This article contains one update.

Since 2021, the state of Virginia has relied on a group of mostly Metro Richmond-based recovery house owners and operators to fairly distribute millions of taxpayer dollars to recovery house operators throughout the state.

Organized as the Virginia Association of Recovery Residences (VARR), that group promised to promote equitable access to recovery housing – also known as sober living – for all Virginians with substance use disorder.

(See the Introduction for a review of key players and organizations.)

During state fiscal year 2022 (FY22) (7/1/21 – 6/30/22) – the nonprofit’s first year as a multimillion-dollar enterprise – VARR leaders funneled large percentages of those funds to their own organizations, many of which are for-profit companies.

I recently obtained VARR’s subgrantee expenditures for FY23, and a familiar pattern emerged.

Below is a broad overview of how VARR disbursed funding for capacity expansion and indigent services during both years.

Roughly $1 million per year was designated to help organizations start recovery homes throughout Virginia in “areas with limited housing and recovery supports…”

At the start of both years, more than 85% of VARR-certified beds were concentrated in the Richmond Metropolitan Area.

Nonetheless, VARR spent just 28% (FY22) and 36% (FY23) of the budget on projects outside Metro Richmond.

At the end of FY22, VARR redirected the unused money to indigent services: the bigger budget item that continues to land almost exclusively with VARR leaders and their Richmond area network:

This outcome is a product of VARR’s ongoing design.

A review of VARR’s playbook from the last few years, with some new details, shows how we got here and offers an idea of what future funding might look like for small and emerging recovery house operators as VARR pursues more money and power.

***

Starting in early 2020 – the year VARR became the state-sanctioned certification authority for all staffed recovery residences in Virginia – legislators began working to direct funding from the state budget to VARR-certified recovery homes, which would flow to VARR through the Virginia Department of Behavioral Health & Developmental Services (DBHDS).

VARR immediately got to work certifying recovery residences owned and operated by VARR Executive Director Anthony Grimes² and VARR board members.

In November 2020, DBHDS started working through the state procurement process to facilitate payment on VARR’s first round of legislatively directed funding – a modest $250,000.

Seeking to expedite the process, Grimes wrote to DBHDS officials on Dec. 1, 2020:

(W)e are seeing overdoses continue to increase and now more than ever it is imperative that we come together to make recovery support services available across the Commonwealth of Virginia. (emphasis added)

The following month, Grimes submitted his budget for that $250,000, noting indigent bed funds would be distributed “by the percentage of certified beds each organization holds out of VARR’s total” – meaning the money would not, in fact, make recovery services available “across the Commonwealth.”³

Over the next several months, legislators worked to increase funding into the millions for VARR-certified recovery homes. Rather than ramp up efforts to expand certified recovery housing throughout Virginia, VARR appears to have shifted gears.

In June 2021, with roughly 88% of VARR-certified beds still concentrated in Metro Richmond, Grimes solicited an increase to VARR’s sole-source contract with DBHDS – the one that provided $216,370 per year for VARR to engage, train and certify recovery house operators throughout Virginia.⁴

But Grimes didn’t ask for more money to balance the geographic distribution of recovery residences. Instead, he claimed VARR had experienced “tremendous growth” and identified a need to spearhead a new project: certifying Virginia’s Recovery Community Organizations (RCOs), which are non-profit enterprises “led and governed by representatives of local communities of recovery.”⁵

VARR got the annual increase of $100,008 that Grimes requested for the new endeavor along with $71,580 through a separate contract to develop a standard for RCOs.⁶

Within two months of initiating the RCO project, Grimes and then-VARR President David Rook founded their own RCO – Imagine the Freedom Recovery Foundation – for the purpose of supporting their respective for-profit organizations, WAR Foundation and True Recovery RVA. They then obtained more money from DBHDS to staff the RCO and to renovate and furnish the new office building they had just purchased with VARR board member Jimmy Christmas and others (see Part 2).

After that, recovery residence bed growth in the rest of the state hardly moved. As of April 2023 – the last month for which DBHDS received bed counts from VARR – Metro Richmond was still home to 88% of VARR-certified beds.

Grimes did not respond to a request for VARR’s updated bed counts. As of this month, VARR’s website shows 22 certified recovery residences outside Metro Richmond, an increase of three since April 2023.

