Tulare hospital sues to exit loan arrangement

The Tulare Local Healthcare District is looking to exit a leaseback arrangement it claims was set up by Dr. Benny Benzeevi, the head of Healthcare Conglomerate Associates (HCCA), the district’s former management partner. The district claims that the leaseback agreement wasn’t authorized.

While the sale and leaseback of the district’s assets was first revealed in a January lawsuit, the district has now filed another suit in the United States Bankruptcy Court — this time against Celtic Leasing, the financial entity that provided the money.

With the leaseback secured by the district’s assets, Celtic was instructed to wire a $3m loan to Tulare Asset Management, a company which was at one point registered to Benzeevi’s home address, according to the lawsuit. The district claims Benzeevi and Alan Germany, HCCA’s CFO, misrepresented Tulare Asset Management’s address to be the hospital’s, instead of Benzeevi’s home address, to prevent any delays in receiving the proceeds from the loan.

According to forms submitted to the court, Benzeevi represented himself as the Chief Executive Officer of the district, and Alan Germany, HCCA’s CFO, represented himself as the district’s Chief Financial Officer. Neither were granted those roles by the board, the district’s attorneys state.

At least one provision of the hospital’s contract with Healthcare Conglomerate Associates appears to show the company was given the authority to appoint a Chief Executive Officer, and that the appointed CEO’s authority “shall be at least as extensive as the authority the District delegated to the District’s former chief executive officer (as of the end of 2013), together with such additional authority as is provided in the District’s bylaws.”

It does not, however, state that the appointed CEO would be given the title of CEO of the district.

Marshall Grossman, an attorney representing Healthcare Conglomerate Associates, previously told the Voice that HCCA’s leaseback arrangement was “totally regular.”

“There was a $3m loan, fully documented, and fully reported, and so far as everything I know is concerned, it was in the ordinary course of business, and totally regular in every way,” Grossman said. “It’s almost as if the district is looking for stuff to throw against the wall, and look if some of it sticks.”

In the filing, the district claims that the leaseback arrangement – selling some hospital equipment to Celtic, then paying a monthly lease fee to use that equipment – was a preferential transfer of the district’s assets prior to its bankruptcy, and likely more than it would have been entitled to in bankruptcy proceedings.


Authority Given, Taken Away

The story began when HCCA was given authorization by the hospital district’s board in June 2017 to pursue a $22m loan.

Former board members Linda Wilbourn, Parmod Kumar and Richard Torrez voted in favor of authorizing the company to do so, while board members Kevin Northcraft and Mike Jamaica voted against the move.

“The resolution does not speculate a specific loan,” HCCA CFO Alan Germany said at the time. “So, we’re looking at a variety of different funding sources.”

According to the district’s filing, Germany started negotiating with Celtic for a loan in July of 2017 for as much as $20m.

“The critical factor for me is time,” Germany wrote to an official with Celtic, the district claims. “I would like to get this funded very quickly. Thank you.”

Time was of the essence, the district’s suit claims, because Dr. Parmod Kumar had been recalled, and Senovia Gutierrez was elected his replacement.

Gutierrez campaigned as being against HCCA’s contract with the district. It was likely that she would vote to remove the company’s authority to take out loans in the district’s name; as a result, the district claims that the company worked to prevent Gutierrez from taking her seat as long as possible until it could execute a loan.

At the district’s July 26, 2017 meeting, Wilbourn stated that there were “legal opinions that were not agreeing” regarding whether Gutierrez needed to legally be recognized by the board before she could take her seat. The published agenda for the day’s meeting didn’t allow for that to take place at the meeting, she said.

Gutierrez, Northcraft and Jamaica took the view that it wasn’t required — her certified election results were enough. They met on July 27 and revoked the company’s authority to seek loans, and held public meetings multiple times afterwards. All would be without Torrez and Wilbourn.

HCCA and its attorney, Bruce Greene, claimed those meetings weren’t legal or valid because the former board hadn’t recognized Gutierrez as a board member yet.

“All members of the board were advised of that by the District’s legal counsel. Unfortunately, we are continuing to see a calculated and deliberate effort to destroy our hospital. Those individuals, including the newly elected but not yet certified board member, would be much better served by spending their time educating themselves about actual hospital business instead of spending it on theatrics and meaningless antics,” a statement from Benzeevi read after the July 27 meeting.

