Fraud Exposed: City Has No Records to Support Claim of $78M In "Wind Down" Costs

[Brian Essi]

Here is another WHOPPER:

1. On page E2 of the Plain Dealer dated 12/13/15, Summers said: "$12 million of the hospital's $78 million in wind down costs would be borne by the Clinic" and on page A2 of the Plain Dealer dated 12/13/15 to wit: "the Clinic could end up spending $12 million toward the $78 million in wind down costs."

2. That same day (12/13/15) I made a public records request asking for: "All public records that are the basis of Mayor Summers' statements as reported on page E2 of the Plain Dealer dated 12/13/15 to wit "$12 million of the hospital's $78 million in wind down costs would be borne by the Clinic" and on page A2 of the Plain Dealer dated 12/13/15 to wit: "the Clinic could end up spending $12 million toward the $78 million in wind down costs."  I also made three other requests for any and all public records of estimated wind down expenses.

3. On February 3, 2016, Mr. Butler Responded responded to all four records requests as follows:"The city bears no written record of the Cleveland Clinic’s or LHA’s wind-down costs, although much information was exchanged during the parties’ negotiation of the master agreement."

4. The December 21, 2015 Master Agreement terms gave CCF $70M of the Hospital’s value (cash, accounts receivable, $27M investment portfolio, bed licenses, equipment, fixtures, a non-compete covenant, discounted buildings and land, etc.) in exchange for the “risk” that CCF might have to pay some wind down expenses. Healthcare and legals experts have estimated that CCF will get all that stuff free and pocket at least $20M of LHA's investment portfolio in the wind down.

5. So our City gave $70M of value to CCF based upon a conversation about $78M in alleged costs---no written record of those expenses exist---no documents were exchanged and no notes were ever taken by anyone--not Butler, not Thompson Hine, not Summers.

I learned a simple rule 32 years ago when I began my career in handling business transactions: “If it ain’t in black and white, it ain’t.”

Folks this isn't right. It is very very wrong.

So here is the simplest way to see through this obviously fraudulent claim by Summers and City Hall:

If the hospital was actually losing $1M per month last year (which it was not), and they quickly shut it down cutting their costs to nearly nothing in less than 2 months after signing the agreement, how much money did it cost to wind down the hospital?

"Folks this is not rocket surgery" JOB

[james fitzgibbons]

Here is another WHOPPER:

1. On page E2 of the Plain Dealer dated 12/13/15, Summers said: "$12 million of the hospital's $78 million in wind down costs would be borne by the Clinic" and on page A2 of the Plain Dealer dated 12/13/15 to wit: "the Clinic could end up spending $12 million toward the $78 million in wind down costs."

2. That same day (12/13/15) I made a public records request asking for: "All public records that are the basis of Mayor Summers' statements as reported on page E2 of the Plain Dealer dated 12/13/15 to wit "$12 million of the hospital's $78 million in wind down costs would be borne by the Clinic" and on page A2 of the Plain Dealer dated 12/13/15 to wit: "the Clinic could end up spending $12 million toward the $78 million in wind down costs."  I also made three other requests for any and all public records of estimated wind down expenses.

3. On February 3, 2016, Mr. Butler Responded responded to all four records requests as follows:"The city bears no written record of the Cleveland Clinic’s or LHA’s wind-down costs, although much information was exchanged during the parties’ negotiation of the master agreement."

4. The December 21, 2015 Master Agreement terms gave CCF $70M of the Hospital’s value (cash, accounts receivable, $27M investment portfolio, bed licenses, equipment, fixtures, a non-compete covenant, discounted buildings and land, etc.) in exchange for the “risk” that CCF might have to pay some wind down expenses. Healthcare and legals experts have estimated that CCF will get all that stuff free and pocket at least $20M of LHA's investment portfolio in the wind down.

5. So our City gave $70M of value to CCF based upon a conversation about $78M in alleged costs---no written record of those expenses exist---no documents were exchanged and no notes were ever taken by anyone--not Butler, not Thompson Hine, not Summers.

I learned a simple rule 32 years ago when I began my career in handling business transactions: “If it ain’t in black and white, it ain’t.”

Folks this isn't right. It is very very wrong.