***

As VARR remained Richmond-focused, VARR leaders took strides to attain national spotlight by bringing the annual summit of the National Alliance for Recovery Residences (NARR) – VARR’s parent organization – to Richmond for two years in a row.

“I look forward to the future and projects that we will work together on and keep pushing Virginia out front in and around recovery. VARR is being looked at all around the country and our model is being mimicked in other states.”

David Rook to Mark Blackwell, then-director of the DBHDS Office of Recovery Services, Sept. 2021

In mid-late 2021, when VARR’s budget from the General Assembly skyrocketed with a $10 million line-item – for disbursal over three years – and a doubling of VARR’s initial $250,000 allocation, Grimes didn’t announce the annual amounts VARR set aside for program services ($607,500) or capacity expansion ($1.01 million), according to several operators I spoke with in late 2022.⁷ As reported in Part 2, program funding was reserved for a coterie of six Metro Richmond operators, and the majority of capacity-expansion funding – money that was meant to start new recovery homes in underserved areas of the state – was also dished out to operators in the Richmond area, while funding inquiries from other localities appear to have been ignored.

“Thank you for all of the support you have and continue to give VARR as we work together for all Virginians suffering from substance use disorder.”

Anthony Grimes to Mark Blackwell, Sept. 2021

When Rook and Grimes presented publicly on VARR’s FY22 expansion, it wasn’t clear that VARR only funded one project outside Metro Richmond.

In a Sept. 2022 VARR-hosted panel discussion with DBHDS Commissioner Nelson Smith and Jim Newton, then-chief administrative officer at Chippenham Hospital’s Tucker Pavilion, Rook said that government funding had enabled VARR to increase the number of beds in “rural areas” and “urban areas.”

When Grimes talked about VARR’s use of capacity-expansion funds at the 2022 NARR Best Practices Summit, he highlighted VARR’s one rural project along with “seven minority-owned organizations that have received funding (from VARR) and have opened recovery residences in Virginia…”

He didn’t mention that all of those minority-owned organizations were in Metro Richmond or that they were all affiliated with VARR board members.

With each new round of funding, Grimes has written the rules for indigent bed distributions according to the same “percentage of certified beds” model – one that doesn’t appear to award funding based on need but instead rewards operators for accumulating recovery houses (whether rented or owned), no matter how much money is already concentrated in the area.⁸

But that model isn’t the only impediment to small operators.

As I covered in Part 2, VARR has also made eligibility for indigent bed money contingent on operators’ participation in a data collection and case management platform called REC-CAP (Recovery Capital). VARR has required operators to fully integrate this system into their daily operations and to continuously provide VARR with their residents’ data – regardless of whether those residents are funded by VARR.

Two newly obtained records – a VARR “best practices” document and the following email to VARR operators – highlight the extensiveness of VARR’s REC-CAP requirements and shed light on why some operators previously reported difficulty implementing this program to VARR’s satisfaction.

VARR did receive the money for staff positions that de Triquet referenced in the email. $840,000 was budgeted for VARR-certified organizations based on their bed counts, meaning the well-established organizations were guaranteed adequate staffing to alleviate the REC-CAP burden.⁹ At least five organizations were not included in the budget.¹⁰

***

Nearing the end of VARR’s first year as a multimillion-dollar enterprise, there had been little change in the geographic distribution of certified recovery homes.

The available data shows VARR’s bed growth from May 2021 to May 2022:

Even though operators outside Metro Richmond had between roughly 12% and 14% of the beds, they ended up with just 1.3% of the indigent funding, as shown in the graphs at the beginning of this installment.

“(T)here is a dire sense of urgency to get the legislatively directed funding to VARR in order to continue the rural and urban projects as well as the indigent bed program which is serving a large number of individuals across the Commonwealth with substance use disorder who without this funding would not have accessibility into a certified recovery residence.”

Anthony Grimes to Cort Kirkley, then-chief administrative officer for DBHDS, May 6, 2022

Even though VARR’s REC-CAP requirement kept some operators from getting a slice of the pie, VARR’s funding agreements with DBHDS did not mention REC-CAP as a condition of indigent bed funding until FY23. In one FY23 contract, it was vaguely stated that operators “must be in compliance with utilizing the Advanced Recovery Management System (ARMS) which contains the REC-CAP module.” The FY23 funding agreement for VARR’s $10 million award did not mention a REC-CAP requirement at all.

