Lawyers for Dr. Yorai ‘Benny’ Benzeevi appeared in court Wednesday, asking Judge Michael B. Sheltzer to lift a temporary restraining order freezing the former Tulare hospital CEO’s money, bank accounts, and future earnings.
The judge declined to make an immediate decision, stating that he would deliberate on the arguments and filings from each side and issue a written ruling in the days to come.
Sheltzer heard arguments from Benzeevi’s defense team — Oliver Wanger, Peter Jones, and Christopher Lisieski of the Wanger Jones Helsley firm — and Trevor Holly with the Tulare County District Attorney’s office. Benzeevi appeared remotely in the courtroom via Zoom.
Benzeevi, as CEO of Healthcare Conglomerate Associates (HCCA), oversaw management of hospitals owned by the Southern Inyo and Tulare Local Healthcare Districts until 2017, when both districts cut ties with the company and later filed suit against HCCA, leading to an extended period of legal acrimony before HCCA and each district signed settlements.
The district attorney’s office later charged Benzeevi, former HCCA CFO Alan Germany, and Baker Hostetler attorney Bruce Greene with a laundry list of alleged crimes related to the management of the two hospitals in August 2020, leading to Benzeevi’s arrest in December 2020.
All three have pleaded not guilty to the charges.
“We anxiously await our opportunity to present our client’s side of the story, based on the actual facts of what happened in this extraordinarily complex case,” Jones told the Valley Voice.
Wednesday’s effort is separate from a 2019 case in which Benzeevi’s attorneys attempted to take back $937,000 seized by the district attorney’s office. His legal team appealed to the Fifth District Court of Appeal in Fresno; records show the appeal was “denied as moot” by the court.
Funds frozen in 2020
On August 12, 2020, one day after charges were filed against the three, the district attorney’s office was able to obtain an “ex parte” — without prior knowledge or involvement of the trio’s attorneys — temporary restraining order that prevented them from accessing multiple bank accounts.
The restraining order also prevented them from “withdrawing, transferring, disbursing, encumbering, granting a security interest in, squandering, hiding, secreting, granting a preference to, or fraudulently conveying, or otherwise dissipating or disposing” of “any other thing of value,” including any bank accounts, retirement accounts, or valuables not specifically listed, effectively freezing any future bank accounts.
Germany later came to an agreement with the district attorney’s office allowing him to access income from his employment, wholly unfreeze multiple accounts, draw funds from two accounts exclusively for legal fees, only keeping a 401K and IRA under a partial freeze.
Freezing more accounts
On September 2, 2021, Sheltzer signed off on another ex parte order, this time freezing an Israeli bank account belonging to Benzeevi, an Israeli citizen.
According to a Statement of Probable Cause filed with the court, after the initial temporary restraining order was granted, investigators with the district attorney’s office discovered a series of wire transfers from a US bank account into the account with Bank Leumi in Tel Aviv, Israel.
In the statement, Rodney Klassen, an investigator with the Tulare County District Attorney’s office, wrote that he “believes [the transfers were] in an effort to prevent these funds from being seized as restitution.”
“I am of the opinion and do believe that Dr. Benzeevi is holding currency assets in the Stale of Israel and that these funds are lawfully siezable [sic],” Klassen’s statement read.
Fighting the freeze
No agreement to access funds exists for Benzeevi, who is instead fighting to have the restraining order lifted in its entirety.
Lisieski said that the restraining order should be lifted because it was sought in a “procedurally improper” manner, because the basis for the restraining order — to ensure restitution — does not apply in this case, and because the order violates Benzeevi’s Sixth Amendment right to an attorney by denying him funds to pay for counsel.
Though Germany was able to seek a stipulation allowing him to access funds for both defense counsel and for day-to-day life, Lisieski told the court that having Benzeevi apply to the court for limited access to his funds would effectively “flip the burden” from the district attorney’s office to Benzeevi.
He also told the court that the broad grip on Benzeevi’s funds — past, present and future — was unconstitutional: the office made no effort to differentiate between “tainted” funds linked to any alleged crimes and “untainted” funds that existed outside of the sphere of the HCCA case, Lisieski said.
Holly argued that Benzeevi’s legal team misinterpreted the law: the district attorney’s office could constitutionally freeze his assets whether they were tainted or not, as long as a process existed to allow him access to untainted, unrelated funds for his criminal defense.
“The defense’s contentions at this point are purely hypothetical, as they have never requested
attorney’s fees,” Holly stated in a court filing.
Benzeevi’s attorneys wrote that he has “struggled to make ends meet and mount a defense to the District Attorney’s exhaustive complaint,” noting that District Attorney Tim Ward said in 2018 that the HCCA case was the “largest investigation ever undertaken” by his office: Benzeevi would undoubtedly need to be able to pay “substantial attorneys’ fees” in order to defend himself.
“Dr. Benzeevi needs money to pay his lawyers,” Lisieski told the court. “[The restraining order] includes assets that haven’t even been earned yet.”
Additionally, though the district attorney’s office indicated in a filing that the court “has jurisdiction to preserve as much as twenty-million four-hundred thousand dollars ($20,400,000),” the office’s anticipated amount of restitution and fines, Lisieski told the court that restitution to the two healthcare districts didn’t apply in this case.
It didn’t apply, he said, because HCCA had settled with both of them: the company never owed them money — each district owed HCCA, he stated — and through the settlements, HCCA agreed to effectively take a haircut and settle.
Holly argued that the districts settled out of desperation. Benzeevi’s finance company, Vi Healthcare Finance, had entered into a 2017 agreement with Southern Inyo to extend a loan secured by the district’s future tax revenues.
Separately, HCCA placed a lien on Evolutions one day before the Tulare Local Healthcare District filed bankruptcy. The property was one of the district’s few pieces of otherwise-unencumbered property, and with HCCA’s lien, it could not be used to secure financing to reopen Tulare Regional Medical Center.
“The districts were desperate — they couldn’t afford to go to court,” Holly told the court. “So they settled.”
He characterized the settlements as HCCA having each district “by the throat.”
Lisieski challenged that characterization multiple times.
“The settlements that were enacted were a fraction of what the districts owed to HCCA,” he told the court.
All sides met, set aside their differences, and agreed that HCCA was owed money, he said.
Court filings related to the hearing are available at the Voice’s HCCA Criminal Trial Docket tracker.