So here is the simplest way to see through this obviously fraudulent claim by Summers and City Hall:

If the hospital was actually losing $1M per month last year (which it was not), and they quickly shut it down cutting their costs to nearly nothing in less than 2 months after signing the agreement, how much money did it cost to wind down the hospital?

"Folks this is not rocket surgery" JOB

Does that mean the City of Lakewood has no legal agreement with CCF ? Whose signatures are on the agreement ? Seems likes they could have used a good accountant.

[Brian Essi]

I am not here to render legal advice or opinions--and while I do have degrees and 30+ years of experience in finance, economics, accounting and law, the facts and issues I present in this post are simply a matter of logic and common sense that follows from the indisputable facts:

1. In 2013 and 2014, LHA made a net profits of $5.3M and $2.5M, respectively.

2. After the January, 2015 announcement to close the hospital and the closure of the lucrative interventional cath lab, LHA posted EBIDA operating loss of $4.9M through 10/31/15, i.e. that's less than $500K per month (per the Master Agreement.

3. On April 8, 2015 Summers told me that wind down costs would be around $26M--we now know he had no documentation to back that claim up

4. Eight months later, on December 13, 2015, he claimed that wind down costs would be an astounding $78M-we now know he had no documentation to back that claim up.

5. On February 11, 2016, Mr. Butler acknowledged that there was "no denying" that in entering into the Master Agreement, City Hall relied on the "expertise" of LHA trustees "in the room." He was referring to "expertise" that included conflicted CCF Trustees and CCF employees serving on LHA's board. We now know that the people in the room had no documentation to back up the $78M claim, if it was ever even made "in the room."

6. LHA assets and going concern were recently valued at $120M---the "people in the room" knew that.

7. Summers possesses an MBA while Butler, O'Leary and Nowlin are all licensed attorneys.

8. Unless Summers and Butler (while "in the room") came up with the $78M in their heads (remember they claim they have no notes or documents) the unverified and undocumented $78M was transmitted verbally from CCF folks to Butler/Summers et al. and then to City Council. That's called Hearsay Evidence.

9. There are no public records or discussion of wind down costs--it was all discussed and "deliberated" upon in secret "in the room."


So here are some logical common sense conclusions that that facts lead to:

1. It is absurd that it would take $78M to wind down otherwise profitable hospital that was valued at $120M.

2. It is absurd that educated people with "expertise" would think it wise to spend $78M to close and liquidate a $120M going concern.

2 It is absurd that estimated wind down costs could increase by $52M in 8 months.

3. It is absurd that education people made a decision of this magnitude based upon 100% Hearsay Evidence without having any documentation.

4. Here is a googled definition: A "fraud" is false representation of a matter of fact—whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed—that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury.

5. The claims about estimated wind down costs fit the definition of fraud.

5. Since the estimated wind down costs fit a definition of a fraud, a key portion of the Master Agreement rests up a defined fraud--namely, the transfer of $70M of the Hospital’s value (cash, accounts receivable, $27M investment portfolio, bed licenses, equipment, fixtures, a non-compete covenant, discounted buildings and land, etc.) in exchange for the “risk” that CCF might have to pay some wind down expenses.

Common sense suggests that the wind down narrative is fraud in furtherance a scheme to steer assets and money to CCF.

[Jim Kenny]

Brain: As you are an attorney and officer of the court, my understanding is you're legally obligated to report fraud to the courts. Are you honoring this legal obligation?

https://en.wikipedia.org/wiki/Duty_to_report_misconduct

[Peter Grossetti]

wiki.jpg (84.12 KiB) Viewed 4067 times

[Dan Alaimo]

Wikipedia can be a very useful research tool. It's become my first stop when checking details/facts, but I generally look at the sources of the information, especially if I find the information dubious for whatever reason. This particular item is not sourced.

[Brian Essi]

Brain: As you are an attorney and officer of the court, my understanding is you're legally obligated to report fraud to the courts. Are you honoring this legal obligation?

https://en.wikipedia.org/wiki/Duty_to_report_misconduct

Attorney Kenny,

You completely failed to address the facts (again) ---I guess that means you and BL have nothing to counter my facts (again)--This "shoot the messenger" thingy is an addiction with you---You are not the first person to impliedly threaten my law license in an effort to shut me up--that dog won't hunt.

