Prosecution nears close in medical fraud trial

By Errol Castens/NEMS Daily Journal Oxford Bureau

OXFORD – The prosecution is expected to rest its case this morning in the federal kickback/bribery conspiracy trial of Ray Shoemaker, a Tupelo businessman and former administrator at Tri-Lakes Medical Center in Batesville, and Batesville businessman Lee Garner.
FBI Special Agent Shannon Wright is expected to be the government’s final witness when court resumes at 9 a.m.
The charges against Shoemaker and Garner center largely on $268,000 in bribes the prosecution alleges Garner paid former county administrator and hospital board chairman David Chandler to steer business toward Garner’s medical staffing firms and that Chandler in turn paid Shoemaker part of the proceeds.
Shoemaker is also accused of illegally taking $250,000 from the hospital for the use of a nonprofit entity, Kaizen CMR Inc., that he founded, so Dr. Robert Corkern and other local residents could buy Tri-Lakes Medical Center from the county in 2005, with a loan from UPS Capital that carried a 90-percent guarantee from USDA Rural Development.
On Monday USDA investigator Keith Luke testified that Shoemaker said the $250,000 payment made for use of his nonprofit entity was approved by both the USDA and Corkern.
Luke said after Shoemaker was told USDA officials were unaware of the payment, “He said he didn’t care whether they approved it or not – that Dr. Corkern had approved it.” Corkern has said neither he nor the hospital board approved the payment.
Bettye Oliver oversaw USDA Rural Development’s guarantee of the loan for the hospital purchase. She attested that USDA would never have approved Shoemaker’s claim.
Officials from GE Capital, which extended a $4 million line of working capital, said their company would never have approved paying even legitimate long-term debts from operating funds, including the $500,000 down payment reimbursement that was owed to Corkern.
Defense attorneys questioned why Luke didn’t record his interviews with Shoemaker and showed that some of Garner’s gains and losses of business with Tri-Lakes could be explained by the hospital’s growth and hiring its own nursing staff. Shoemaker’s attorneys also argued that since the IRS hasn’t charged Shoemaker over the funds, the transaction must have been legitimate.
errol.castens@journalinc.com