Shoemaker-Garner update: Jury begins deliberations in Oxford

By Patsy R. Brumfield / Daily Journal

4:25 POST
OXFORD – Ray Shoemaker and Lee Garner’s future is with a 12-member jury today.
Closing arguments from the government and defense wrapped up about 4:15 p.m. in a trial that’s been under way since Feb. 21.
(Below, read a running account of court action before it went to the jury.)
Businessmen Shoemaker, 38, of Tupelo and Garner, 67, of Batesville are accused in a multi-count, multi-million-dollar federal medical fraud case.
Judge Neal B. Biggers is presiding over the trial.
Prosecutors contend the men were part of a bribery/kickback scheme associated with Tri-Lakes Medical Center in Batesville, where Shoemaker was a top official. Garner’s nurse staffing company did business with Tri-Lakes.
The courtroom audience was full of family, friends and others interested in the case.
Co-defendant Dr. Robert Corkern of Batesville recently pleaded guilty to charges against him and testified early in the trial. Former Panola County administrator David Chandler, named an unindicted co-conspirator in the case, pleaded guilty to an embezzlement scheme late in 2011 and was the government’s lead and final witness.
Prosecutors are Clay Dabbs, Robert Mims and Charles Spiller. Defense attorneys likely to address the jury are Ronald Michael of Booneville for Garner and Steven Farese for Shoemaker.
(Please excuse the typos and glitches likely as I type as quickly as I can. Come back to this post, which I’ll update as I can during breaks in the courtroom action.)
• • •
In packed courtroom crowd, former Ole Miss coach Billy “Dog” Brewer, an old friend of Garner, and assistant U.S. Attorney John Marshall Alexander, who was interim USA before the full-time chief arrived.
3:00 – Judge, jury back
STEVE FARESE (FOR SHOEMAKER) – Apologizes for his raspy voice. I want to talk to you about the greatest thing in the world – justice and freedom in this country. BEcause of people like Ray Shoemaker.
When I was growing up, we didn’ thave much to do. Parents taught us God, country and family. Let’s talk about God first. Theyc an say what they want. But Ray Shoemaker gave $250K to his church. Signed a note and is paying it. It’s earmarked over a perior of time.When Corkern testified, with a smirk on his face, he shrugged it off. God. Country – for 13 years, he served in US military rising to captain. Going to school, getting under grad, masters to become somebody – not to become a thug, or a drug dealer or involved in criminal activity.
His country, your country, my country. So we can be here today.
Family – Raymond Shoemaker in Dec. 2005 told Mr. Chandler that he was leaving and going back to Tupelo because he had to support two familyies.. his wife and children in Tupelo and his home in Batesville. He found that climbing the ladder wasn’t all about money. Costing him an extra $2K/month … Chandler, the shark that he was … took advantage of that situation to try to ingratiate himself with Ray Shoemaker. He said, Ray, I’ll loan you the money. He knew the Golden Boy was at work, the hospital census was going up. This way way before Chandler came out with a story about a $25K bribe. Who set the terms? Chandler. Who decided how paid? Chandler, by check. The truth flows freely. The reason nothing is written on those checks, it was for a loan. It loan had been written, Chandler would have said “loan” to cover it up. These were legitimate payments.
When payments stopped, not say anything? You heard Chandler. He didn’t say anything, he said. What happened to bribery deal or did somebody walk up and pull up envelope and walk away with $2K on desk. That’s how bribery deal works. How does it end. One guy with a man with a bullet in his head or what? Ray says nothing, Chandler says nothing.
Let’s talk about half-truths. You’ve heard partial truths. Snppets of conversations. They offered to throw out all counts involving Chandler. I accept that because … they knew they couldn’ get Ray on bribery because Chandler is such a snake. They knew that, so they come up with this $250K charge, which is BS. This money was owed to him. You know it was. Thing of value, he sold it.
