Hypothetical – AG Seminar – Non-Profit Regulation


The Attorney General of North Dakota, Marge Gunderson is originally from Bowbells (Bowbells (est. pop 322) is the county seat of Burke County and has been called by the Voice of America the "fastest-shrinking county in the nation.") Marge has not been seriously opposed for election in 12 years, has a staff of 46 lawyers who do the best they can providing legal services to the states 654,000 residents. Marge now lives in Fargo, the cleanest city in the United States, and was just elected to a fourth term.

As with all attorneys general, Marge’s office has a federally mandated and funded Medicaid Fraud Unit that oversees the expenditures of Medicaid dollars and reviews the quality of care provided by all Medicaid providers.

Although North Dakota is not the oldest state in the country (Maine has that distinction), there does seem to be an awful lot of old North Dakotans. The statistics say 15% statewide, but once Marge drives outside the“hipster” areas of Bismark and Fargo, she can see entire communities where the numbers must be far higher. In fact, the fastest growing age segment in the state are those over 80 with many Norwegian bachelor farmers living past 100. With the collapse of the family farm and the kids gone to the Twin Cities for the bright lights, more and more are on Medicaid.

North Dakota has long been served by about a hundred small, family owned nursing homes. In the face of Medicaid cuts – no doubt due to “Obamacare” – these homes are often kept afloat by the largesse of North Dakota’s best know citizen, the late John Beresford Tipton, who upon his death left every then existing nursing home in North Dakota $3 million dollars.

Each home has its own account at the Tipton Trust and each home can draw down on it with the permission of the staff of the Trust or a vote of the Trustees who are Tipton’s three children – Joe, Jerry and Josie Tipton who themselves are in their 80’s and who have not spoken to each other since their father’s passing. None of the living Trustees live in North Dakota and only Josie has children (Jimmy and Jezebel) both of whom live in New York City where they live in Tribeca and run a dance studio.

The day-to-day control of the Trust – which now stands at $600 million - has fallen to Wade Gustafson. Wade was the older Tipton’s lawyer and his rumored lover. All the Trustees hate him and are waiting for him to die, but Gustafson, who is himself 84 and has a large picture of AIG’s Maurice Greenberg in the lobby of his office, seems in excellent health. His law firm – Gustafson, McDormand and Coen - does the legal work for the Trust and the Olde Fargo Bank, where Gustafson is Chair of the Board, invests all of the money.

Marge has never heard a single complaint about the operations of the Tipton Trust until one slow November morning, she opened up her copy of the Sioux Falls Argus-Leader and spilled her coffee (lots of milk and two sugars) after reading the front page with disbelief. The Argus - Leader – long a bastion of the North Dakota establishment – was recently purchased (as has everything else in North Dakota) by someone “from away” who in turn had frugally asked four Columbia Journalism students to come to the Falls and intern for free.

The students have now released their report that includes allegations that:

1. Wade Gustafson draws an annual salary of $2.3 million from the Trust and undisclosed amounts from his law firm and the Bank where he is the major shareholder. Gustafson also has a house, car, chef, and airplane at his disposal paid for 100% by the Trust.

2. The purchase of 37 North Dakota nursing homes by a California corporation with a reputation for buying and then closing small, unprofitable nursing homes has been approved by the Federal Trade Commission.

(Marge, who was the Fargo DA before becoming AG, has not paid any attention to the FTC since Obama’s election although they have written several letters addressed to her “Antitrust Division” that were never read by anyone other than Marge’s long time secretary. “Once they find that birth certificate”, Marge said at the North Dakota Tea Bag convention just last month, “I will start paying attention to the federal government!” It was a great line at the time.)

3. Nursing homes have complained to the Leader that there are having difficulties accessing their accounts at the Trust. There seem to be no written guidelines for dispersal and no accounting.

Marge does not have a press secretary – preferring to handle these matters herself – but she knows that she will be getting lots of calls about this story. She also knows that her Medicaid Fraud staff has been telling her that the quality of care in many small homes has deteriorated, but also that if she sues them, they will shut down. Nursing home operators are always important small business persons and, along with barbers and funeral directors, are politically powerful.

Marge’s staff also says that advocates on the Native American Reservations are threatening to complain to Larry Echohawk, the current Director of the U. S. Bureau of Indian Affairs and the former AG of Idaho, if her Medicaid Fraud Unit does not take action.

Marge also knows that Wade Gustafson, his law firm and his bank have long been her strongest political supporters.

4. In addition to the Tipton Trust, most nursing homes are the beneficiaries of smaller – but emotionally important – local trusts set up by the families of those who passed in those homes. Marge knows that the families, banks and lawyers who run those small trusts will be upset by the Argus-Leader story and will be contacting her soon.

4. To top it all off, Marge’s 93 year old mother, Eudora Presnell, who reads the Argus Leader every morning at 6:00 AM, is calling from the Bowbells Manor where she is a resident to ask what her famous daughter is going to do about it all.

Bowbells Population Trends:

Census Pop. %±
1920 643 —
1930 695 8.1%
1940 787 13.2%
1950 806 2.4%
1960 687 −14.8%
1970 584 −15.0%
1980 587 0.5%
1990 498 −15.2%
2000 406 −18.5%
Est. 2008 322 −20.7%