Tulare County District Attorney’s office arrests Healthcare Conglomerate Associates CEO in Los Angeles, booked on $4 million bail
LOS ANGELES – The Tulare County District Attorney’s office (TCDA) announced last Friday morning that Healthcare Conglomerate Associates CEO Yorai “Benny” Benzeevi was arrested at LAX airport Thursday evening.
According to the DA’s office, their bureau of investigations took Benzeevi into custody at Los Angeles International Airport. The DA’s office coordinated with Benzeevi’s local counsel and federal officials at the American Embassy in Manila, Philippines, for his self-deportation and return to the United States. Benzeevi was initially taken into custody and processed by U.S. Customs officials before he was turned over to district attorney investigators, who then transported him back to Tulare County where he was booked and released on $4 million bail.
The DA’s office, with assistance from the Federal Bureau of Investigations (FBI), revoked Benzeevi’s passport while he was in the Philippines. He does not possess a current passport.
On Aug. 11, 2020, the DA’s office filed 40 felony and six misdemeanor charges against Benzeevi, HCCA CFO Alan Germany of Arizona, and Tulare Regional Medical Center / HCCA counsel Bruce Greene of Los Angeles. It is alleged that the defendants used control of public hospital entities to enrich themselves through the improper use of taxpayer and private loans, and other public integrity crimes. Crimes alleged include misappropriation of government funds, conflicts of interest, money laundering, embezzlement, theft, and failure to disclose funds intended to influence a political campaign.
If convicted, each defendant potentially faces a significant state prison commitment. The specific amount of prison time as to each defendant varies due to the nature of the charges and California sentencing rules; however, on the most serious charge, money laundering, Benzeevi is potentially facing 13 years while Greene and Germany are each facing up to nine years. Greene and Germany have potential maximum sentences of well over a decade should they be found guilty of all of the charges and allegations, and Benzeevi is facing in excess of four decades.
Benzeevi is scheduled for arraignment on Jan. 6, 2021. Greene and Germany will return to court on Friday, Dec. 18 for a scheduled hearing.
Germany pleaded not guilty to 11 counts of embezzlement, four counts of conflict of interest, one count of using his official position for personal gain and one count of failing to file a statement of economic interest.
Most of Germany’s charges stem from his former position as CFO for HCCA, which in turn made him acting CFO for both Tulare Regional Medical Center (TRMC) and Southern Inyo Hospital (SIH), a rural hospital in Lone Pine, Calif., about four hours east of Tulare over the Sierra Nevadas. The management service agreements HCCA signed with both TRMC and SIH did not expressly include a CFO, of which neither board was aware. The oversight in the contract meant both districts were charged a fee, in addition to their management contract for CFO services with Germany. Within a year at TRMC, Germany’s contracted fees had risen from $561,000 to $681,000 and allowed for up to $8,000 per month in travel expenses. This was about twice the national average for CFO salaries, according to the California State Auditor. By the end of 2016, Yorai “Benny” Benzeevi and Germany transferred $700,000 of property tax revenues from Southern Inyo to Tulare Regional, in part as a reimbursement for Germany’s consulting fees and to balance the books as part of a money laundering scheme, according to the DA’s filings. HCCA also billed Southern Inyo for hours which Germany had already been paid for by Tulare Regional. Germany also had Tulare Regional staff generate false billing invoices to Southern Inyo for time that Tulare Regional had already paid for.
Germany allegedly worked with Benzeevi to orchestrate the line of credit between TRMC and SIH. HCCA extended a $250,000 line of credit from Tulare to Southern Inyo in March 2016 and subsequently increased to $500,000 just four months later. In return, HCCA received $3.1 million it charged to SIH as a fee for guaranteeing the loan. Additionally, the two HCCA executives coordinated took $16,000 worth of hospital beds, IV pumps and refrigerators from Tulare Regional and sent them to help reopen Southern Inyo, which was short on equipment and had a shortfall in cash flow.
Bruce Greene, the former attorney of Health Care Conglomerate Associates (HCCA), the company that formerly managed Tulare Regional Medical Center, was charged with nine felonies and five misdemeanors. According to the Tulare County Superior Court, Green’s preliminary hearing is set for Dec. 18, 2020.
