive director and founder, $225,000
--Brenda Berner, wife, assistant executive director, $160,000
--Andrea Berner-Hurst, daughter, regional director, about $50,000
--Rebekah Botello, daughter, business manager, $37,503.68
--Jaime Botello, son-in-law, maintenance, $21,000
--Paul Hanrahan, half-brother, assistant director of operations, $62,000
--Elizabeth Hanrahan, sister-in-law; senior accounts clerk; secretary/treasurer and administrator at Grace Fellowship Church; $29,513
--Chuck Hanrahan, half-brother, vehicle maintenance, salary unavailable
--Jason Hanrahan, nephew, IT support; also youth leader at Grace Fellowship Church, $20,200
Sources: Ohio Department of Job and Family Services and federal tax returns

Company's growth
Berner, who founded the non-denominational Grace Fellowship Church in 1984 and Lifeway 10 years later, began expanding Lifeway For Youth and branching out to other businesses in 1999.

1994: Lifeway opens in Ohio. The company's headquarters are in New Carlisle, with offices in Sharonville, Franklin, Hilliard, Canton, Cleveland and Columbus.

1999: Lifeway incorporates in Kentucky. Offices are in Ashland, Berea, Corbin, Elizabethtown, Florence, Hazard, Lexington, Louisville, Prestonburg and Somerset.

2000: Berner Real Estate Investments LLC is incorporated in December. Mike Berner runs the for-profit business out of his house.

Berner Service Systems Inc., a for-profit company, is established to run Berner's Springfield restaurant, Cecil & Lime Cafe.

2004: Lifeway incorporates in Indiana, where it has offices in Indianapolis and Lafayette.

2005: Lifeway is licensed in Virginia in March and opens an office in Richmond. Nineteen children are placed in 11 foster homes as of October 2005. The company accumulates 82 violations between June 2005 and March 2006, according to Virginia Department of Social Services records.

Violations include failure to conduct criminal background checks on foster parents before children were placed with them, a failure to check references for foster parents and not providing required physical and dental examinations for children. Some of the problems cited were repeat violations.

2006: Lifeway is licensed in Texas and Georgia and is in the process of developing foster homes there.

The for-profit Lifeway Solo Day Habilitation Program Inc. is incorporated in July to provide living skills to mentally retarded adults.

Sources: State licensing records in Ohio, Virginia, Kentucky, Indiana, Texas and Georgia.

The Berner file
Berner and his wife don't appear to live a lavish lifestyle, but their association with Lifeway has rewarded them. They own:

A two-story, three-bedroom, three-bath home listed for sale at $337,000 on 1.6 acres in New Carlisle's Tall Hickory subdivision. A white baby grand piano sits in the formal living room, according to a picture on the real-estate agent's listing on the Internet. The house has been on the market for two years. Berner said he is looking for a ranch-style home instead so he can have his elderly parents move in and can care for them.

Twenty-five acres with a 106-year-old farmhouse on Troy Road in German Township. Four acres are zoned for business, which Berner plans to sell. He said he wanted the wooded property for a getaway to hike and bike not far from home. Berner bought the property through his real-estate investment company for $214,000 in August.

A 1962 Cessna 172D four-seat plane. With new paint and a new interior, it is listed for sale on the Internet for $39,500. Berner, a licensed pilot, said he and his father bought the plane together to renovate.

Clark County Auditor's Web site and FAA records.

Others in trouble
Liz and David Carroll Jr. are not the only Lifeway For Youth foster parents who have been in trouble. Others include:

Gracie Vandemark: Charged twice with making false statements to police in Clermont County and endangering children.

Victor Delomas: Stopped in Kentucky and charged with drunken driving while returning from camping with Marcus' older brother and infant sister.

Jaysen Bell: Charged with eight counts of rape, sexual battery, gross imposition and sexual imposition involving two of his foster children.

Random observations:
Mike Berner, the founder and executive director of Lifeway for Youth, built the foster-care company into a $15-million business responsible for 900 children in Ohio, Kentucky, Indiana and Virginia.

Berner preaches to a small congregation at Grace Fellowship Church, which is associated with the foster-care agency.

Lifeway for Youth's headquarters in New Carlisle is the center of the company's $15 million-a-year operation.

Mike Berner's three-bedroom New Carlisle home is for sale. A real-estate agent lists a picture of the home's living room, featuring a baby grand piano.