Gutierrez was eventually seated at a September 27, 2017 meeting. By that point, the company said loans would be a necessity — Benzeevi claimed that HCCA had been footing the hospital’s bills to the tune of $7m, and it wouldn’t continue to do so in the “destructive political environment” of the time.

“Without immediate approval for the District to obtain prompt funding, the only alternative will be for HCCA to move immediately to cease operations at the Hospital and to consider immediately a plan over the next several days to close the Hospital,” Benzeevi wrote in a September 28 letter to the district’s attorneys.

The Tulare Local Healthcare District later filed bankruptcy, and voluntarily closed the hospital to prevent HCCA from doing so unilaterally.

By that point in September, however, the district claims that Benzeevi and Germany had already received $3m in proceeds from a sale and leaseback of the district’s assets nearly a month before — on August 31.


Kumar’s Attorney “Clears Up” Gutierrez’ Status

HCCA was able to convince Celtic to execute the loan, the lawsuit states, by providing the company with a letter from Michael L. Allan, a Pasadena-based attorney.

Allan had represented Kumar in July, sending a letter to the board stating that Gutierrez’ swearing-in ceremony was, in fact, a violation of the Brown Act, California’s open meetings law. Allan claimed that having three board members — Wilbourn, Northcraft, and Jamaica — present at the ceremony was a violation of the law.

The Brown Act provides an exception for purely ceremonial events, and the Tulare County District Attorney’s office later stated that no action would be taken.

“The action taken appears to demonstrate by consensus of the Board that Senovia Gutierrez has assumed office as representative for District 3, despite there having been no publication of a Notice of any planned declaration by the Board, and despite the earlier filing of a timely request for recount with the Registrar of Voters of Tulare County,” the July letter stated.

In an August 25 letter, Allan stated that representing Kumar in that action wasn’t a conflict — and that Gutierrez wasn’t yet a board member.

“The known facts suggest that compliance with statutory procedure required to commence Ms. Gutierrez term of office has not taken place, and she is not yet a director,” Allan’s August 25, 2017 letter states. “Further, if Ms. Gutierrez has failed to subscribe her oath and file it with TLHD within the time frames set forth in Government Code Section 1303, the office to which she was elected may be deemed to have fallen vacant.”

The district alleges that Celtic relied on that letter, in part, to proceed with the leaseback.

In Depth: Tulare Regional Medical Center

37 thoughts on “Tulare hospital sues to exit loan arrangement

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  1. But wait, theres more ! The current caretaker executives are getting paid a lot to take care of this shell. Not quite as much as Benny himself, but still a great payday. And they have staff of 50+ continuing employees, labtechs, xray guys getting paid their $40 an hour salaries even tho not a single xray or lab exam in 4 months! Guessing they are sweeping floors, pulling weeds, answering phones, making appointments. Nobody is watching. Nothing ever really changes at TRMC. Someone please, put this hospital out of its misery!

      • Linda,
        You are misinformed . Why are there 10 nurses working there doing policies and no patients?? A secretary could do that job for a 1/4 the cost. Do the math . Lots of money still wasted under current management and Board members.

        • Is there really 10 nurses working? If so that is ridiculous, poor decision making by wipfli. How many in housekeeping and maintenance.

  2. It looks like the District Board gave Benny the authority to do what he saw fit. It sounds like the bankruptcy judge would have to decide if Senovia was a board member when Benny acted. I cant imagine a bankruptcy judge wanting to wade into that mess. This could go on a long time. The interim CEO and his entourage of rehired employees along with the multiple lawyers will now feed off the public tax trough just as Benny has done so successfully. Has the Board given any thoughts to selling the hospital and relieving our citizens of this tax burden? It is hard to see light at the end of this tunnel.

    • Wouldn’t need all these people “feeding” as you say if they weren’t still finding crap Benny and crew hid. 2 steps forward and 6 back everytime they think they are close to opening. Use your brains people Sleasy/Kumar/Germany raped this community. Won’t get fixed overnight. You’re pissed at the wrong people!!!

    • They basically pawned all the hospital’s stuff. Where is the $3 mil? The hospital wants to buy it back from Celtic. With What?