Let’s go to semantics. Witness said it was iimproper, not impermissible like they said. It’s not against the law. Shoemaker fell off the boat into an ocean filled with sharks. Like Chandler, who take advantage of the board of supervisors, hif friends, they don’t know what’ he’s doing. Robert AVant, prez of board, loaned him money. Even Al Capone gave away turkeys at Christmas.
Story of when Shoemaker is… Chandler tried to get him to create a false document on video at urging of govt: What does he say? That would look like we were conspiring to cover something up.
If they would lie about a loan, why wouldn’t he join in? Well, he must have known I was wired .. is the answer they have. Chandler says he must have known I was wired. Their whole case is Chandler. The roach in the soup. When you find one, you throw out all the soup because if you don’t, you can become infected like the govt has – infected and affected by Chandler.
Wright said she interviewed Les Smith for insurance in Panola. He told her he’d been extorted by Chandler and didn’t get it because he didn’t give a kickback. Man from Jackson paid and got the business. WRight said she chooses to believe Chandler, although in grand jury testimony she said she believed LesSmith.. why? Because sh eknew Chandler was going to hae to testify.
Can’t dress a man up and put him in a suit and glasses and make him a man. Character is who you are. We know who he is. Do they say he’s changed? But saying it doesn’t make it so. Got to prove it by actions. By Deeds!
Shoemaker asked by Wright about whether he’d ever gotten any money from Chandler, he denied it. He said he was 99.9% sure he didn’t. But, he said if you have checks, I’ll look at them with you. That’s not a denial, that’s a “I don’t remember.” We know she (Wright) lied. Corkern lied – we know he did because first he wanted ot say, well,I didn’t reall commit a crime, I was extorted by David Chandler. All these indictments … Chandler hadn’t pled guilty to any of these. All these, nothing. Guess what, court will instruct you that when have people like Corkern and Chandler, you ahve to look at their testimony with greater care because they’ve already proved their lack of integrity. Treat them carefully, with caution, great care. On video tape that scam that Chandler tried to run on Shoemaker, he talked about signing a document, forging it, presenting false document to govt, Ray said something about his character – he said this – I guess I wasn’t raised that way. You didn’t see that snippet.
Shoemaker was a go-getter. A personality, gift of gab. Could get biz for that hospital. Made it grow. Was making money, paying its notes. Serving his community, The dream was to be like Tupelo and Oxford. When Chandler found out that Ray had tired of his biz and wanted to get to his family, that’s when he stopped paying. That’s the reason. It was agreed upon, I’m leaving no matter what. Last check was July. Left in December.
Laying out checks – almost tripped over their own lies. Last check was for $4K. July 27. Hee’s what happened… because FBI think you will believe them. They have to change their story to comport to the facts that we bring out. How many nurses did you hear, in a position to know how nursing staffing and services were run. 5-6. How many govt bring you? Zip, Nada. They didn’t want you to know that. They say allw e have to prove is statistics. Lies, damn lies and statistics.
Gone from lies to Chandler, a damn liar, to statistics. You heard Wright, who happens to be an accountant, say you can make numbers say what you want them to say. While Shoemaker making hospital grow, numbers for nursing services goes up because census goes up. Now know, hospital grows and nubmers go up. But when Golden Boy leaves, the numbers will go down. Make numbers work, but here’s where they can-t – not on bribery payments because Chandler starts with $2K discussed in early Dec but no check written for January. He didn’t pay it, makes no sense. Know what he is. You’ve met him before.
The court will ask you and tell you how to treat the testimony of someobyd like Chandler. But also will talk about burden of beyond a reasonable doubt. Goes something like this – that you would want to rely on the word of Chandler in most important of your personal affairs. To convict Shoemaker, to rely on Chandler as if applying them to the most important affair. When my mtoehr was dying and have to decide to pull that plug – actual between life, brain death, morality and Christianity…. and you call in your reverend and say, What do I do? When he comes in, will you rely on Chandler?
