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Pa. hospital executive to admit $1.7M fraud

PHILADELPHIA — A Philadelphia hospital executive will plead guilty to creating a series of shell companies to embezzle $1.7 million over a decade, even as his salary rose above $700,000, his lawyer said Tuesday.

Roosevelt Hairston Jr. of Malvern, Pa., used his position as general counsel to defraud Children’s Hospital of Philadelphia, federal prosecutors said. He used the stolen funds for $10,000 monthly mortgage payments on his suburban Philadelphia mansion, a yacht and boat captain, and other luxuries, they said.

“Hairston chose terms like ‘consulting’ and ‘economic impact studies’ to use on his fake invoices, because CHOP was engaged in projects that would require such services and these types of services were more difficult for CHOP to detect,” the government wrote in its plea memorandum this month.

Defense lawyer Howard Klein told The Associated Press that two failed real estate ventures in Chester County contributed to Hairston’s financial woes.

The defense plans to present “the other side of his life” at sentencing later this year, stressing Hairston’s high-profile civic and charitable endeavors in the region. Hairston, now 46, had moved to the city from Prince Georges County, Md., to attend law school at Temple University, Klein said.

He stayed in the city, moving up the ladder at Children’s Hospital and serving as chairman of the Public Interest Law Center of Philadelphia, and as a board member of the American Red Cross chapter and a tutor to underprivileged children.

“We plan to stress the extraordinary community, charitable and volunteer service that have characterized Roosevelt’s entire professional and personal life,” Klein said.

According to court papers, Hairston starting in 1999 created an elaborate shell game to pay hospital “consultants” while sending the checks to himself. Initially, he made the payments for expert trial witnesses in his role overseeing the hospital’s medical malpractice lawsuits, prosecutors said. That ruse ended in 2004 when the hospital added a risk management director whose signature was also needed on the payments, they said.

But Hairston deployed a more elaborate scheme in 2007 that would come to involve seven bogus entities that were paid $1.4 million through 93 invoices, the plea memorandum states. Hairston was creating employee identification numbers and using his wife’s Social Security number and a friend’s identity at times to get the paperwork through, it states.

In 2010, the scheme started to unravel when the hospital thought it had paid the same bill twice, and started to investigate. Hairston assumed a lawyer friend’s identity to pose as a consultant in electronic correspondence, but accidentally left his own email address on one exchange, prosecutors said.

Hairston will plead guilty Wednesday to mail fraud, money laundering and a tax charge, Klein said. The charges carry a maximum term of 43 years and $1 million in fines, along with a mandatory $3.4 million in restitution and forfeiture, the government said. The likely sentencing range has not yet been calculated, Klein said.

2 comments

  1. I bet there is more to this story than meets the eye. Like why would the administration have dismissed their internal
    employee who uncovered this?
    Why would the administration have blocked their staff from implementing controls regarding situations just like this?
    Why would the administration have brought on a person to put the systems in place to vet the vendors of the hospital and hamstrung the implementation?
    Why would almost 2 million dollars be almost swept under the carpet when the dollars could have been going to healthcare for the child patients?
    Oh yes I bet there is more to this story and more of this activity that has been going on for a long time.
    I would not be surprised if the predecessor of the staff person brought in to implement controls was running into
    a wall with the administration.

  2. This was accomplished over 10 years all by himself? Who expects people to read this article and believe that nonsense?
    Someone needs to check the corporate board room and see if their were multiple lunch bags left. I would bet the bags contained no sandwiches. Just green lettuce!

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