  3. perpetualcrisis, the xray person is there to keep equipment calibrated and maintained which is required by public health, lab also has machines that require this. Obviously you didn’t attend the last reg board meeting where the public ask them to explain why certain people were working and the CFO explained exactly what was happening. So please make sure you aren’t just looking to stir people up. Attend the meetings get the facts.

  4. also perpetualcrisis FYI the executives from Wipfli haven’t been paid as of yet, they know it could take quite a while, but yet they continue to work their a$$’s off.

    • as usual, you’s all being hoodwinked. lab, electronics, xray calibrations do not take full time persons. Couple of hrs a week, max. The equiptment has never seen such TLC as its getting now, if thats the case. A full time xray person to calibrate?
      Total BS. If more Tulareans had been skeptical and questioning over the past 10 years instead of accepting what they are told, we’d not be in this predicament.

      • Wifli not getting paid? Really? The money is running out in a hurry, based on a spreadsheet what was published right here in the V V a few weeks ago. Go back an read it. Massive legal costs, large payout for management. Its all in there. Where is the transparency?

        As for the Board, they are doing a stellar job in a very difficult situation. They will do what the community wants. Most of them are not knowledgeable about running a hospital. Kevin has better than average admin skill and seems to get it. Even if the hospital does come back on line, there will be major survival challenges that require thinking out of the box. Maybe its time to think about alternative models for health care. Or privatizating.

  5. Couple of thoughts:
    First, Linda is right on. Let’s give support to the Board who is trying to right the ship that was sunk by the previous inept Board.

    Second, did Benzeevi, Germany and Greene conspire to violate the voters’ civil rights by not seating Senovia depriving thier rightfully elected representatives of her seat?

  6. It seems like it is time to sue the previous board for lack of financial duty to the district. Kumar was the kingpin and he has made out like a bandit. Created his empire off the hospital’s dime in more way’s than one.

    Valley Voice thank you for your excellent coverage. Everything you have laid out makes it so easy to follow. You truly deserve an award for true journalism.

    Did Benny and Germany put up District assets for this loan that were purchased with bond money? Is that legal? So much for due diligence by Celtic, they should be ashamed of themselves. All it would have taken was a quick google search at the time and they could have read of the corruption that was going on.

    Hang in their board we know if anyone can pull this off all of you can.

  7. Of course Wipfli is getting paid, look at the last financial statement they provided. Additionally money is sent to BK attorneys, Board minutes have shown to have authorized. Meanwhile the hospital is still closed and looking for anyway to get out of loans that were taken out. Whether it was the right thing to do or not, the District gave the authority to Bennye et al to act in that capacity. The audit will show where the money has gone, meanwhile, either get the hospital open or sell it if you can. Stop repeating the past. This debacle between Boards and management have gone on for twenty plus years. Didn’t start with HCCA and won’t end with it. And someone told me that HCCA had a consulting agreement with HFS which is Wipfli so in essence if that’s true, they were of no help then, what would think they could fix this mess now? Tangled webs are woven in Tulare and meanwhile we suffering from your ineptness at KD.

    • Ladies and Gentlemen–The Iceberg

      Posted on January 28, 2018 by Joseph Oldenbourg

      On January 18 the House Permanent Select Committee on Intelligence voted to publish the transcripts of testimony provided to the committee by Fusion GPS co-founder Glenn Simpson.

      Congressman Devin Nunes’ Communications Director, Jack Langer, emailed the transcript to the Valley Voice that afternoon.

      Simpson’s firm, Fusion GPS, was the outfit that contracted former British spy Christopher Steele to investigate the Russia side of the Trump/Russia equation. The result was the now famous dossier bandied about in the news media.

      Simpson testified for six hours before the committee on November 14, fielding questions and interpreting the dossier.

      Having read Simpson’s testimony, it is readily apparent that no commentary is necessary. The following, therefore, is lifted–in order–directly from the 165-page transcript. The elipsis are not for editorial purposes but to streamline the narrative.

      According to Simpson:

      One of the very first things that I focused on was Donald Trump’s relationship with a convicted racketeer named Felix Sater, and who was alleged to have an organized crime, Russian organized crime background.

      Over the course of the first phase…we developed a lot of additional information suggesting that the company that Donald Trump had been associated with and Felix Sater, Bayrock, was engaged in illicit financial business activity and had organized crime connections.

