Prison policy aide resigns: Amid probe, ex-official says medical investment was no conflict of interest.

Byline: Andy Furillo

Feb. 28--The prison system's top health care policy adviser has resigned amid a conflict-of-interest investigation into his investments, but in an interview Tuesday, the official denied any impropriety. "There was no conflict of interest," said Darc Keller, the California Department of Corrections and Rehabilitation's assistant secretary in charge of health care policy until his resignation Friday. Keller, 59, said he divested himself of an investment he listed on his statement of economic interest that sparked an investigation by the Office of the Inspector General, which provides oversight to the corrections agency's operations. According to Keller's economic interest statement filed last year, he had a $10,001-to-$100,000 investment in Mobile Medical International Corp. The company had performed subcontracting work for Medical Development International, the Florida firm that since last year has provided outpatient physician, billing and scheduling services for inmates on a pilot project at two Southern California prisons.

Keller said he divested himself of his stock in Mobile Medical before Peter Farber-Szekrenyi, the prison system's health care director, signed a "scope of work" contract with MDI. MDI, he said, made a subcontract proposal to Mobile Medical "without my knowledge."

"There was no financial gain by anybody," Keller said. Several sources told The Bee that the Office of the Inspector General's investigation was focused on Keller's investment in Mobile Medical. "We understand the OIG is looking at a previous relationship Darc had with one of our subcontractors that we've known since 1997," said Mark Nobili, a lobbyist for MDI. Nobili said his client "is not an issue" in the probe. OIG spokesman Brett Morgan has declined to discuss the investigation. Corrections Secretary Jim Tilton informed his executive staff about Keller's resignation in a memo dated last Friday. "Darc has plans to return to his private sector career," Tilton said in the memo. "He has made significant contributions in our complex system during a time of extraordinary challenges." Both Keller, who was earning $180,000 a year at the time of his resignation, and Farber-Szekrenyi were appointed to their jobs in November 2005 by Gov. Arnold Schwarzenegger.

Robert Sillen, the ...