Hospital scam alleged - Execs siphoned millions, suit says

Published on March 17, 2000

Three top officials of Philadelphia’s largest nonprofit hospital were charged with illegally spending more than $52 million from charitable donations in a desperate attempt to outrun bankruptcy, the Associated Press reports. In addition to charging the defendants with siphoning the restricted funds for day-to-day operations and other disallowed costs, Pennsylvania Attorney General Mike Fisher claims former chief executive Sherif Abdelhak made illegal political campaign contributions and donated $50,000 to renovate the locker room at his son’s high school. The three executives face up to 24 years on charges of theft, misuse of property, and conspiracy.  A preliminary hearing on the charges is set for May 25. “They… stole millions in charitable dollars in an effort to save this mismanaged system,” Fisher told AP. Fisher initiated the suit against the three defendants -- as well as foundation trustees who worked for Mellon Bank -- in an effort to recover $78 million illegally drawn from charitable accounts. Allegheny Health, Education and Research Foundation – which once controlled 14 hospitals in the state – fell into financial trouble in 1996 as a result of high administrative costs, lower reimbursement rates, and shrinking occupancy rates. After laying off 1,700 employees and closing one hospital in 1997, the chain filed for bankruptcy in 1998.  Nine remaining hospitals were sold that same year in the Philadelphia market, AP says.

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