After nearly four years, the case against former Schneider Regional Medical Center officials Rodney Miller Sr., Amos Carty Jr. and Peter Najawicz finally came to a head after attorneys wrapped up five weeks of testimony Thursday with closing arguments before handing the decision off to the jury.
In a nearly three-hour presentation, government attorney Denise George-Counts hit home every point the prosecution has made over the course of the trial, in which the three defendants stood accused of 44 charges of corruption, embezzlement and conspiracy. From "bogus" employment contracts to kickbacks and tax fraud, the trio moved as an unstoppable team and removed everyone in their wake that didn’t want to play ball so they could rack up millions in illegal payments that did not align with the terms of their employment agreements with the hospital, George-Counts said.
The scheme, she added, began with Miller, who moved into the top spot at the hospital with a plan already in mind.
"The first thing he started to do was break down key controls at the hospital, those systems and policies that were in place to report fraud," George-Counts said. And once the hospital’s system of checks and balances was overturned, the trio then began to siphon off the funds by couching them under labels such as "stipend agreements," "bonuses," and "allowances," she said.
The bottom line, George-Counts explained, was that each of the men had a clearly defined government salary and circumvented that payroll process by making these "inflated, illegal" payments to one another in "flagrant disregard" of the hospital’s board or its policies. Referencing testimony brought up during trial, she spoke in particular of a 2005 employment agreement that listed Miller’s government salary as $150,000, and the creation or hidden use of other accounts that allowed him to collect much more.
While hospital board members testifying during the trial said they had discussed bumping Miller’s 2005 salary up to $265,000, most of them recalled never having taken a final vote on a second contract, which would have left the $150,000 salary still in place, George-Counts said. Over the course of the trial, the prosecution has contended that Carty, who was then the hospital’s legal counsel and chief operating officer, had drafted an illegal schedule of benefits that was attached to a "bogus" second contract, which defense attorneys have contended was legitimate.
Referencing other testimony by former hospital board chairwoman June Adams about the approval of the second contract, George-Counts said that while Adams’ signature does appear on the last page, she also said she never saw the benefits schedule and had trusted that the officials were being honest when they submitted payments to her based on its alleged contents.
That "trust" was taken advantage of, however, and by the time he was ready to leave the hospital in 2007, Miller had racked up $78,722 in educational reimbursement expenses alone — which George-Counts said was "far in excess" of the $10,000 even included in the bogus contract. Meanwhile, Miller collected a $45,500 advance from his housing allowance that George-Counts said also wasn’t on the up and up.
"This was not an advance, this was just $45,500 Rodney Miller wanted to stuff in his pockets," she added, saying that the label of "housing advance" was just used to offer some justification to the board.
A sticking point for the prosecution during trial has been the creation of a Scotia Bank account that George-Counts has said was set up solely to enable the three officials to make gross payments to one another. While Najawicz and Carty were subpoenaed by the government to produce justification for the payments, George-Counts said that while the two admitted to making the payments, they couldn’t find Miller’s 2005 employment agreement on which they were based.
"This is the CFO," George-Counts said, referring to Najawicz. "He made almost $400,000 in payments and he doesn’t know about any June 2005 agreement? That’s just shameful."
In total, Miller walked away with $1.8 million between May and October 2007 alone, and $3.1 million in payments — including salary and benefits — over the five years he was at the hospital, George-Counts said. And because they approved and made the payments, Carty and Najawicz were rewarded with kickbacks of their own, including a $160,000 transfer to Carty from Miller’s own personal bank account in 2006.
Defense Attorneys Make Their Case
While the defense witnesses were scant over the last few days, attorneys for Miller, Carty and Najawicz each made their case clear after George-Counts wrapped up. The government has no evidence to support its claims, and therefore, the jury must return a verdict of not guilty, they said.
Miller defense attorney Alan Teague has said from the beginning of the trial that the government’s case was about ignorance, intimidation and political agenda. Over the past five weeks, Teague has been the most active in cross-examinations, scrutinizing the government’s witnesses for any inconsistencies that would support his argument — several of which he outlined for the jury Thursday.
Under the label of "ignorance," Teague gave nine examples, which ran from the government’s very first witness to the $160,000 payoff to Carty, that he said was nothing more than a personal financial matter between the two friends. The government has made its case on payments being made above the officials’ government salaries, but disregarded that Miller, Carty and Najawicz were not the only employees receiving stipend agreements and bonuses, Teague said, referencing a letter read early on in the trial by former territorial hospital board chair Carmelo Rivera to the attorney general acknowledging that these kind of payments were being made.
The bottom line is that the board knew about it, and the government knew about it, Teague said.
"So where’s the intent, where’s the crime?" he asked.
Skipping to the creation of the Scotia Bank account, Teague refuted the prosecution’s claims about it being hidden by showing that Adams and former hospital board member Francis Jackson had to submit identification — as the board’s chair and secretary — before it could be set up. In a package of account documents, the signatories to the account also had to state what it would be used for, and Teague referenced testimony given early in the trial by Reid Brett, a Scotia Bank account manager, about the payments being in line with what they told him.