You suggest that the facts above somehow outline misconduct by any attorney that needs to be reported, but that is because you did not read the facts carefully enough.

In other words, tell me the name of the attorney and what fraudulent conduct he or she committed that requires reporting and get back to me.

[Jim Kenny]

Brian: Please bear with me, as your facts can be so arbitrary that I struggle to comprehend.

I read in your first post that you noted that Butler, Nowlin and O'Leary are attorneys.

I also read your in your second post where you shared your "logical common sense" that "It is absurd that educated people with "expertise" would think it wise to spend $78M to close and liquidate a $120M going concern."

In that same post, you cited: "It is absurd that education (sp?) people made a decision of this magnitude based upon 100% Hearsay Evidence without having any documentation."

Again, in the same post you boldly claim as "Common sense suggests that the wind down narrative is fraud in furtherance a scheme to steer assets and money to CCF."

Lastly, you educated me that "A "fraud" is false representation of a matter of fact—whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed—that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury."

Did I just read "legal injury"? It's my hope that a responsible officer of the courts would act on his clear logic and pursue justice where it can best be found. I would hate for you to be disbarred for this failure. What would you do with all the free time you would gain from no longer reminding others that you're an attorney?

[Lori Allen _]

Jim, thanks for showing us how a person can convey their thoughts in a calm and respectful manner.

[Brian Essi]

Brian: Please bear with me, as your facts can be so arbitrary that I struggle to comprehend.

I read in your first post that you noted that Butler, Nowlin and O'Leary are attorneys.

I also read your in your second post where you shared your "logical common sense" that "It is absurd that educated people with "expertise" would think it wise to spend $78M to close and liquidate a $120M going concern."

In that same post, you cited: "It is absurd that education (sp?) people made a decision of this magnitude based upon 100% Hearsay Evidence without having any documentation."

Again, in the same post you boldly claim as "Common sense suggests that the wind down narrative is fraud in furtherance a scheme to steer assets and money to CCF."

Lastly, you educated me that "A "fraud" is false representation of a matter of fact—whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed—that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury."

Did I just read "legal injury"? It's my hope that a responsible officer of the courts would act on his clear logic and pursue justice where it can best be found. I would hate for you to be disbarred for this failure. What would you do with all the free time you would gain from no longer reminding others that you're an attorney?

Attorney Kenny,

There you go again, now a not so veiled threat of having me disbarred.

Once again, you as the BL/City Hall PR guy have not challenged a single fact as being untrue.

“But you can wake a man only if he is really asleep. No effort that you make will produce any effect upon him if he is merely pretending sleep.”
― Mahatma Gandhi

[cmager]

Mr. Kenny,
I suppose we should thank you for praying for Mr. Essi. It's fairly common for people to pray "for" those who seek the truth. However, I've never seen a situation where people pray "against" those who seek the truth. I find that odd.

Regards, Bill

[Lori Allen _]

Thank you for the rebuttal from the SLH gang! SLH is now know as the bullies of Lakewood! It does not help your cause!

[james fitzgibbons]

Thank you for the rebuttal from the SLH gang! SLH is now know as the bullies of Lakewood! It does not help your cause!

Lori only by your definition as you spoke alone. BTW SLH is not a gang it is a Grassroots Organization. You are also accusing everyone in and affiliated with SLH a bully, quite a reach! And it does not help your cause!

[Peter Grossetti]

Thank you for the rebuttal from the SLH gang! SLH is now know as the bullies of Lakewood! It does not help your cause!

Who comprises "the SLH gang"?

Is it anyone who "Likes" their Facebook page?

Is it anyone "on The Deck"? (except for, you know, the really obvious non-SLH people)?

Is it anyone who voted in favor of Issue 64?

From what I have gathered there is no official "Membership Form" to fill out nor "Membership Dues" to pay to become an Official Member of "the SLH gang" ... and only two people have been "elected" to "leadership positions" ... a chair and a co-chair.

[Jim Kenny]

Brian: I would never threaten to have you disbarred. You're more than capable of achieving it without my help.