BlueWare CEO Arrested in Alleged Kickback Scheme

September 10, 2013 Alex Woodie

The CEO of BlueWare, a developer of IBM i-based healthcare management applications, was arrested in Florida last month for her alleged role in a kickback scheme with an elected official and a lobbyist, who were also arrested. The CEO, Rose Harr, posted bail and denies all the charges.

Harr is accused of funneling money into the 2012 re-election campaign of Mitch Needelman, who was then the Brevard County Clerk of Court, in exchange for Needelman’s assistance in arranging for BlueWare to receive an $8.5 million contract from the county to scan a gymnasium full of paper documents into digital records.

Florida Department of Law Enforcement arrested Needelman and his business associate, the lobbyist William Matthew Dupree, in mid-August. Harr, who was the subject of an arrest warrant for bid-tampering and bribery, turned herself in two days later, according to a story by Florida’s WFTV.

The FDLE says it began investigating the case in July 2012 when it received information about the alleged scheme. The information allegedly came from a disgruntled former BlueWare employee, which Harr says shows that the case against her is weak.

However, investigators with FDLE say they have more evidence that the scanning contract was a bum deal. “It’s particularly interesting to note that approximately 75 percent of the records that were to be scanned by the terms of the contract were eligible for destruction and didn’t need to be scanned,” said Cindy Sanz of the FDLE, according to WFTV’s story. What’s more, the FDLE claims that BlueWare didn’t even have the equipment to scan the documents when the contract was signed.

FDLE officials says BlueWare received an up-front payment of $500,000 in May 2012, even though the contract hadn’t been signed. The first monthly payment of $90,000 was made the following month, when the contract was signed.

When Needelman lost his re-election bid, he arranged to receive a $5.6 million loan with Hewlett-Packard Financial Services, according to the FDLE. BlueWare received the loan money, although Brevard County was obligated to repay the loan, the FDLE says.

“The investigation shows Needelman, Dupree, and Harr swindled Brevard County taxpayers out of millions of dollars,” FDLE commissioner Gerald Bailey says. “Although not the final chapter, today’s arrests should present a degree of satisfaction to Brevard County taxpayers.”

Harr defended herself in an interview with Florida Today. “We did not do anything wrong,” Harr reportedly said. “The criminal charges are completely unfounded. â€¦ I’m looking forward to it being resolved.”

Meanwhile, the number of employees at BlueWare has shrunk from about 60 to about 10. Some of the employees have not been paid, and are looking into possible legal action to get wages owed them, according to Florida Today.

BlueWare relocated to Melbourne, Florida, from Cadillac, Michigan, in May 2012. At the time, Florida governor Rick Scott hailed the move as “a great win for the Space Coast, as well as for the entire state.” The company, which received tax benefits and other incentives from the state as a result of the move, was expected to hire more than 190 employees with an average wage of $69,000.

BlueWare’s main product was the Wellness Connection Electronic Health Record application, which runs on the IBM i platform. The company sold access to the software via the software as a service (SaaS) method, and also provided consulting and document scanning services.