The signs were there

By Marshall Allen

Thursday, Jan. 18, 2007 | 7:06 a.m.

Lacy Thomas is now disgraced, a fired hospital chief executive who is under criminal investigation into allegations of cronyism and kickbacks at county expense.

But signs that foretold his implosion were present in the first year of his regime as head of the University Medical Center, the county's public hospital. In July 2004, Thomas made threats and shook his fist in the face of Diana Bennett, the chief executive of Paragon Gaming who hails from one of Las Vegas' most powerful families, according to witnesses to the intimidation.

The confrontation took place at, of all places, a charity board meeting. It was the climax of a clash that dragged to a bitter end two weeks ago and has cost UMC the goodwill of the valley's philanthropic elite and dried up hundreds of thousands of dollars a year in contributions.

Bennett was president of the board of the University Medical Center Foundation, which since its inception in 1982 had donated more than $5 million to UMC, primarily for pediatric equipment and services to the cash-strapped hospital.

The charity and UMC had enjoyed a cozy and mutually beneficial relationship for more than two decades. The foundation's director and administrative assistant worked at UMC and were paid by the hospital, but they were supervised by the nonprofit group's board. In turn, the foundation's long-standing relationship with the Children's Miracle Network Telethon yielded annual donations to UMC of between $200,000 and $300,000.

In the summer of 2004, Thomas shouldered in, attempting a takeover of the foundation and its money - about a million dollars at the time - for use in meeting nonpediatric hospital needs. Board members said they refused to cave and the clash climaxed at the July 2004 board meeting.

According to the meeting's minutes, Thomas was angry about a bonus the board gave a foundation employee, and in the blowup, he threatened Bennett.

Carolyn Sparks, a former university system regent who sits on multiple nonprofit boards, recalls the chief executive's swagger: "Now don't try to cross me because you won't win."

"I took that as an unveiled threat," Sparks said.

The minutes say Thomas was "angry, defensive and threatening" throughout the meeting.

Thomas stormed from the room after his outburst, but board member Bill Flangas persuaded him to return.

Next, the board and Thomas discussed the foundation's relationship with the Children's Miracle Network, and the chief executive made it clear that, because the telethon contract was technically with UMC, the hospital's new director of development, Mary Ellen Heise, would become the point person.

Neither Heise nor Thomas returned calls from the Sun for this story. Heise left the hospital in November 2004 and now works in Las Vegas for Nova Southeastern University.

The board countered with complaints about Heise, the minutes show. Since she started a month before, she had fired the foundation's auditor and bookkeeper, alienated donors, and most grievously, cleaned out the foundation's office and storage unit.

Sparks said Wednesday that at Thomas' direction, Heise had tried to gain access to the foundation's checkbooks and bank accounts. UMC never did gain access to the foundation's money, but in Heise's search, she took boxes of financial records, memorabilia and donated items and tossed them in a trash container, Sparks said.

At the contentious board meeting, Thomas said the office space belonged to UMC, and he said his goal was to expand the foundation into other areas of the hospital. He said, "We can part ways and take our foundation and go someplace else," according to the minutes of the meeting.

Board members say they were astounded to discover a month later, when they called UMC to reserve space for their next meeting, that they had been banned from the hospital. Hospital records show that on July 22, 2005, exactly a year after the explosive meeting with the UMC Foundation, the hospital started its own foundation, Partners in Excellence.

Sparks and Flangas said UMC quickly botched the relationship with the Children's Miracle Network, and 2004 was the last year it benefited from the telethon. The contract now belongs to St. Rose Dominican Hospital.

Without the telethon deal, and with the hostilities they faced at UMC, many board members resigned. Those who remained determined it was better to end the charity and keep its integrity intact, Flangas said.

When Thomas "butted into the foundation's business" and destroyed the relationship with the telethon, "it was a signal to us to protect whatever assets we had and get them directed to wherever they could go, and also to protect our personal reputations," Flangas said.

Current and past members of the foundation's board told Thomas' superiors, the Clark County Commission, about his behavior, but nothing was done.

"I'm not sure why (the commissioners') reaction was the way it was, and why (Thomas) was able to go as long as he did fooling everybody," Sparks said. "We didn't want to make trouble for the hospital, and that was part of the problem. We didn't know how to deal with (Thomas) without embarrassing the hospital."

Now that Thomas is being investigated , she said board members "regret we didn't speak up."

It took more than two years after the records were trashed for accountants to restore the foundation's finances and complete an audit of the charity. The final gift to UMC was Jan. 2. The foundation cleaned out its coffers to deliver the largest and most bittersweet donation in its history: $899,769.58.

The gift was delivered at the meeting of the County Commission, which two weeks later would preside over the meeting where Thomas would reveal he misreported more than $15 million in losses. Foundation board members told the commission about the unfortunate end of their charity.

Flangas told the commission that Thomas destroyed the foundation and "poisoned the enthusiasm of the board." Sparks added that they wanted to go on the record about why they are no longer involved with UMC.

It was not our choice," she said.