Before Greene came under the eye of the District Attorney’s office, he was already being sued civilly by the Tulare hospital district when the Tulare County DA filed criminal charges against him last month.
Visalia attorney Michael Lampe filed a lawsuit on behalf of the hospital district on April 24, 2019, suing Greene and his law firm, BakerHostetler LLP, for breach of fiduciary duty, fraud, professional negligence and breach of contract. The case was originally filed in Tulare County but was moved to Kern County Superior Court after Baker-Hostetler argued it would be difficult to find an impartial jury in Tulare County. The next date for the case is a status conference on Jan. 24, 2021. A trial date set for March 8, 2021.
As part of the lawsuit, Lampe filed a complaint to the California State Bar on March 25, 2020 in regards to Green’s actions to deceive a board member, lending institutions and the court, subvert the electoral process, and his refusal to turn over client records. Greene even went so far as to bill the district $24,815 for his time, and the time of other BakerHostetler attorneys, to appear in court for a hearing to defend himself two months after he had been fired by the district, which was also listed in the complaint to the state bar.
“While acting as legal counsel for both the District and the Benzeevi Group, Bruce Greene engaged in multiple acts of deceit for the sole purpose of financially benefiting himself, the Baker law firm, and the Benzeevi Group,” the complaint reads. “The District contends that these deceitful acts involve moral turpitude, dishonesty or corruption, proscribed by Business and Professions Code §6106.”
In 2019, Greene, who specializes in real estate law, was named one of the firm’s “Lawyer of the Year” for its Los Angeles office. One hundred ninety-eight BakerHostetler attorneys earned 336 rankings on the Best Lawyers in America 2020 list, a list he has made since 2018. From 2007-12 Greene was awarded “Super Lawyer,” a regional award given out in Southern California.
BakerHostetler is one of the nation’s largest law firms with nearly 1,000 attorneys working out of 17 offices in 10 states and Washington, D.C. Ironically, the firm grabbed headlines over the last decade for their work in recovering money stolen through corporate greed and white collar crime. Two BakerHostetler partners, Irving Picard and David Sheehan, have led the Madoff Recovery Initiative which has recovered more than $13.3 billion stolen by Bernie Madoff, the former investment advisor and financier who defrauded thousands of investors in the largest Ponzi scheme in U.S. history.
Greene was hired by HCCA to act as general counsel for the hospital district in May 2015 but was retained as Benzeevi’s attorney as well as the attorney for his Benzeevi Group of firms including HCCA. Greene’s alleged misconduct began a year after he was hired on May 4, 2016, when he filed a lawsuit against Dr. Abraham Betre on behalf of the district, but for the benefit of Benzeevi, even though the district was not mentioned in lawsuit. The lawsuit was dismissed by the court on Sept. 26, 2016, which Greene appealed on Nov. 23, 2016 and which Benzeevi paid the $78,000 appellate bond with district funds, which the district lawsuit says constitutes a breach of fiduciary duty.
In June 2017, when the hospital district could not pay its bills, which included $500,000 in delinquent legal fees owed to BakerHostetler for Greene’s time, Greene drafted board Resolution 852 giving HCCA “absolute” authority to borrow up to $22 million on behalf of the district. This was also considered a breach of fiduciary duty.
Claims of fraud refer to Greene’s emails to board members in an attempt to prevent the seating of an elected official to prevent the board from undoing two actions firing his law firm from representing the hospital district and damaging the district in deals costing $4.8 million.
The lawsuit also contends “Greene failed to use reasonable skill and care in the representation of the District in that he continuously acted in a manner that placed the interests of Greene, BakerHostetler, Benzeevi, and HCCA above the interests of the District.” The claim of negligence includes lying to the board, delaying the seating of an elected official, executing a loan the board had rescinded, all under the umbrella of his inherent conflict of interest serving as both legal counsel for the public district and the private company it hired to manage the district. The conflict of interest is also at the heart of the breach of contract argument as Greene never got consent from the district to simultaneously represent it and HCCA, which the lawsuit lays out as a violation of rules of professional conduct.