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April 17, 2014

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Indictment says UMC chief made no-work deals

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Former University Medical Center Chief Executive Lacy Thomas must post $500,000 bail to remain free on 10 counts of theft and official misconduct.

Beyond the Sun

In the first private meeting between then-University Medical Center Chief Executive Lacy Thomas and the hospital’s legal counsel, prosecutors said, the new boss made it clear that he would not be bound by traditional rules.

Mary-Anne Miller, a Clark County deputy district attorney, was supposed to sign off on all county contracts. But Thomas, who came to county-owned UMC from Chicago in November 2003, told her the public hospital’s regulations were too cumbersome.

“He told her he was not interested in abiding by the law,” Deputy District Attorney Scott Mitchell said Wednesday in court. “Her job was to find ways around the law because UMC was in competition with private hospitals.”

A source said Miller testified before a grand jury that she told Thomas: “I don’t know how you do things in Chicago, but if you do those things here, I’m going to report you.”

About three years later Thomas showed similar disregard for his own boss, County Manager Virginia Valentine, on the day she fired him over financial mismanagement. A source familiar with the investigation said Thomas’ first words to Valentine after being fired were: “You don’t have the authority to fire me.”

Thomas, however, learned differently when Valentine did, indeed, dismiss him that day in January 2007.

A 15-month investigation into Thomas’ conduct at UMC culminated Wednesday with his indictment on five counts each of theft and misconduct of a public official for allegedly awarding lucrative no-work contracts, mostly to his Chicago friends.

Mitchell estimates UMC lost $10 million because of the alleged malfeasance. Some of the contracts were for work that should have been completed at no charge to the hospital by county agencies, Mitchell said. Others were awarded to companies that seemed to exist solely to take money from UMC.

A consulting company called Frasier Systems Group, for example, was run by Thomas’ friend Gregory Boone out of his mother’s garage, Mitchell said. Metro Police investigators say UMC had paid Frasier Systems at least $673,268 as of August 2005.

The indictment does not accuse Thomas of pocketing kickbacks in return for awarding the contracts to his friends.

“We’re not trying to show that he lined his own pockets,” Mitchell said. “We’re trying to show that he lined the pockets of his friends, which the law forbids.”

Mitchell said that in Thomas’ initial meeting with investigators, he denied any connection to those friends. After detectives confronted him with evidence, “he gradually admitted he had closer ties to these people,” Mitchell said.

“There was a conscious effort to cover up,” Mitchell said in court.

The Chicago friends who benefited from the UMC contracts knew Thomas through a fraternity that Mitchell said operated more like a business association in which members “have an understanding they are going to help each other.”

Thomas sat silent as the judge gave him a week to post $500,000 bail. He is scheduled to be arraigned Feb. 28.

During Wednesday’s hearing, his attorney, Daniel Albregts, pointed dramatically to the Metro Police detectives who investigated the case and said: “Many of the things they were looking for were not in the indictment.”

Thomas, Albregts said, “has every intention of clearing his name.”

The allegations have hurt Thomas’ reputation and made it impossible for him to find a new job, Albregts said. His house is on the market because he can’t afford it, the attorney added.

Albregts and Thomas would not comment on the case to reporters at the hearing.

Mitchell said the case is still being investigated and that others may be named in the alleged theft of taxpayer dollars. He would not name any other suspects, but Thomas’ 10-count indictment includes the names of several individuals and companies:

• Thomas allegedly gave a contract to Superior Consulting, also known as ACS, with terms “grossly unfair” to UMC, under which the company was paid for work already being performed by a county agency. Superior is allegedly run by longtime friends of Thomas’, the indictment said.

• Thomas’ contract with Frasier Systems never produced any product or services in return for the payment, and it should have been known that UMC could have received the services free of charge from the county.

• Thomas hired TBL Construction, a Las Vegas company, to oversee work on a construction project being performed under a separate contract with the general contractor. A source familiar with the investigation said Thomas was directed to hire TBL by then-Clark County Commissioner Yvonne Atkinson Gates, one of his allies, who is now under criminal investigation in an unrelated matter. Investigators contend the contract with TBL was unnecessary and duplicated work already being done.

• Thomas hired Premier Alliance Management, a company owned by his friend and longtime Chicago political player Orlando Jones, to analyze and report on UMC’s planning, priorities and communications systems. No work was performed by Premier in return for payment, the indictment said.

Soon after Metro contacted Jones in connection with the investigation, he killed himself with a gunshot wound to the head.

Sources familiar with the investigation told the Sun that in exchange for the Premier contract, Jones directed one of his clients, Chicago-based Family Guidance Centers Inc., to pay Thomas’ wife to open a drug rehabilitation clinic in Las Vegas. Mitchell said there is evidence that Thomas’ wife benefited from such bogus contracts, “but it’s not direct enough to show evidence that he did something wrong.”

• Thomas awarded a contract to Crystal Communications, a company owned and operated by Jones and Martello Pollock, another friend of Thomas’, to select and install top-notch telecommunications equipment in the UMC Northeast Tower. Crystal was not qualified to do the job, the indictment says.

A source said Crystal was hired to install a phone system at John H. Stroger Hospital in Chicago when Thomas was its director. That project, the source said, came up 1,100 phones short, causing a loss of $1.1 million.

Mitchell said he anticipates that Thomas’ defense will be built around the argument that the contracts were well-intentioned — if incompetent — attempts to improve UMC.

The problem is, the law says such levels of incompetence are a felony, Mitchell said.

“You can’t just be stupid and give contracts to your friends and say, ‘I thought it would work out best for UMC,’ ” Mitchell said. “You’re not supposed to award a contract just for the benefit of the person you’re giving it to. That is corrupt government.”

Marshall Allen can be reached at 259-2330 or at [email protected]

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