Hospital CEO Caused Payment of $60,000 Bribe to Senator Keep Job

January 4, 2012

As readers of "Street Sweeper" know, I am an outspoken critic of corruption - which seems to have become a way of life for those in government.  Bribes and kickbacks have a corrosive effect that hinders honest government and prevents robust competition in the marketplace.

Far too often, taxpayers foot the bill for official corruption in the form of over-payment for shoddy services and substandard products.  Moreover, as word gets out that a bit of cash placed into an outstretched palm can grease the wheels to winning bids and contracts, the system of cronyism and misconduct becomes entrenched.  A darkened side-door becomes a well-lit superhighway.

Is this a problem solely limited to our federal government? Absolutely not!  Drill down - to the states, to the counties, to the cities, to the towns.  It's there too.

In recent years, I have made it a point to report about a particularly evil form of corruption: that involving the healthcare industry.  Few crimes that are more disgusting than those that inevitably drive up the cost of healthcare while frequently degrading the quality of the services provided.  The danger of healthcare industry fraud is that patients and their families ultimately foot the bill for all the illegal payments.  You're paying $30 for a lousy bandage in order to off-set the $50,000 bribe paid to some political hack - or the hospital ratcheted up its charges because one of its employees overpaid for goods and/or services after getting a hefty kickback.

If you or a loved one has ever been a patient in a hospital, you are surely aware of the inflated prices charged by the institutions.  I'm sure that many of you have looked around and wondered why the facilities are so poorly maintained.  Read any number of recent criminal complaints involving the healthcare industry and you'll soon find your answers. Too many hospitals are run as petty fiefdoms where purchasing agents and providers seem to be setting up toll booths. You want the contract?  That's gonna cost you a kickback.  You want to head up the new surgical center? You're going to have to boost your Medicare reimbursement rates.

In a federal criminal Complaint filed on March 10, 2011, the following defendants were named:

  • Robert Aquino, 54, Glen Head, NY, the former Chief Executive Officer of Parkway Hospital in Queens, NY;
  • Carl Kruger, 62, Brooklyn, NY, former New York State Senator;
  • Michael Turano, 50, Brooklyn, NY, a gynecologist;
  • Richard Lipsky,64, New York, NY a lobbyist;
  • Solomon Kalish, 61, Rockville Centre, NY,  an healthcare consultant and the owner of Adex Management Inc.;
  • David Rosen,54, Harrison, NY, former CEO of MediSys Health Network;
  • Aaron Malinsky, 63,  New York, NY, a real estate developer, and
  • William Boyland, Jr., 41, Brooklyn, NY, a New York State Assemblyman.

And just exactly what were these defendants accused of doing?  Frankly, it's such a silly case, such an outrageous example of self-interest and public corruption, that you're really left shaking your head in disbelief that so many apparently intelligent and successful individuals would have engaged in this alleged crime.  On the other hand, given the banality of the fraud, it only underscores how commonplace such scams have become in the public sector.

Here's what this caper is about: Aquino, who was the  Chief Executive Officer of Parkway Hospital in Queens, New York, learned that the State of New York was slating his hospital for closure in 2008.  Apparently, Aquino wanted to keep his job - oh, and, sure, also keep the hospital open so that it could pay him.

What was Aquino's alleged solution to the thorny issue of his institution's closing?  According to prosecutors and plea agreements, Aquino caused Parkway Hospital to make $60,000 in payments to Adex Management Inc. ("Adex").

Okay, now it gets a bit fun.  Let's all trace the money.

Who just happened to have an interest in this Adex?  Why none other than New York State Senator Kruger. My, how convenient!

Adex then paid half of that  $60,000 payment to Olympian Strategic Development Corp.

By Zeus!  Who do you think controlled Olympian?  Well, the feds alleged that this consulting company was controlled by Defendant Turano,  And, go figure, Turano just happened to be close - in tight - with Kruger.

On January 3, 2012, Aquino pled guilty in federal court in Manhattan to one count of conspiracy to commit bribery of Kruger .  If convicted, Aquino faced faced a maximum potential penalty of five years in prison and a fine of $250,000 or twice the gross gain or loss from the offense. As part of his plea, Aquino explained that he understood that  in exchange for making the $60,000 payments to Adex, Senator Kruger would undertake official action to help keep Parkway Hospital open.  There you go - one job saved.

Unfortunately for Aquino (but fortunately for taxpayers), his guilty plea was heard by District Judge Jed S. Rakoff, whose recent rejection of the Securities and Exchange Commission's proposed settlementwith Citigroup has likely initiated a new era of judicial activism aimed at demanding such deals between prosecutors/regulators and defendants further the public good rather than accomplish the dubious goal of expediency.  Also READ.

On September 12, 2011, Rosen was convicted at a trial before Judge Rakoff  for his involvement in schemes to bribe Kruger, former New York State Assemblyman Anthony Seminerio, and Boyland. Rosen is scheduled to be sentenced by Judge Rakoff on January 6, 2012.

On November 10, 2011, Boyland, 41, of Brooklyn, New York, was acquitted by a jury. See this article.

On November 22, 2011, the Government entered into a deferred prosecution agreement with Malinsky,

On December 20, 2011:

  • Kruger, pled guilty to two counts of conspiracy to commit honest services fraud and two counts of conspiracy to commit bribery; and
  • Turano, pled guilty to one count of conspiracy to commit bribery.

Kruger and Turano are scheduled to be sentenced by Judge Rakoff on April 26, 2012.

Charges are still pending against Lipsky and Kalish, 61, who are presumed innocent unless and until proven guilty in a court of law.

Manhattan U.S. Attorney Preet Bharara stated:

Robert Aquino was all too willing to make sure a bribe was paid to preserve his job as CEO of a hospital. Like others in this case, he chose to fight his battle with money under the table rather than to play by the rules. And like others in this case, he now faces the prospect of jail. This Office remains committed to breaking the chains of corruption that weigh down New York politics.