Nearing the end of FY23 – based on the latest available data from April 2023 – VARR bed counts outside Metro Richmond hovered at 12%.

By the end of that fiscal year (6/30/23), operators outside Metro Richmond had collectively received just 2.6% ($78,880) of the $3.07 million disbursed for indigent services.

That same year, Grimes directed 14% ($431,780) to WAR Foundation – the for-profit organization owned and operated by his wife. Grimes then entered the new year with a 53% raise, which brought his base salary to $115,000 for serving as VARR’s executive director.¹¹

In May 2023, at the Virginia Year of the Peer Conference in Richmond, Grimes gave a presentation on what VARR had accomplished with indigent funding. Starting in 2020, he told the audience, he was “disturbed” when he saw there was a racial disparity among Virginia’s sober home residents. But thanks to public funding for indigent beds, he said VARR has been solving that problem by giving minorities equitable access to recovery housing.

I clipped the following audio from a recording of that presentation, which was provided by a confidential source. A few sound bleeps were inserted to protect the privacy of attendees talking nearby.

Several local recovery community members told me they believe the demographic piece of Grimes’ account is accurate: Richmond-area recovery residences are housing more minority residents.

But that data is missing some key facts.

Grimes did not mention that “equitable access” to Richmond’s biggest organizations came at the expense of access to recovery housing everywhere else.

He did not mention that equitable access was paid for at double the rate organizations are able to charge residents out-of-pocket, leaving the under-funded organizations at an even greater competitive disadvantage.

He did not mention that many of those minority residents got equitable access to for-profit organizations that forced them into what many described as low-quality treatment with River City Comprehensive Counseling Services – owned by VARR Vice Chairman Jimmy Christmas, who has allegedly been providing kickbacks to those organizations, including WAR Foundation, True Recovery (formerly owned by Rook) and Starfish Recovery & Wellness, owned by VARR board member and secretary Stephanie Bellanger (see Parts 1 and 4).

Evidence also suggests that True Recovery – the most heavily-funded organization to date – might not be using the indigent bed money according to its intended purpose.

Danielle Atkinson – a former True Recovery participant who was introduced in Part 1 – told me about another resident who left the organization when staff threatened to kick her out for falling behind on her rent. True Recovery allegedly declined to provide an indigent bed grant to allow this resident to stay in her house, even after she repeatedly asked for help. I corroborated the circumstances of this resident’s departure with a source who had direct knowledge of the situation, who chose to remain confidential.

After this resident left, according to Atkinson, True Recovery Director of Operations Chris Waugh told the house leader not to discharge any residents in the REC-CAP system who owe money so that he can first apply a grant to “recoup the loss.” I brought this up to Rook when I interviewed him in November 2022:

Someone that I talked with told me that someone (who) lived in their house (at True Recovery) was trying to get help, that they weren’t kicked out but (were) threatened to be kicked out because she was behind on her rent, and then after she left, True Recovery was going to apply a grant to pay themselves back for the rent that she owed. Is that —

No, and not only that, but there would be no way any house leader or assistant house leader would have access to any kind of information like that at all. And that wouldn’t happen.

…

Is retroactively applying a grant that didn’t actually go to a participant something that VARR would allow? 

Fuck no they wouldn’t allow it.

Is that something True Recovery would condone?

No. Absolutely not. Under no circumstance. Not VARR. Not True Recovery. Not anybody. Now the only time the grants can be used retroactively is like in this situation. Say the grant gets signed on October the first. And we don’t get notification that the grant is available. Like say it takes VARR all this time to adjust, come up with percentages on who’s getting what, and then we get notified. But because it was on the first, so if you had anybody that wasn’t paying rent or needed a grant during that period, we can go back on those folks for them. But that only happens like once a year, during that period of time. … They would be people that are actually getting the grants.

Ok, so it’s not like you’re going to kick somebody out or somebody leaves owing and then you’re going to go back afterwards and —

Fuck no. Nope. Absolutely not. Why in the fuck would you do that?

To recoup the loss?

(Shook head) 

You’re saying that’s not a thing?

No, and…if it were a thing the house leaders…would never hear that or know that or any of that.  