No matter what y’all do, one thing I know: This man is innocent. He is not guilty on all counts. They can tell a lie 10K times and it’s still not the truth. Want to be in a foxhole with Chandler or Ray? I’m going with Ray.
3:16 – RONALD MICHAEL (FOR GARNER)
Apologize for my voice, too. Blames Farese. Honored to speak for Garner. Several years ago I took a job as a prosecutor, but did it for the state not feds. WE both have the same obligation. My job was to rep the people of Miss. When I went to work there, I respected most was Richard Bowen, who told me this – our responsibility is to seek the truth and not seek the conviction. He said if we seek the truth, it means justice is served. If we seek a conviction only, then the truth gets skewed, broken, not what it’s suppose to be.
This is a case that these prosecutors and their agents – they sought a conviction of these men for years now. And they’ve done it without seeking the truth. If sought truth, they would not have told you that a $50K raise for Shoemaker was to influence him. Because that’s not what it was. Chandler said the $50K raise was because David Vance came to see me and brought me an order from board to say give him raise when this new company takes over. Chandler testified that it wasn’t to influence him, I did it because David Vance asked me to. But you heard testimony, argued, that $50K was to influence Shoemaker. Not the truth but they keep arguing it.
Heard tape a few inutes ago of Garner and Chandler. Last night I read the transcript of Chandler’s testimony. Lto of interesting htings he said. At end of Spillers questions, he aske dhim: What was Garner talking about when he said he didn’t need to know hwo you paid and … ? Chandler ersponded – he was talking about my problems, things I was involved in. (So, when I had hance to ask Chalder – I asked him, he said, it was an earlier conversation about my trouble and also about each individual thing that had been looked at.) That was in reference to him. But then, we get a night off. We come back next day and mr. Spillers asked the same question: What did Garner mean when he didn’t want to know about payment? Chandler, this time, – he didn’t want to know about the $25. First time we heard it. We hard it again today.
Two times before, he said it had nothing to do with it. Shown an invoice for accounting services, Spillers pointed out the words. He didn’t ask Chandler to read the rest of it … “and other professional services.” I asked Chandler, is picking up checks, delivering invoices… isn’t that other professional services? Chandler said, yes it it.
They want you to believe there’s something sinister that GArner agreed to pay Chandler $5/hr. Want that ot be sinister. They want you to believe that because he did that, that Chandler went from GArner to Shoemaker to influence him to icnrease hours. Here’s what Chandler said: I asked himk as chairman, can you influence one hour? He said, I can’t influence one hour at a nursing station.
I asked him, do you ahe ability to get any business for Mr. Garner? He said – I can’t get one hour. So, here’s what he had to do, if that’s the case. He’d have to go see Ray and ask him. I asked Chandler about influence on Ray. He said he was board chairman. Exerted? I asked him to raise hours.
Here’s the truth: It never happened. And the reason the FBI and the govt agents don’t talk to nurses out there … Mr. Shoemaker can’t influence anybody unless he tells somebody to do something. Spillers said you are the best lie detector, you sure are (he’s talking to thejury). By now, you must be detecting a lot of untruths presented to you by the federal govt. Do you job, ask somebody, did Ray tell you to use Guardian? Witnesses say no.
Other half-truth: That Guardian and OnCall had 40 percent of biz. That’s true. Tried to imply because of Shoemaker’s influence. Here’s what the nurses said: Guardian got biz because first one to call back. That’s why. They played you a tape about Garner saying he’d pay to “procure” business for him. I googled “procure” – to get, obtain or acquire, secure. Through receipt of invoices and then payments. They want you to think that because Garner was making money … telling you this untruth… Truth is that these numbers represent census of hospital going up and care patients needed. It doesn’t represent anything Shoemaker did with Garner or Chandler. Without knowing that, you just might buy the lie.