The prosecution has also been ignorant in its investigation of Miller’s two 2005 employment agreements, Teague said, explaining that while the benefits schedules attached to the second contract were not signed, its contents were referenced in the body of the contract, which does bear Adams’ signature. The benefits are also listed in a June 2005 offer letter to Miller from Adams, which was signed by both parties and which Teague referred to Thursday as a contract in and of itself.
Board members, meanwhile, knew what the contract said and what Miller was making because they had hired an independent firm, Clark Consulting, to review Miller’s salary and benefits, which were contained in both 2005 and 2007 analyses that were submitted and reviewed by the board, Teague said.
Intimidated by the prosecution and of being charged themselves, board members were inconsistent in their testimony about the contract and the benefits it contained, Teague added.
Referenced in particular by Teague was testimony from Jackson and former board member Sam Topp, who both received a thrashing from Carty defense attorney Anthony Chambers.
"I want to focus in particular on the testimony of two board members," Chambers said as he closed from the podium. "Sam ‘I Can’t Tell the Truth’ Topp and Francis ‘I Can’t Recall Jackson.’"
Chambers zeroed in on an affidavit given by Topp after the results of a joint local and federal audit that revealed financial mismanagement at the hospital was released. While on the stand during trial, Topp said that Carty had encouraged him to create the affidavit in response to the audit report, and Topp testified that he had been "anxious" to do so at the time to defend the decisions the board had made on Miller’s 2005 contract, which, by that time had included a base salary level of $265,000.
Topp had said that he worked with an independent off-island attorney to create the affidavit, which was then emailed to him for a final review. While on the stand, Topp was given the document to look over and noted two sections in particular that he said he had never talked to the attorney about — a section on the creation of a Rabbi Trust, or retirement fund, for Miller, and the board’s decision to fund that account with annual $125,000 contributions.
Reiterating the testimony for the jury, Chambers contended that Topp was trying to "run and hide" from the board’s decision to increase Miller’s salary and award him the benefits in the second 2005 agreement. Jackson, meanwhile, had testified about a $10,000 loan given to Carty that Najawicz said in 2004 should be written off.
While prosecutors have said that was another means of allowing Carty to keep money he didn’t earn from the hospital, Chambers pointed to documents that said the loan was from 1998, and included among nine other entries that Najawicz had suggested be written off in order to balance the books.
"This is not a civil case," Chambers said. "If you want to sue someone for your money back, feel free to do so, but don’t charge them with a criminal offense."
While Chambers also said there was not any evidence presented to show that the $160,000 payment from Miller to Carty wasn’t a personal loan, he wrapped up Thursday by arguing that everyone — including the board members — made mistakes, but making a mistake doesn’t mean that someone has criminal intent.
Najawicz defense attorney Robert King took it a step further by saying that the payments his client made to supervisors Miller and Carty were not only without criminal intent, but done in good faith, which King argued was "absolutely a defense."
Focusing first on the Scotia Bank account, King said its creation was referenced in a 2006 independent audit and was described as a "supplemental account" that was approved by the board and managed by the hospital’s senior management. There was no subterfuge going on — Najawicz was told by Miller and Carty what to pay, and did as he was directed, King said, adding that many of those directed were documented in letters signed off on by Adams, Miller and Carty.
"If they were part of a conspiracy, why wouldn’t he just pick up a phone and make the payment — why would they create evidence?" King asked.
Like the other attorneys, King also argued that payments made in excess of the amount listed on an employees’ Notice of Personnel Action (NOPA) is not illegal, and further reminded the jury that Najawicz was offered by the hospital a $100,000 salary — $80,000 of which was reflected on his NOPA, while the remaining $20,000 was included in a stipend agreement that, like all of the hospital’s other stipend agreements, did not factor in withholdings.
King also helped the jury into deliberations by giving them three exhibits to focus on: the official government audit report that says Najawicz did not have a copy of Miller’s contract; the Clark Consulting report; and a June 18, 2008 tape recording of a board meeting where members discussed the audit’s findings and firing Najawicz for making the questionable payments to Miller.
Still, despite what the board said on the tape, the testimony of former chairwoman Beverly Chongasing during the trial indicated that no one thought there was any "bad mindedness" — or evil intent — on Najawicz’s part, King said.
"And if it was reasonable that the board had this belief, wasn’t it reasonable for Mr. Najawicz to believe that he was entitled…to everything he got?" King asked the jury, adding that there was also no reason for his client to believe that Miller wasn’t entitled to the payments, especially when he received a directive from the board, or Miller himself, to make them.
"How could you hold Mr. Najawicz liable if the other board members said they knew he didn’t have a copy of the contract?" King asked the jury, adding that Najawicz chose to stay in the territory after the audit came out instead of skipping off to someplace like "Bora Bora with his share of the loot."
"The government has overstepped its bounds," King said. "They charged him because he was the CFO, not because he did anything wrong."
After closing arguments wrapped around 3 p.m., V.I. Superior Court Judge Michael Dunston — who is presiding over the trial — read the jury its instructions. Jurors are expected to pick up deliberations early Friday morning.