The staff correspondence that followed the aforementioned resident’s discharge told a different story.

It showed that True Recovery had indigent bed money available, did not use it to let the resident stay in her home, and would have instead paid themselves after her departure to “recoup the loss” from her unpaid balance:

Rook, Waugh and True Recovery CEO Crystal Doss (then-Snodderly) did not respond to a request for comment on the contents of this email.

When I reached out to True Recovery President Coleman Mundie for his comment on a previous article, he stated he would initiate legal action if I contacted him again, alleging he feared for his safety.

Were you marked “indigent” in REC-CAP while you were paying rent? Were you told this would keep your rent from increasing? If so, please contact me.

Newly retired state Delegate Kaye Kory, D-Fairfax County, was one of two legislators who introduced a $10 million budget amendment on VARR’s behalf in 2021.

Kory told me she requested the budget item after speaking at length with John Shinholser – then-President of McShin Foundation, a VARR-certified organization.

Kory was happy to support funding for recovery housing and was pleasantly surprised when her request made it into the state budget. But she had no idea the money would be managed by the same individuals benefiting from it. She called VARR’s leadership structure “concerning” after learning about it for the first time on our Zoom meeting in mid-December.

“I’m pretty sure that most of the legislators who are helping VARR don’t have the depth of knowledge that you have for example,” Kory said.

She hadn’t kept up with what happened after VARR got the money because there was no easy way to do that.

I think one of the most frustrating things about being a delegate, probably a senator also, there is no mechanism in the setup of the General Assembly to let the author of the bill that gets passed – and that includes budget amendments as well – know what happens, how it gets implemented, who does what, none of that. If you want to know, you have to work really hard as an individual legislator. … I picked a few pieces of my legislation to doggedly follow and see what the implementation or effect was. That ($10 million for VARR) was not one of them. …

“It sounds like, from what you’re saying, (the money) hasn’t accomplished what I had hoped it would,” Kory said when I explained the general breakdown in VARR funding distributions.

Later, she added, “It would be great if (Virginia Attorney General Jason Miyares) were able to bring some order, at least, to this process of handing out the money.”

McShin didn’t respond to a request for comment, but Shinholser – who fully retired last week – had a lot to say.

When you have an inner circle (within VARR) that’s completely self-dealing, that’s where some of the problems come in. That’s where the state needs to pay attention. …

They need a whole new uncontaminated board of directors. And part of that board, they have to have subcommittees that oversee a fair and equitable distribution of those funds to organizations that are in compliance with their policy, rules and regulations, and not be written in such a way that (creates barriers). They need to eliminate barriers. …

While McShin is a 501(c)3 nonprofit, unlike many VARR funding recipients, it can’t be ignored that the organization is advantaged under VARR’s current setup. In each of the last two fiscal years, McShin received more than $500,000 in indigent funding, coming in second only to True Recovery.

Shinholser continued:

People don’t realize what it takes to advocate at the General Assembly. You’re talking 15 straight years of getting up at 4 a.m. to go down there to get in line for a 7 a.m. number to present at an 8 a.m. subcommittee. … It’s hard for recovery people to get (legislative) champions that want to help them, and the last thing I want to do is scare away future champions. …

(VARR is) close to being a great, wonderful organization (but) they got to atone. They got to clean up their act. And don’t confuse none of this with the fact that we (peer-to-peer recovery organizations) are actually a major solution for criminal justice/corrections’ overpopulations. (We’re) alternative services for those that need it that can’t get it elsewhere.

In March 2023, roughly three months after VARR conflicts of interest were initially publicized in this series, VARR announced a public application process for FY24 capacity-expansion grants – just in time for the third and final year VARR had access to American Rescue Plan Act funds (the $10 million budget). Four months after that, VARR announced it awarded $1.18 million to 16 unnamed organizations through a four-person panel.

Grimes and VARR President Sarah Scarbrough did not initially respond to a request for the names of grantees and awarded amounts. But not long after I published this installment, Scarbrough provided that list, which shows VARR awarded sixty-five percent (65%) of the final total of $1.2 million for projects outside the Metro Richmond area – a significant increase from 36% and 28% in the previous two fiscal years, yet still disproportionately favoring Metro Richmond.