      …Mr. Trump had long time associations with Italian organized crime figures. And as we pieced together the early years of his biography, it seemed…during the early part of his career he had connections to a lot of Italian mafia figures, and then gradually during the nineties became associated with Russian mafia figures.

      And so all of that had developed by the spring of 2016 to the point where it was not a speculative piece of research; it was pretty well-established.

      …We also increasingly saw Mr. Trump’s business career had evolved over the prior decade into a lot of projects in overseas places, particularly in the former Soviet Union, that were very opaque, and that he had made a number of trips to Russia, but said he’d never done a business deal there. And I found that mysterious.

      …Lots of other issues came up during the primaries that raised concerns in my mind about whether there might be connections–Donald Trump might have unexplained connections to Russia or people involved in that part of the world.

      …The funding of Bayrock was, I think, much of what we initially were concerned about and focused on. The company seemed to have some sort of funding source from either Russia or the former Soviet Union that was opaque. So we spent a lot of time looking at the people around that and their backgrounds and why Mr. Trump would be in business with them.

      …The amazing number of people from the former Soviet Union who had purchased properties from Mr. Trump, including Dmitry Rybolovliev, who purchased a derelict estate at an extreme markup in Florida. And a number of other people bought into his properties.

      I guess the general thing I would say is that…the Russians are far more sophisticated in their criminal organized crime activities than the Italians, and they’re a lot more global. They understand finance a lot better. And so they tend to use quite elaborate methods to move money.

      …The offshore system has grown in sophistication in the last decade or so, too, so they’ve taken advantage of that.

      …If you can think of a way to launder money, the Russians are pretty good at it. But they specifically understand financial markets.

      …The thing that comes to mind, of course, is the real estate deals. And…it came to our attention…that there were a lot of real estate deals where you couldn’t really tell who was buying the property.

      …I think we saw patterns of buying and selling that we thought were suggestive of money laundering.

      …There was various criminals were buying the properties. So there was a gangster–a Russian gangster living in Trump Tower.

      His gangster name is Taiwanchik…These are the kind of things that prompted us to hire Mr. Steele.

      And when Mr. Trump went to the Miss Universe pageant in 2013, Taiwanchik was there in the VIP section with Mr. Trump and lots of other Kremlin biggies. So that kind of thing that raised questions with us.

      …The patterns of activity that we thought might be suggestive of money laundering were…fast turnover deals and deals where there seemed to have been efforts to disguise the identity of the buyer.

      …Some of the things that we…looked at that we thought were very concerning are existing investments in projects…specifically a project in Panama, the one in Toronto. These both got a lot of fraud associated with them, a lot of fraud allegations, a lot of activity that I would say smacks of fraud, and a lot of Russian mafia figures listed as buyers who may or may not have put money into it.

      The other one that is–was concerning to us was–is the golf courses in Scotland and Ireland.

      …We saw what Eric Trump said about Russian money being available…for the golf course projects, making remarks about having unlimited sums available.

      …Because the Irish courses and the Scottish are under UK…corporate law, they…file financial statements. And they don’t, on their face, show Russian involvement, but what they do show is enormous amounts of capital flowing into these projects from unknown sources and…it’s hundreds of millions of dollars. And these golf courses are just…sinks. They don’t actually make any money.

      …If you’re familiar with Donald Trump’s finances and the litigation over whether he’s really a billionaire…there’s good reason to believe he doesn’t have enough money to do this and that he would have had to have outside financial support for these things.

      …Well established in criminology now is that the Russian mafia is essentially under the dominion of the Russian Government and Russian Intelligence Services. And many of the oligarchs are also mafia figures.

      …Basically everyone in Russia works for Putin now.

      …Essentially, if people who seem to be associated with the Russian mafia are buying Trump properties or arranging for other people to buy Trump properties, it does raise a question about whether they’re doing it on behalf of the government.

      …One of the central mysteries of Donald Trump is that…beginning in the mid-2000s he was not a creditworthy businessman.

      …So if you’re analyzing…someone who says they’re a billionaire but can’t get a bank loan…there’s this whole issue of where is the credit coming from.