Truth? Tri-Lakes had been sued before Garner got contract with them. Made Garner nervous about getting paid? Well, weeks go by and he’s not getting paid. When I crunched the numbers, at end of May, Garner’s company spent $94K on nurses. End of June spent $184K. At end of June he’d been paid $134K. If I know him, I’d be getting nervous about getting my money.
What’s wrong with him making a biz decision to pay Chandler 5% instead of collection agency for 25%?
But govt, to the grand jury, liked to use these word games … for isntance, all this money that Garner collected.. $2M … way you influence a grand jury is that youask a question: Mr. Garner makin gmillions off Tri-Lakes. (He was not making millions.) This witness, she’s an accountant, she told you it was revenue. Big difference between revenue … led grand jury to believe Garner was paying Chandler to get a contract. Chandler told you he didn/t but she said it over and over.
I don’t believe that this jury .. I don’t believe that if you looked at everything that govt has done in this case “in truth” to get a conviction, I just don’t believe you’ll see it.
Example: shown this tax return.. where Guardian and OnCall at top in 2005. He didn’t turn to next year and show that HealthForce staffing made $1M. Didn’t show you rest of story. OnCall made $485K. Does that mean HealthForce made money that Shoemaker was bribing somebody or getting bribes? I don’t think so.
Explanation, a reasonable explanation govt says Garner did wrong. One thing, truth is this: Never happened. Last statement we were given of Mr. Chandler saying anything about Garner by Wright was in July 2010. All way to Feb. when he was indicted, Garner indicted. WE don’t have another tape by Wright of Chandler saying $25K to Shoemaker. If you listen to these tapes,listen in context. Talk of procurement, nothing wrong … if Chandler works for Garner, nothing wrong. One thing Spillers said, Garner is a wa=ealthy man. He is. He’s worked hard. He’s done everything to be successful. 67-year-old. Chandler comes in here, lies to you as an agent for federal goverment to ruin this man’s life.
Whatthis is about: It’s about the fed govt sticking their hand into the cesspool and from it they’ve drug up DAvid Chandler. When they did, the filth got all over them. It’s wrotten, it’s putrid, it was nasty. They drug up filth to come into this courtoom and ruin the names of these two good men, and I don’t think you’ll let that happen.
3:38 – BILL KIRKSEY (FOR GARNER)
My privilege to stand before you for last time and close this case for Lee Garner. I first met him 42 years ago. I met himb ecause I married his little sister. Although that went by the wayside, he’s been my brother-in-law for 42 years. Great pride to close this case fo rhim.
After Lee was charged, he called me. I dropped everything and came to Oxford. I chose to place the burden on my shoulders. I didn’t have to. No reason to walk back because I did because he is my brother-in-law. The burden ofr what will happen to Lee and rest of his life, will pass from my shoulders to yours.
For 35 years, I’ve been doing this. Have heard all kinds of things from witness stands. All kinds of argument from people like Mr. Spillers. Everybody has a job ot do, but it ought ot be done right and with honesty and should be done with integrity. I grew up in Drew MS, preacher was Dr. John Lee Taylor. He taught me truth and meaning of not lying. Agree there’s been more lying from that witness stand that Iv’e heard in past 10 years!
You know, judge told you hae decisions to make as a juror and collectively as jury. Overall these years, I’ve come to know cases. Expect to see prosecuted. In murder cases, look at bullets. In this case, we’re looking at money. Asyou know, Ronald said the govt would have you look at an exhibit …such as this … and say, Ah, he got paid a lot of money, didn’t he? He’s making money… census going up. He must be bribing somebody!
You know, this case, I agree with learned colleague… It stinks! The prosecution has chosen to put on a liars scheme.
Remember a guy, in the news… Bernie Madoff … guy around here,name starts with S. People trust people they shouldn’t. Around Jackson, we trusted Bernie Ebbers, invested in company and lost money. Lee Garner trusted David Chandler. Chandler had been his accountant for 25 years. Not only, went on trips with him, even went with him when Garner went to Memphis to do a trust will, to make provisions for his parents. That’s how close Chandler was to GArner.