The following awards reflect the maximum amount VARR agreed to reimburse each organization for their proposals and may not represent the total each organization will receive by the end of the year. The operators of Evolution House reported they did not use their grant funding and returned it to VARR.

Outside Metro Richmond:

Organization	Award
Russell County Recovery	$125,000
Dickenson County Recovery	$125,000
Loudoun Serenity House	$125,000
Evolution House	$125,000
Piedmont CSB	$115,330
Uhuru Foundation	$69,672
Awareness House	$64,000
HER House	$19,286
Warren Coalition	$9,280
Total	$777,568

Metro Richmond:

Organization	Award
Lotus Recovery RVA	$125,000
McShin Foundation	$114,700
City of Refuge Hopewell	$55,770
Starfish Recovery & Wellness	$42,000
Wellness Institute of Virginia	$42,000
The Dandelion Hive (formerly Peter’s Place RVA)	$42,000
Total	$421,470

Indigent funding – which more than doubles the amount budgeted for capacity expansion – was not opened up to a similar process.

Instead, VARR’s highest-dollar FY24 funding agreement with DBHDS added a new barrier for indigent funding:

VARR did not respond when asked what the “new operator policy engagement period” entails or what it means to be “in compliance with VARR metrics.” The vague language seemingly leaves compliance – and therefore eligibility for funding – wide open to VARR’s interpretation.

***

As requirements for indigent funding intensify, and the well-established organizations are continually advantaged, the barriers to small and emerging organizations seeking to benefit from VARR’s wealth appear increasingly insurmountable.

Recovering Hands, a small nonprofit, operates the only certified recovery residence within a roughly 40-mile radius of Nathalie, in rural Halifax County.

In that area of Southside Virginia, recovery resources are scarce and the drug overdose death rate nearly doubles the statewide rate.

Recovering Hands Executive Director Kim Adams says in rural communities such as hers, buy-in for recovery often lags behind other parts of the state. She has a dedicated board of directors and some community support, but as the only recovery service in the area, building that supportive network has been a slow and difficult process.

Last month, I took a trip to Nathalie to see what Recovering Hands had to offer.

Adams gave me a tour of the property starting at her home, which she and her husband open up to residents on a daily basis to host meals and occasional events. The recovery residence – a cabin and bunkroom that accommodates four women – sits across the gravel road from Adams’ home.

A short walk away from the cabin sits a small building that serves as a group meeting space with sofas, a fireplace and recovery literature lining the walls. The building was formerly Adams’ husband’s tool shop. He sacrificed it for the program, she said.

The property also has a small building for art-related activities, a labyrinth for walking meditation and a small chapel for residents’ optional use that was funded and built by the United Methodist Church. The property is also home to two rescued horses that are used for equine therapy – a trending alternative therapy in addiction recovery programs.

When Adams joined VARR, she hoped to find the support she needed to keep her four beds full. But as I initially reported in January 2023, she’s been frustrated with what she describes as a lack of support from VARR.

Over the last year, that hasn’t changed much.

Adams told me she spent considerable time and effort trying to make her program eligible for funding under VARR’s REC-CAP requirements. She studied the 70-page navigator practicum, participated in multiple trainings and purchased four computers with expensive rural internet connection so her residents could use the REC-CAP system.

But she hasn’t been able to get enough funding to keep her four beds full, and VARR seems to require a continuous stream of data from non-VARR-funded residents before VARR will consider an operator eligible for funding.

At the end of FY23, VARR gave $7,000 to Recovering Hands from a pot of leftover funds so Adams could accept two residents into her program. That money was offered on a one-time basis, as VARR said she wasn’t technically eligible for it.

As she does with all residents, Adams said she introduced those two to the REC-CAP system and ensured they completed the required assessments. She is not opposed to helping VARR collect data and she welcomes any resources REC-CAP could offer her residents. But she doesn’t force them to engage with the platform on their own time – a fundamentally different approach from that used by operators who threaten eviction or jail to enforce compliance.

In November, when Adams requested financial support for a new resident, VARR said no: Recovering Hands didn’t have enough resident data in REC-CAP.

I worked very hard at trying to keep this place open and to put women in these beds because that’s why we’re here. … And all of the energy that I put into meeting (VARR’s) criteria so that they can give me the assistance that Virginia expects them to give me has taken away from my program. I just can’t keep doing it. … I just don’t have it to jump through a bunch of hoops for nothing.

