Dr. Benny Benzeevi, the CEO of Tulare’s former hospital management company, won’t get his seized property or bank account back – but his legal team will have another chance to fight the seizures at an evidentiary hearing set in January.
Attorneys for Benzeevi and his company, Healthcare Conglomerate Associates (HCCA), appeared before Superior Court Judge John Bianco on November 9 in an effort to have his assets returned; they were seized as part of an ongoing Tulare County District Attorney (DA) investigation into his company’s conduct in Tulare.
“I can’t rule that as a matter of law a crime hasn’t been committed,” Bianco said.
Eliot Peters, appearing for Benzeevi, told Bianco that he had been misled about the series of contracts between HCCA and the Tulare Local Healthcare District (TLHCD).
Oliver Wanger, a former judge for the US District Court for the Eastern District of California, appearing for HCCA, also told Bianco that he did not have all the evidence.
“You were affirmatively misled,” he declared.
Citing previous case law, Bianco said an evidentiary hearing was the required next step in the proceedings.
“You can’t,” he told Peters, “trump the People’s right to an evidentiary hearing.”
Peters and Wanger were referring to what they believed were “indisputable” clauses in the HCCA contracts that allowed the company, and Benzeevi, the right to make wide-ranging financial decisions.
“The idea that Dr. Benzeevi could sell $3.5 million in property and give it to himself is ludicrous. It’s a [Government Code] 1090 violation,” Deputy District Attorney Trevor Holly countered.
Government Code 1090 states:
(a) Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. Nor shall state, county, district, judicial district, and city officers or employees be purchasers at any sale or vendors at any purchase made by them in their official capacity.
(b) An individual shall not aid or abet a Member of the Legislature or a state, county, district, judicial district, or city officer or employee in violating subdivision (a).
(c) As used in this article, “district” means any agency of the state formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited boundaries.
(Amended by Stats. 2014, Ch. 483, Sec. 1. (SB 952) Effective January 1, 2015.)
Holly’s statement regarding selling property referred to a $3m leaseback arrangement that HCCA made in August 2017.
The company allegedly sold some assets of Tulare Regional Medical Center and deposited the $3m into an account belonging to “Tulare Asset Management,” a company wholly owned by Benzeevi.
After that deposit, the District Attorney’s office alleges that Benzeevi later shuffled the funds through HCCA’s bank account and into one shared by him and his wife.
Because the district is a public entity, it is an “agency of the state,” and subject to legal restrictions on its financial dealings.
However, Peters stated that the Management Services Agremeent, one of the contracts between the district and HCCA, is indisputable.
“[It] allows Dr. Benzeevi to pay himself. The contract is what it is and can’t be disputed. The only reason the account is frozen is because they [the DA] say it was stolen,” he said.
The judge insisted there was a dispute, and both parties agreed the remedy is an evidentiary hearing.
Frustration Over “Leaks”
Peters also expressed his “frustration” to the judge that the DA allegedly leaked information about Benzeevi’s seized accounts online, including bank account balances and dates.
A court filing from the District Attorney’s office was reported on in the media and posted by the group Citizens for Hospital Accountability. The filing is available below.
“These are all public documents,” Holly said. “There’s no number, they’re difficult to track down, but the documents are public.”
Wanger suggested the court assign the proceedings – and, by association, any related documents and filings — a case number.
The same suggestion was made at prior hearings; currently, hearings are not listed on the court calendar, and case information is unavailable on the court’s public e-filing website.
Internally, the District Attorney’s office has assigned the investigation case number 17-01-000407, and the hearing are currently labeled as “In Re Search Warrant #013487.”
“There will be an evidentiary hearing with the burden on the People to show these funds were illegally obtained,” Bianco said. “If the money was illegally obtained, it taints the accounts it was put into.”
“At some point, Dr. Benzeevi’s Fourth Amendment rights will trump the District Attorney[‘s office],” Bianco said, noting that the proceedings were moving slowly.
Both parties agreed to a two-week hearing, set to commence on January 22.
“You’ll have my full calendar,” the judge said. “From 8:30am to 4:30pm.”