      I think that the evidence that has developed over the last year, since President Trump took office, is that there is a well-established pattern of surreptitious contacts that occurred last year that supports the broad allegation of some sort of an undisclosed political or financial relationship between the Trump Organization and people in Russia.

      …The first thing that I would do would be to subpoena the brokers and…the other people that were involved in the transactions, and the title companies and the other intermediaries that would have that kind of information.

      Then I would go to the banks next. But I actually think some of the intermediary entities in a lot of these transactions are going to be where a lot of the information is.

      …It’s these sort of intermediary entities that have no real interest in protecting the information, and all you have to do is ask for it and they just sort of produce it by rote.

      …All dollar transactions are generally cleared through New York…So…the main thing you have to do is identify the banks that were used.

      …By 2003, 2004, Donald Trump was not able to get bank credit…and if you’re a real estate developer and you can’t get bank loans…you’ve got a problem.

      And then ultimately…what we came to realize was that the money was actually coming out of Russia and going into his properties in Florida and New York and Panama and Toronto and these other places.

      One of the things we now know about how the condo projects were financed is that…you can get credit if you can show that you’ve sold a certain number of units.

      …So the real trick is to get people who say they’ve bought those units, and that’s where the Russians are to be found, in some of those pre-sales, is what they’re called. And that’s how…in Panama they got the credit of…they got…Bear Stearns to issue a bond by telling Bear Stearns that they’d sold a bunch of units…

      …There’s supposed to be contracts, down payments, all that sort of thing. So in the case of Panama where the evidence was most vivid…the buyers were fake. I mean, they were real people. They just never paid.

      This–it’s in the public records.

      President Donald Trump is an active member of the Russian mafia.

  8. Suppose Joseph is making analogy between Tulare hospital sheninagans and the Trumpster.

    At the end of the day…all thieves will walk. The profiteers will profit. The lawyers will get paid. A few staff will have jobs calibrating unused old worn out xray machines daily. And Tulare is minus 1 hospital. It just seems so um, so normal.

    • Nope–it’s worse! Somehow this got attached to the wrong article. I replied to someone else and the computer assigned it here.

      • Don’t worry about it Joseph….this county cannot be reminded enough about Trump/Nunes Russian mafia membership.

  9. I know things take time and patience, but we need a hospital soon this is not fair for the community and city of Tulare. You are correct perpetualcrisis 9 nurses doing clerical at $40+ an hour a full maintenance staff, 4/5 housekeepers, X-ray tech, 2 lab supervisors, a handful of clinic staff, education, Hr, respiratory, finance, and a full IT staff… not sure if all this is necessary at 40hrs a week maybe the highest paid should overlook areas at least 2-3 days a week at most to keep things up but it really seems like what has been said may be true we need to look at not wasting unecesday funds.

    • If and when this hospital opens….you want to hit the ground running as soon and fast as possible. Hence, the need for nurses maintenance housekeepers, X-ray tech, lab supervisors, clinical staff, education, HR, respiratory, fiance, and IT already in place and set to go. Seem like you, Perpetualcrisis, and other critics need to take the time and patience and do some hands-on research on the whys and wherefores. Perhaps you may be right but from my perspective you are wrong. Those buildings and grounds are huge and this is not a small clinic that needs to be maintained not to mention all these high caliber machines that MUST be fully maintained in order to run at capacity from day one once the hospital opens.

  10. High caliber machines. I know for fact the MRI machine is more then twenty years old. I wouldnt let them scan my old dog there. a former xray staff told me most of the machines were broken. Wake up people this place is a trainwreck and they paying a few persons full rate to do $10 an hour work. the state would never sign off on this wreck and they dont have any money left to buy new stuff. Open your eyes Barbara some of you people are so naieve there are no high caliber machines left.

  11. They bought all new equipment new xray and mri machines with the bond money it was all in a warehouse and paid for it was supposed to go in the new hospital and cost millions. maybe thats what Barbara is talking about high caliber machines. where are they now. it belongs to us the taxpayers that is just outright theft if they are gone. I would not vote another dime from my property taxes. I agree with other post this place should be sold.

  12. Yes, Freddy I agree. Barbara the staff has been “preparing” for an opening everyday for the last 4+ months they should be ready by now if they’re not wasting time. And yes you can get a lower rate clerical to do the paperwork the nursing staff is doing

  13. FreddyG and Whatsgoingon and other fellow trash talkers sound like hired yucksters who are on Benzeevi’s payroll to muddy up the waters, spreading the same-o crapola. No one believes anything these Benzeevi yokols post.