As someone with 32 years of sustained recovery, Adams has a distinct perspective on VARR’s financial activities.

“I don’t know if you’re familiar with addict behavior,” she said, “but that’s what this is. This is people who are used to getting over on the system, and they have found some financial wealth, so to speak, and they’re hanging on to it.”

(Related emails between Adams and VARR are available here.)

To get an opinion on the legal and ethical implications of conflicts of interest within VARR leadership, I spoke with Lloyd Mayer, a professor of law at the University of Notre Dame whose research focuses on nonprofit organizations.

As a legal matter, Mayer said, nonprofits aren’t prohibited from engaging in transactions with insiders.

“Frankly, if I was (VARR’s) lawyer or the PR person, I could defend it. I could come up with reasons why this all makes sense,” he said about VARR providing grants to board members’ organizations.¹²

But the bar for legal compliance is much lower than that of the well-recognized ethical standards or “best practices” for nonprofits.

As an ethical matter, if your standard is we want to be above board and highly ethical here, there are lots of problems here (with VARR), because really you should have independent people that don’t have the conflicts choosing the grantees. …

If I was a government official, a legislator, someone in the state government who’s overseeing these funds, I’d be concerned because how do I know you’re picking the right people to receive these funds? …

I (would) want to make sure the money’s not (only) not getting stolen by someone or going into someone’s pocket (where) it shouldn’t go, (but) that the money’s being used well, that the right groups are being chosen, they’re providing the most effective services in the most efficient way, spending the taxpayers’ dollars most efficiently to provide these services the state wants provided. … I don’t know you’re really furthering the legislative purpose of providing these funds if almost everyone who’s getting these funds are people that have some sort of tie to your organization.

Mayer added:

I have seen other scenarios with similar arrangements where there’s a nonprofit intermediary that gets state funds and then re-grants them out and no one’s paying attention. And that tends to eventually tip into someone running off with the money. …

If there was a sense of people not watching and there’s a lot of money and an increasing amount of money, it’s very tempting to start siphoning off a little bit more and a little bit more and getting paid more by your for-profit entities and maybe looking (to) increase the pay on yourself … The temptation is there, and the temptation gets worse the more money there is.

Over the last few years, state Delegate Nick Freitas, R-Culpeper, introduced various bills and budget amendments that would have potentially directed tens of millions more to VARR.

He has not succeeded in securing the proposed funding so far, but his efforts indicate VARR has been pursuing a lot more money.

Here’s the breakdown:

In the 2021 session, Freitas proposed that 25% of cannabis tax revenues go to DBHDS for “for addiction recovery programs which provide services as outlined by the Council on Accreditation of Peer Recovery Support Systems (CAPRSS) and the Virginia Association of Recovery Residences (VARR).”

The only CAPRSS-accredited organization in Virginia is McShin Foundation – a VARR member.

According to Shinholser, CAPRSS accreditation represents the highest standard of accountability in nonprofit peer-to-peer recovery programs. He’d been promoting CAPRSS at the General Assembly for the last five or six years, he said, and hoped pushing that standard would incentivize more Virginia organizations to join CAPRSS. He also aimed to ensure McShin wasn’t left out of the funding distributions.

CAPRSS representatives declined to comment on the proposed legislation, and I did not explore the merit of Shinholser’s assertion about CAPRSS standards for this installment.

If Virginia’s future cannabis tax revenue were to fall somewhere within the range of what other states are collecting per capita, 25% of tax revenues – money directed to VARR/CAPRSS organizations – would fall between $35 million and $145 million in a single year.¹³

In the 2021 Special Session I, the General Assembly passed legislation that directed 25% of net profits collected by the Virginia Cannabis Control Authority to DBHDS for distribution to community services boards (CSBs) – which are located throughout the state – for “substance use disorder prevention and treatment programs.”

In the 2022 session, Freitas tried to tap into that fund for VARR.

He introduced a bill that would redirect “(a)t least forty percent” of the money allocated for CSBs to “private certified recovery residences … that provide low-cost evidence-based substance use disorder treatment and recovery services, are staffed by persons with lived experience utilizing substance use disorder treatment and recovery services, and follow nationally recognized recovery housing standards.”

