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Benzeevi funds hearing to continue in March
TONY MALDONADO
tony@ourvalleyvoice.com
Arguments over the fate of Tulare Regional Medical Center manager Dr. Benny Benzeevi’s seized cash will resume on March 4. Approximately $937,000 was seized by the Tulare County District Attorney’s office. They claim the cash came from an illegal transaction. Benzeevi’s lawyers claim that the transaction was explicitly allowed when the Tulare Local Healthcare District’s Board of Directors voted to let Benzeevi’s company, Healthcare Conglomerate Associates, seek out and execute loans on its behalf. The district is the legal entity that owns Tulare Regional; Benzeevi’s company, Healthcare Conglomerate Associates (HCCA) managed the hospital from May 2014 until November 22, 2018. While the entirety of the proceedings were initially slated to just last two weeks, the first two weeks were taken up by the District Attorney’s office’s arguments. The seized funds came from a $3m sale-leaseback transaction executed by Benzeevi a month before the district filed bankruptcy: HCCA received $3m on August 31, and the district declared itself bankrupt on September 29. The funds were wired directly into a bank account owned by “Tulare Asset Management.” Benzeevi’s attorneys claim that account was part of HCCA, though it was legally registered at Benzeevi’s home address at the time the proceeds were transferred into it; $2.4m of those funds
were subsequently transferred to his personal account. The judge in the case, Hon. John Bianco, signed the warrant allowing the district attorney’s office to seize the cash. He’ll also be the one to decide whether Benzeevi will get it back as the office continues to investigate his company’s time in Tulare.
Auditor Testifies
Darrell Early, an Investigative Auditor with the California Department of Justice, testified regarding his findings during the series of hearings. Early has prepared at least one Investigative Auditor Report, dated December 19, which states that he began assisting the Tulare County District Attorney’s office with the investigation in January 2018. He examined multiple bank accounts as a part of his work, he told the court, including two HCCA accounts, Benzeevi’s personal bank account, and Tulare Regional Medical Center’s account. $2.4m of the funds were transferred into Benzeevi’s account on September 13, 2017, Early told the court. Days earlier, on September 10, $499,727.93 was transferred to the Baker Hostetler law firm; Bruce Greene, Benzeevi’s preferred lawyer at the firm, would later send Benzeevi a letter dated September 29, 2017, advising that neither he nor his firm could further represent HCCA, Benzeevi, or any other affiliated entity. Earlier in the hearing, Delbert Bryant, the hospital’s long-time controller, testified that the hospital’s profit and loss statements would in-
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clude cash held in the Tulare Asset Management account. Early stated that it was not proper under generally accepted accounting principles to count one company’s cash as another’s, leading Eliot Peters, an attorney for Benzeevi, to object -an objection that Bianco sustained. “The fact that Tulare Asset Management was in Dr. Benzeevi’s name does not mean it’s not a hospital account,” Bianco said. “Tulare Asset Management is a hospital account.” Peters stated that an operating agreement showed Tulare Asset Management was a subsidiary of HCCA; after significant debate between Peters and Trevor Holly, an attorney for the district attorney’s office, Peters agreed to have a sealed envelope with the document delivered to the court. On cross-examination, Early told Peters he hadn’t thoroughly read the Management Services Agreement, the contract between HCCA and the district that Peters states allowed HCCA to pay itself from the district’s bank accounts. HCCA claims that the district owed it millions in loans the company extended so that the district could continue operating Tulare Regional, including loans for operations and payroll expenses.
Former CNO Testifies to Supply Problems
Angie Graziano, HCCA’s former Chief Nursing Officer, testified that starting in 2017, the hospital began facing supply issues. Prior reporting has shown that the Tulare Local Healthcare District
and Tulare Regional, under HCCA’s management: • had at one point owed rent on its Hillman Clinic from February to September of 2017, • had racked up $473,625.65 in past due bills to Southern California Edison, some dating as far back as January 2017, • owed Tulare County for $132,622.08 in elections expenses, dating as far back as the August 30, 2016 Measure I Bond election, • took out an $800,000 line of credit from Bank of the Sierra to repay Cardinal Pharmaceuticals, a drug vendor Graziano said supply issues worsened by March 2017, resulting in weekly meetings with HCCA CFO Alan Germany to discuss supply issues; by April 2017, the situation had devolved so much that daily “huddles” were held at 9am and meetings at 11am to discuss vendors that had put the hospital on credit hold. She told the court that in her 29 years of experience, she’d never before needed to hold daily meetings regarding supply problems. By April, 20 vendors had put the hospital on a credit hold; that number spiked to upwards of 45 by August, she told the court.
Accountants Testify
Michael Certini, an accountant with HCCA, worked at Tulare Regional for three years -- he was initially an Accountemps temporary worker before being hired on permanently, he said.
HEARING continued on 13 »
