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November 27, 2014

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Testimony: Thomas boldly cut iffy deals

Cronies in business just to bilk UMC, investigators say

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Ernie McKinley, University Medical Center’s director of information services, was among the witnesses who testified to the grand jury that the friends to whom Lacy Thomas gave lucrative public contracts were not qualified for the jobs they were supposed to perform. Here are excerpts from a transcript of his testimony.

During Lacy Thomas’ reign as chief executive of University Medical Center he created his own rules, brazenly awarded lucrative contracts to unqualified friends and ousted executives who dared to defy him, according to grand jury testimony.

The result: Taxpayers lost an estimated $10 million at the public hospital while Thomas lined the pockets of his Chicago cronies, according to prosecutors.

A Clark County grand jury indicted Thomas on Wednesday on five counts each of theft and misconduct of a public official, the result of a 15-month Metro Police investigation into his activities as chief executive at the hospital. The grand jury transcripts are now public.

They show the boldness with which Thomas operated, based on deals he struck with Frasier Systems Group, a Chicago company.

Metro detectives testified that Greg Boone ran Frasier Systems for the sole purpose of bilking UMC. The business sprang into existence just five days after Thomas took over at UMC, Detective Mike Ford said. It received more than $330,000 in contracts from UMC.

Boone operated Frasier Systems out of his mother’s two-car garage in Chicago, authorities said.

Thomas did not initially disclose his relationship with Boone and others who received no-bid contracts from UMC, detectives testified. But after raiding the hospital last year, police found a photograph of Thomas at Boone’s wedding. The two were also members of the same business networking fraternity, Alpha Phi Alpha, and Ford testified that Boone was Thomas’ chief information officer at Cook County Hospital, where Thomas worked before coming to UMC.

Thomas hired Boone in 2004 to do a quick evaluation of UMC’s information technologies for $50,400, Ford testified.

“UMC got a 25-minute PowerPoint presentation in return,” Ford said. “It was a regurgitation of information Greg Boone had received from three people he interviewed on a two-day trip at UMC.”

Ford said UMC employees “chuckled and laughed” as they showed him portions of the PowerPoint presentation that came directly from what they had told Boone.

Boone got several other contracts and delivered similarly suspicious results, Ford said.

In another case, Thomas recommended to county commissioners a contract with Crystal Communications, which was owned by Thomas’ friend Martello Pollock. Crystal received UMC contracts worth more than $170,000, Ford said.

Thomas recommended Crystal even though local contractor Quincy Harris’ Network West Consulting had offered to do the job for significantly less, Ford said. Harris had more than 27 years of experience, including telecommunications work at the World Market Center, and, like Pollock, is a minority contractor because he is black.

Harris had no experience doing telecommunications work for hospitals, Thomas reportedly said.

Thomas also used the race card in slipping contracts to his friends, according to testimony.

During the investigation, Ford asked Thomas why Boone was getting paid within days of submitting an invoice, while other companies had to wait weeks or months to get paid by UMC.

At first, Thomas said Boone’s company was small and couldn’t handle long lags in payment, Ford said.

But, the detective countered in his interview with Thomas: “Greg Boone wasn’t out 16 computers or anything to that extent, he was just out some paperwork, I guess.”

Ford said Thomas then changed his story, and that Thomas said: “It’s harder for African-American companies; there’s not as many of them out there and anything he could do to reach out and help them to get ahead and to get paid on time is what he was going to do.”

In another case, Ford said Thomas argued there weren’t enough minority contractors on a UMC construction job and used that issue to force a change order with the job’s general contractor, inserting Las Vegas-based TBL Construction.

Thomas’ willingness to overstep his authority and see that his friends were treated well intimidated hospital executives. Two who apparently defied Thomas — Chief Financial Officer Mike Walsh and Chief Operating Officer Blaine Claypool — were forced by Thomas to resign on the same day in January 2006, according to their testimony. Thomas was known to bully UMC’s staff, witnesses said.

Some UMC staffers who complained about the hiring of Crystal Communications said they were told to keep quiet.

Ernie McKinley, UMC’s information systems director, griped to his boss that Boone was not qualified.

But his boss, Doug Northcutt, was unwilling to stand up to Thomas, McKinley said.

“I was told by my boss, Doug, ‘We’re not going to refuse it. We’re not going to say no to Lacy. I’m not going to end up like everybody else that says no to Lacy. Find something for him to do.’ I said, ‘Well, what if I find him two or three innocuous little items he can deal with back at home and leave us alone on everything else we’re doing?’ And Doug said, ‘Sure, just do that.’ ”

Fear again triumphed when McKinley raised concerns about the Frasier contract.

“I saw the contract when it was first written and what he was asking for and what he said he was going to be doing, and I told my boss at the time it’s not a contract that we should sign, it’s not a contract that we would want. He wants way too much for what he has the ability to offer, and we already know everything he’s going to tell us.”

McKinley said Northcutt responded: “It’s one of those things you’ll have to live with. There are other contracts in the hospital that are all being run by Lacy and if we don’t do as we’re told, we’re not going to have jobs.”

Claypool said he had concerns about whether a contract Thomas formed with ACS Consultants was beneficial to UMC.

“At a point in time,” Claypool said, “you learn very quickly not to bring up certain contracts — or I learned not to. I mean you just ... did not want to evoke a response from him.”

Thomas even tried to impose his will on the county attorney assigned to the hospital. Within weeks of taking over at UMC Thomas summoned Chief Deputy District Attorney Mary-Anne Miller to his office and told her she needed to help him find ways around state law “or get out of the way,” she testified.

She responded: “I’m not sure how it works in Chicago, but it doesn’t work that way here.”

Later, Miller said she was present when Thomas claimed to then-County Manager Thom Reilly that she had never told him the limits of his authority. Thomas and Miller had talked extensively about the subject because it was such a point of contention, she testified.

“He lied to Thom Reilly about whether or not he had been advised that certain actions were outside the scope of his authority,” Miller said.

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