Topeka ? Kansas Attorney General Derek Schmidt is investigating the alleged embezzlement of about $1 million in Medicaid funding from a nonprofit organization that has a state contract to provide mental health patients across Kansas, his office said.

The attorney general is investigating Kansas Health Solutions, a third-party contractor that is a subsidiary of the Association of Community Mental Health Centers, which includes 27 mental health clinics with a provider network in all 105 Kansas counties.

The organization’s former chief financial officer, Jason Sellers, is suspected of creating a false billing arrangement to skim cash from $190 million annually allocated by the Kansas Department of Social and Rehabilitation Services, The Topeka Capital-Journal reported Wednesday.

Sellers, who left the KHS in August, has not been charged with any crime.

The attorney general’s office and a spokeswoman for the SRS confirmed to The Associated Press Thursday that the organization is being investigated but would not confirm that Sellers is the target of the investigation.

A telephone number for the only Jason Sellers listed in the Topeka area was too full to accept messages when called by The AP.

But SRS Secretary Robert Siedlecki told the Capital-Journal that a preliminary inquiry by his state agency indicated Sellers changed a printing contract to bill the state extra for consulting. The consulting firm was set up by Sellers, Siedlecki said.

Michael Goldberg, the nonprofit’s executive director, left the organization after Sellers. The organization’s board chairman, Scott Jackson, said there was no indication Sellers collaborated with any other KHS employees, including Goldberg.

The controversy clouded negotiations with the SRS on a new management contract with the state for mental health services. Jackson and officials at SRS said negotiations are continuing on a new contract that would extend to July 1.

As KHS works with the state to finalize this contract, it continues to cooperate fully with the ongoing investigation by SRS and law enforcement into recently discovered financial irregularities,” Jackson said. “As we have said from the beginning of this investigation, KHS will take all appropriate corrective actions identified by the investigation.”

The new contract will require KHS to hire an outside accounting firm to manage the administrative budget and hire outside legal counsel, pending SRS approval, to handle contracts. And the SRS must approve the hiring of KHS’ new executive managers.

“The whole idea is to provide for more rigorous oversight,” said SRS spokeswoman Angela de Rocha. “Kansans need to know their money is being spent responsibly.”