By including the word “staffed,” this bill would have excluded Oxford houses and ensured that only VARR-certified recovery residences would be eligible for the money.¹⁴ Freitas also included the same kind of language Grimes inserted into VARR’s funding agreements with DBHDS: “Funds distributed to certified recovery residences shall be awarded pro-rata based on the number of residents served by the certified recovery residence…”

In the same session, Freitas introduced a bill that would direct 10% of the Virginia Cannabis Control Authority’s net profits derived from cannabis sales to a Peer Recovery Support Fund for “peer-to-peer substance abuse recovery support services provided by individuals other than state or local government employees…”

While presenting this bill to the House of Delegates Committee on Health, Welfare and Institutions on Feb. 1, 2022, Freitas said it was important to support “nonprofit groups, private groups within the community” that provide peer-to-peer recovery services. Among the speakers in support of the bill was Frank Bellanger, co-owner and CEO of Starfish Recovery & Wellness – the Richmond-based for-profit organization whose exploitative practices I covered extensively in Parts 4, 5 and 6.

Whether Freitas knew he had been advocating to direct millions of dollars to for-profit groups is unknown. Freitas did not respond to interview requests, questions or a request for comment.

Today, the black market is still the only market for recreational cannabis in Virginia, even though personal possession was legalized in 2021. Now that democrats have regained control of the legislature, this year’s General Assembly session will likely see another push for a legal retail market. It has yet to be seen if VARR will try to tap into that potential revenue stream.

Jimmy Christmas currently sits on the board of the Cannabis Public Health Advisory Council, which advises the Virginia Cannabis Control Authority on related public health issues and resource needs.

In the 2023 session, Freitas requested a budget amendment that would have increased VARR’s budget for the remainder of that fiscal year (less than six months) by $2 million. He also introduced a bill to direct “(a)t least 15 percent” of the Opioid Abatement Authority’s unrestricted funds to DBHDS “for distribution on a pro rata basis” to certified recovery house operators.

For 2024, VARR has five lobbyists retained with Two Capitols Consulting, including David Hallock Jr. – the lobbyist who purchased 2604 N. Parham Road (“The Center”) in 2021 with the Grimeses, Rook, Jimmy Christmas and then-state Delegate Lamont Bagby, D-Henrico, who was elected to the state Senate in 2023.

***

While VARR officials are entering the new year with a team of powerful lobbyists, they just lost their strongest DBHDS ally.

Michael Zohab is a retired police captain and founder of the Virginia Recovery Foundation (VRF) – a nonprofit that connected people to treatment that was dissolved voluntarily in July. In a 2017 CARE Talks presentation, Zohab said Jimmy Christmas was a VRF partner.

Before taking a job as the State Opioid Response (SOR) grant manager for DBHDS in 2018, Zohab was also involved in developing VARR.

While at DBHDS, Zohab approved SOR funding for VARR’s extra projects, including the ones that directly benefited Rook, Grimes and Christmas, such as the North Parham Road building rehab project. Zohab pushed for VARR to get the money for these projects even as DBHDS officials raised concerns about conflicts of interest and lack of detailed reporting.

Video clips from the 2022 NARR Summit reflect the alliance between Zohab and VARR:

Zohab was recently under investigation by DBHDS for issues that “may” have pertained to his relationship with VARR, but DBHDS declined to release the records, citing Freedom of Information Act (FOIA) exemptions from mandatory disclosure for personnel information and investigative records produced by internal auditors.

As of late December, Zohab was no longer listed in Virginia’s state employee directory. He did not respond to a request for comment.

Grimes, Rook, Christmas and Scarbrough did not respond to questions or a request for comment.

This year, VARR will take the national spotlight yet again, as the annual NARR Best Practices Summit will be returning to Virginia for the third time since 2021. Like VARR, NARR has yet to participate in an interview for this project.

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(1) Roads 2 Recovery (R2R) – a Lynchburg-based nonprofit Recovery Community Organization (RCO) whose COO was on the VARR board for roughly the second half of FY23 – was the direct recipient of the funds for the Dickenson County project. Per R2R CEO Sandy Kanehl, R2R served as the fiscal agent for the project’s end beneficiary, Dickenson County Recovery, Inc., as that organization was getting newly established. R2R is in the process of collecting supporting documentation, as Dickenson County Recovery Inc. was not listed on VARR expenditure records. Kanehl noted, “We are grateful to help both VARR and Dickenson to expand recovery projects to Southwest Virginia where the need for recovery services is great.” Click to return to article.

