UMC: What the police probe found so far

Marshall Allen, Abigail Goldman and Mary Manning

Wednesday, Jan. 17, 2007 | 7 a.m.

Problems at University Medical Center escalated exponentially Tuesday, from concerns of gross mismanagement to a criminal probe of top administrators, in a tumultuous day that included the firing of Chief Executive Lacy Thomas.

Thomas "has used his position to allow several close personal friends and their businesses to benefit financially," Metro Detective Mike Ford wrote in an affidavit for a search warrant served Tuesday at UMC.

The allegedly illegal contracts outlined by Ford total more than $2.5 million and UMC has virtually nothing to show for them, according to the affidavit. And there could be more.

Thomas did not act alone, according to Ford. The ensuing investigation, he wrote, "will also show that Thomas' Chief Financial Officer, Richard Powell, and his Chief Operating Officer, Marlo Hodges, had knowledge of their executive officer's dealings and even assisted in the crimes."

Thomas is a graduate of Chicago State University and started at UMC in November 2003 after serving as hospital director at John H. Stroger Hospital of Cook County, in Chicago. Most of the alleged payouts are to friends or former colleagues in the Chicago area, according to the ongoing investigation.

On Tuesday, as Metro investigators seized UMC's financial records, contracts and computers, Thomas and other administrators told the Clark County Board of Commissioners, which oversees the hospital, that an audit showed the actual loss for 2006 was $34 million - well beyond the $18.8 million that Thomas reported in November.

That disclosure ended Thomas' career at UMC.

After having weathered months of criticism about his financial competence, he was terminated at Tuesday's meeting. And the criminal investigation includes explosive allegations that could result in his arrest and imprisonment.

The affidavit contends that Thomas defrauded the county by granting numerous contracts to companies run by friends and college fraternity brothers, in some cases despite lower bids by other entities.

The deals were negotiated and pushed through by Thomas, sometimes in a manner that dodged oversight, the affidavit alleged. And while many companies wait six months or longer to receive payment from UMC, Thomas ensured that his friends were paid in days, the affidavit said.

According to Ford's affidavit, "Many of these companies performed no actual work other than 'consulting' and ... this was a means to get friends/family financial kickbacks at the county's expense."

Thomas is accused of ignoring protests by other administrators, including former COO Blaine Claypool and CFO Mike Walsh, both of whom resigned Jan. 6, 2006, because of Thomas' alleged misconduct.

Claypool said on several occasions that Thomas "completely bypassed his department, awarding 'professional service' contracts to businesses of his friends from the Chicago area," the affidavit said.

Clark County District Attorney David Roger launched the investigation Nov. 20, after a county audit raised concerns about administrators' conduct. He issued a public appeal Tuesday for any UMC employees or contractors with knowledge of wrongdoing to contact authorities.

"It's important for people who may be on the periphery of this investigation to come forward and speak to detectives," Roger said. "As the saying goes, the first horse to the trough drinks the pristine water."

Roger said the probe could be a long one. "It could very well be a complicated investigation, as it is with all financial crimes."