Well, he couldhave used Vickie Scruggs to colelct the money. But he had other responsibilties.
They ask you to take leaps of faaith. He didn’t use Vickie, he chose his accountant, so there’s a sinister motive. It was easier to use Chandler. If I knew company hadn’t paid nursing bills, I’d have somebody out there every single Friday, too.
Nurses hours were turne din Monday. Garner paid on Thursday of that week. So in a given month, he could be out $130K or so. Doesn’t take long to lose $700K if you don’t have somebody on top of the game, to collect your money. Corkern said, we were glad to have them. What Garner did. Sent the man who signed off on his tax returns to collect his money. Heard a lot of evidence but haven’ heard one single bit of credible, believable evidence that would make my client a conspirator, a briber and a criminal.
That’s a big thing to ask one citizen to do to another.
Steve said God, Country and FAmily. My father had a 10th grad education. I grew up listening to his war sotries about fighting in Europe. He taught me to respect that flag. Lee Garner, because of this great country … is wrapped with the presumption of innocence. The reason they get to go last is they do have the burden of proof. That burden doesn’t come to this (defense) table. They have to prove to each of you, beyond a reasonable doubt. … to rely on it in the major decisions of your every day life. What they have to prove. They hadn’t don that. Not a damn thing. This case is built … parable one man built house on sand and one on rock. Storms came, wind blew and house on sand, it washed flat away. House on rock it stood firm. The govt’s case in this instance at this day and in this courtroom was built on sand.
Spillers, Dabbs, Mims… they’ve done the best they could with hand dealt them. Hand was incompetence by FBI, buy not properly doing their job, this case was built as Miss WRight said on omissions, mistakes, embellishments, use of misuse of words. She was honest with you, finally that she had testified untruthfully to a grand jury. If a special FBI agent would lie to a grand jury, how can you believe anything that they say?

As Ronald said, proof’s in the pudding. They wouldn’t be asking you to finish their investigation for them. They’re asking you to take quantum leaps from snippets of fact that lee Farner is a criminal. When all they had to do is drive about 28 miles down Hwy 6 and turn into Tri-Lakes, walk in there and say I want to talk to every nurse who has anything to do with nurse-staffing agencies. … I want to see what influence Shoemaker kput on to call Guardian dnad OnCall. They didn’t do that. Didn’t do what we call “due diligence.” I tell you something else… negatives can be important. They already admitted… two agents, Wright and Luke – they didn’t bother to go to that hospital and talk about influence. Two witnesses they put up – Myrick and Morris – both fron Tri-Lakes – neer asked them, tell me how many invoices Shoemaker gave you with specific orders to get paid promptly? How many invoices did Shoemaker give you to get paid?… wasn’t ever asked.
They knew the answer: None.
Look through Exhibit 111 – it didn’t happen.
I could understand if hospital didn’t get every penny they borwwoed. A nurse went out there for every hour. No padding bills. This isn’t about losing health care money, as govt said in opening statement. Bullock said, with Guardian, saved them about $250K. This is not about health care fraud. It’s just not there.
You know, I learned a long time ago that jurors bring into a courtroom the good common sense that those of us in the business sometimes lose. I believe like my dad… people do the right thing. America is a great country. Jury system is the best ghing in our court syuste. But you know, in the end of the day, jurors in America … justice in America is whatever 12 true and good citizens say it is. (AMEN, FROM JUROR) Because of the burden of proof, the govt will go last.
I have now spoke the last words I can speak on behalf of Lee Garner. Shortly you will decide his fate. But while listen to govt. keep in mind what I said. When go to jury room, if you feel a queasiness about this matter … follow your instincts.
In end of day, this started ofr Lee Garner on Feb. 24, 2011. Day after that woman went to his place … it’s been long eough. He’s had enough problems because of this and send him home to about 50 of those people who are his family. Return a verdict of not guilty on all counts.