(2) WAR Foundation – a for-profit recovery housing organization – was co-founded and owned by Anthony Grimes and his now wife, Kate Grimes. As of at least June 2020, Anthony Grimes was still listed as the president of WAR Foundation on various correspondence, including an invoice to the Richmond Behavioral Health Authority. It is unknown exactly when he removed himself as president. Kate Grimes remains the CEO. Click to return to article.

(3) $50,000 for program services and addiction management did not specify eligibility based on bed capacity, but VARR distributed that money exclusively to the same key group of Richmond operators, as outlined in Part 2. Click to return to article.

(4) The $216,370 budget also included $40,000 for indigent bed reimbursement and $20,040 for public education. Click to return to article.

(5) See the Substance Abuse and Mental Health Services Administration’s definition of RCOs. Click to return to article.

(6) VARR originally budgeted $85,280 to “identify, train, and provide oversight to establish two certified recovery residences” in Southwest Virginia. That endeavor did not materialize and was replaced by the RCO development project, which is shown in the contract modification. Roughly a year later, Rook and Grimes created a nonprofit – the National Alliance of Recovery Community Organizations (NARCO) – that they hoped would oversee RCO certification across the country, as Rook explained in a November 2022 interview. Click to return to article.

(7) The $607,000 budget for program services is the combined total from CSLFRF-VARR22 and Contract No. 720-4842 (Modification No. 1). The $1.012 million capacity-expansion budget was only included in CSLFRF-VARR22. Click to return to article.

(8) The “percentage of certified beds” model also allows operators to include bed counts in their “step-up” homes, which don’t typically house indigent residents. These homes are meant for residents who have some sustained recovery, employment and the ability to pay their own rent. Many of the large operators have several step-up homes in their portfolios. Click to return to article.

(9) With an increase from the state general fund to $1.7 million annually, VARR budgeted $450,000 to pay the match fees for AmeriCorps workers at various VARR-certified organizations. DBHDS reported having no record of which organizations VARR funded with that money, and VARR did not respond to a request for that information. A search of the term “Recovery Corps” on VARR-certified organizations’ Facebook pages showed the following organizations had Recovery Corps workers: REAL Life, McShin Foundation, Imagine the Freedom Recovery Foundation (serving WAR Foundation and True Recovery), Journey House Foundation, Loudoun Serenity House and Roads to Recovery. Starfish also had a Recovery Corps worker as of late 2022 through its associated nonprofit, You Matter Foundation. All but two of these organizations (Roads to Recovery and Loudoun Serenity House) are Metro Richmond-based, and all but one (Journey House) have current or recent former representation in VARR leadership. Click to return to article.

(10) Up to seven operators might have been left out, depending on when they were certified. Two operators were added to the VARR list in May 2022, but it’s unknown if they were certified before or after VARR entered the contract in April 2022. February 2022 was the last date bed counts were available, showing five operators would have been left out. Click to return to article.

(11) VARR funding agreements with DBHDS show Grimes’ base salary was $75,000 at the start of FY23 and $115,000 at the start of FY24 – a 53% increase from the year before. Click to return to article.

(12) We did not talk about the Medicaid kickbacks, withdrawal of funds from True Recovery’s account during Rook’s drug use or the state’s responsibility for fiscal oversight, as those topics were outside his area of expertise. Click to return to article.

(13) According to the Tax Policy Center, in fiscal year 2022, 11 states collected cannabis excise tax revenue during all 12 months, ranging from $28.9 million in Alaska to $774.4 million in California. Revenue per capita ranged from $16 to $67. With a population of 8.679 million, if Virginia’s cannabis tax revenue per capita were to land somewhere between $16 and $67, its state tax revenue would range from roughly $139 million to $581 million. Twenty-five percent of that ranges from roughly $35 million to $145 million. Click to return to article.

(14) VARR and Oxford House are the only two entities that provide recovery residence certification on behalf of DBHDS. Oxford houses are democratically run and not staffed. Click to return to article.