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HomeNewsLocal newsSRMC Trial: Witness Details Struggle to Get Cash Advances Back From Execs

SRMC Trial: Witness Details Struggle to Get Cash Advances Back From Execs

Schneider Regional Medical Center on St. Thomas.

The first of several witnesses took the stand last week in the long awaited Schneider Regional Medical Center corruption trial in Superior Court. In lengthy testimony, they laid the foundation for what is expected to appear in the week to come.

It’s the second time prosecutors from the V.I. Department of Justice have brought the case before Superior Court Judge Michael Dunston. The last trial lasted six weeks and ended in a mistrial. Justice has waited eight years to stage a promised retrial. The jury was sworn in Wednesday after two days of jury selection.

Two former medical chief executive officers and the former chief financial officer are accused of channeling $2.8 million in government funding into a privately established bank account, then into their own personal bank accounts. But former officials Rodney Miller, Amos Carty and Peter Najawicz were not the only departed executives to come under scrutiny in the early days of the second trial.

Former hospital financial services vice president Eugene Walsh gave an account of how his attempt to collect a salary advance given to Carty and the security deposit for temporary housing for Miller ended with his dismissal in 2003.

The following day an investigator from the U.S. Interior Department Office of the Inspector General told the court about the struggles his team had gathering documents for an audit report in 2007. At the time Hannibal Ware was the acting Inspector General for the Small Business Administration. He was formally sworn into to the post in 2018.

Rodney Miller
Rodney Miller (Source file photo)

By the time Judge Dunston called a recess on Friday, the jury had heard from close to half a dozen witnesses. Former hospital board member Doradeen Williams testified about the secrecy surrounding Miller’s professional services agreement, signed in 2003 as he began his duties as chief executive officer.

Kenneth Hermon, former director of the V.I. Division of Personnel, walked the jury through details from the Notice of Personnel actions for the three defendants and their work histories at Schneider hospital.

Welsh’s testimony began on Wednesday afternoon and continued through Thursday morning. He explained how the hospital board authorized an advance payment system to help newly hired employees waiting for the processing of personnel notices and the activation of the payroll system. Prosecutor Sigrid Tejo-Sprotte projected an image of a list of employees owing salary advances to the hospital prepared by Walsh. Subsequent lists displayed for the jury showed how the list of workers reimbursed their employer.

But the advance given to Carty – $10,768.80 – remained unchanged and lingered on the list for months. Walsh said he then prepared and sent a memo to Carty, then the hospital’s general counsel, asking for payments.

A while later Sprotte asked the former financial services chief how the board handled arrangements for Miller’s living quarters after they brought him on board, and before his contracted $20,000 annual housing allowance took effect under the NOPA process. Walsh said the board agreed to extend payments for temporary housing. Upon the board’s approval he issued a check for $4,176 and sent it to the real estate firm that managed the rented living quarters.

The figure included a $2,000 security deposit, which was supposed to be returned to the hospital but was not, the witness said.

Walsh said he then went to Miller’s office with a request.

“My conversation with him pertained to the return of the $2,000,” he said.

“And what did Mr. Miller tell you?” Sprotte asked.

“He said he didn’t receive the money,” the witness said. Afterward, Walsh said he checked with the administration to see if the deposit was received. “They had not,” he said.

About two minutes after returning to his office, the witness said the light on his phone extension lit up with an incoming call. The general counsel was on the line.

“He said, ‘General, leave it alone,'” Walsh said.

When he asked what Carty was speaking about, the witness got a reply.

“The issue about which you were speaking to Mr. Miller,” the witness said.

Walsh said he told the caller he intended to do his job. A few days later he was called into the hospital conference room and confronted by Carty, Miller and the head of Human Resources.

At that time the witness said he was given two options: quit or be fired.

Walsh said he chose to resign.

Carty’s attorney, Gordon Rhea, questioned the witness on cross examination. He pointed out that Walsh rejoined the staff at Schneider hospital in 2008 and asked him how the reimbursement were handled.

By then, he said, the funding method had changed. The St. Thomas hospital had added a new funding source, the hospital revolving fund. Rhea asked if that change could account for the difference in the salary level defendants said they received and the salaries listed in their government personnel notices.

“We paid you according to what was in the NOPA and what was the funding source, based on your NOPA,” Walsh said.

Miller’s lawyer, Hannibal O’Bryan asked if, since the contract provided for a housing allowance, the $2,000 could become part of that compensation. The witness said no, because the temporary housing allowance came from the hospital and the housing allowance came from the Department of Finance, the agency managing the government payroll system.

Ware took the witness stand late Friday morning. He told the jury that at the time he worked on the Schneider hospital audit report he served as field office supervisor in the inspector general’s office.

“We had problems from out of the gate. They said ‘Your auditors will have to sign these confidentiality agreements. We went to Washington and told them what the situation was, They said, ‘We would never sign an agreement like this,’” Ware said.

Further discussions yielded an agreement that auditors could see the contracts and could take notes but could not have copies, he told the court.

Along the way, the witness said he heard from Carty, who offered an explanation about the hospital’s cautious stance. The counsel said Miller had come under “a lot of scrutiny” and people were looking for anything that could be used to criticize him, the witness said.

Finally, Ware said, he wrote to then-hospital board chair June Adams, asking for documents to be turned over. Sprotte produced two letters written in reply.

The first acknowledged Walsh’s letter and said the matter would be discussed in the next board meeting. The second letter said the board was reluctant to comply.

Ware said the federal inspector general’s office then issued subpoenas. A hearing was held in court and seven of the requested documents were produced. Each document was the result of a subpoena issued to either Adams or one of the hospital’s top executives, he said.

Still, in spite of the efforts, several requests for supporting documentation went unfulfilled. Ware told the court that deficit led to an audit showing “significant internal control deficiencies that brought into question the accuracy and totality of information.”

By the end of the day on Friday, Dunston told jurors they would resume work on Tuesday, after the three day Columbus Day weekend.

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