  14. It will take a lot of work to dig out of the deep grave this hospital was put in by the prior board that place a thief in charge. The result was millions of dollars in debt, creditors knocking at the door and two doctors making out like bandits, with one having a 10 million dollar lien on Evolutions and the other buying up farmland and trees.

    It appears by the last board meeting that Hope is on it’s way as the board announced its plan to bring in Community Hospital to help open the hospital. This could be the silver lining to this dismal situation. This is the same Community Hospital that submitted a proposal five years ago but was turned down by the kumar board that decided to bring in Benzeevi to rape and pillage the district. Let’s hope this board makes the right decision.

  15. Barbara you are crazy I’m not a Benzeevi anything, I’m a citizen who like most want the hospital open soon the concern it that money may be running out and it’s what is needed to open the hospital my question was if there were any possible ways to help cut costs to stretch what little income may still be tricking in from prior visits… it has to be close to being used up.

  16. Yokel??yuksucker?? What language do u speak? No need for insults just have an adult conversation. How bout this… shamalamadingdong

    • Yeah you get my point…..I spoke in language that only a Benzeevi shamalamadingdong could identify with…..thanks for confirming that. Your posts do not support you being “truly concerned” but does support you having no true support or encouragement in the reopening of our hospital.

  17. Crabs in a pot
    The town of Tulare is a perpetual feeding frenzy on any and all drama matters-big or small.

    Get out of the quagmire

  18. True support does not equal blind faith Barbara. the blind followers of the last board are whats got us into this mess in the 1st place. The new temporary management gets paid or they wouldnt be there now would they. and the longer theyre there the more they get paid. open your eyes and ask questions dont just believe everything you are spoonfed and be a bit more sceptical we dont need cheerleaders. do you think doctors and suppliers will come back with out guaranteed payment after so many were stiffed? some people maybe even you think wifli is working for free. sure. has anybody from the board or the temp execs said how much of their own money community will need to put up to open? with little or no collateral? for a hospital few paying patients have not been to for years? yes everybody wants one of those $50 an hour jobs a few nurses and xray workers are getting now for doing not too much but this is not a local jobs program it should be a private business without peoples taxes to prop it up (or steal from like a cookie jar)

  19. “Public Relations – noun – the professional maintenance of a favorable public image by a company or other organization of a person.”

    Barbara, I do not think you’re wrong. The above article mentions Kumar attorney, Michael Allan. Along with Michael Allan, Kumar used the political PR firm Capitol Core Group whose principal is a former Allan co-worker, Michael McKinney. Capitol Core Group’s mission as stated on their website is, “Frame the discussion…Take charge of the issues, win the campaign”. Capitol Core tried to do the first two…the third, judging by the 80% vote to recall Kumar, not so much.

    Not only do I use my real name when I comment, I also admit to speculation., When I read the numerous comments that take a minor point (e.g. who is doing the compliance and procedures…a medical professional or a clerical person), then cast doubt on the current Board’s spending…liken it to Benzeevi’s, then end with close the hospital, I am left to speculate someone is framing the discussion, taking charge of the issue, and again trying to win the campaign.

    In order to believe the above comments about the current Board of the Hospital District one would have to assume that the Bankruptcy court, bankruptcy attorneys (including HCCA’s) and the more than 1000 creditors HCCA left in its wake (again, including HCCA) are asleep at the wheel while wild spending is going on at the Tulare Local Healthcare District. They refer to the money is almost gone!” What money? The money was gone months ago, including the $3 million Benzeevi received from Celtic Leasing. Was that money from Celtic used to pay the vendors that had not been paid for more than 12 months? Was that money used for payroll to prevent not paying employees more than three times and pay their benefits, like COBRA and PTO? Was it mailed to the Hospital District and deposited in a District bank account? And, what happened to all the money collected in the year that those vendors and employees were being stiffed? Where is that money? I think those are much bigger questions to be asked than who is preparing Compliance and Procedure reports.

    So those of you that are framing, taking charge, and trying to win the campaign….want to take a crack at that question? #where is the money?

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