3:57 – SPILLERS (for government)
Must move quickly only have 20 minutes. Ask you to do… use your common sense. I don’t have time to address every single thing opposing counsel brought up. Use your common sense.
Exhibit 96 – Kaizen consulting… money $250K tht Shoemaker took. Counsel said he donated all this money to his church. Not one shred of evidence that he did that. He wired $50K to church and used all the rest for himself. (Enlarge the list) One of first things he did, spent about $57K on cars. After that, sent $50K to church and rest went into bank account. can see what he spent money on. Casino ATMs. Steakhouse. Just look at it. Personally.
Address other things. But before I do, let me remind you what case is about. Opposing counsel, heard from them. I said you were best lie detector. No one can stand up here and pull the wool over your eyes. Use your common sense.
Case is about: Influence. (walks through issues). Chandler authorized increase in Shoemaker’s contract. Shows he has influence. Chandler gave Shoemaker $50K raise. After left Tri-Lakes Board, Chandler urged Shoemaker to use Garner’s company. Chandler began paying bribes to Shoemaker. Spread payments out to have continuing influence on him. In 2007, Chandler transferred $400K to hospital i return for $25K bribe from Corkern. Chandler used his influence on Shoemaker to help GArner businesses. Tri-Lkes went bankrupt, with unpaid bills.
$268K Garner paid in bribes and kickbacks… Key thing, Garner was paying money with an attempt to influence. Chandler was accepting the bribes with intent to influence. Chandler was turning around and paying bribes to Shoemaker with intent to influence Shoemaker. And Shoemaker was accepting bribes with intent to be influenced. That’s why agents weren’t over there talking to every nurse.
$268K bribes and kickbacks / show corrupt intent by Garner … not to put on invoices for nursing hours. They agreed to put done for accounting services or fees, to hide it. All done for deception. Shows Garner’s corrupt intent. He knew you can’t pay a go-between to influence a hospital administrator. Can’t pay a county administrator bribes.
Garner told Chandler to take it out of his bribes. It’s to use unlawful means to effect a lawful object. Using unlawful means is the problem.
Then we have Shoemaker’s bogus coverup of the loans. Deception and lies. When Shoemaker using loan story, he didn’t know that Chandler would come clean and tell about it. When he was using the loan story, didn’ tknow Chandler would tell aboutit. When Chandler did, we looked at Shoemaker’s acocunts to show he was rolling in it.
Of $250K – how many of us would have this kind of money and claim they had to borrow money from somebody? If you’re in bad financial shape, can you get a car loan? I’m not going to go through all this.
Is Shoemaker on video tape sticking with the loan story, about needing to borrow oney? Same man suspicious of Chandler on the phone, asks if wired?
Why would he lie about accepting $12K? Because he knew $12K was a bribe. Same reason Garner didn’t reveal what payments were for.
Garner had Vickie Scruggs, who was doing collections. What special qualifications did Chandler have to Garner to pay him $268K? My gosh, procuring business.
If Garner can get away with this, it means powerful people with money are the winners. Won’t be a level playing field. We’ll be like third-world country where bribes and kickjbacks….
Reasonable doubt… govt not required to prove “beyond all doubt,” just “beyond a reasonable doubt.” Someone told me, can find them guilty and still leave courthouse with some doubt in your mind.
We don’t need couty officials, hospital administrators for sale to highest bidder. WE don’t need that. That’s what this case is about.
This may be my last trial as a prosecutor, I’m approaching retirement.
4:17 – Judge retire jury to jury room.
• • •

2:38 POST
OXFORD – The government and one defense attorney told a jury their versions of Ray Shoemaker and Lee Garner’s alleged roles in business with Tri-Lakes Medical Center in Batesville.
Closing arguments from the government and defense wrapped up about 1:30 p.m. in a trial that’s been under way since Feb. 21.
(Below, read a running account of court action before it went to the jury.)
Businessmen Shoemaker, 38, of Tupelo and Garner, 67, of Batesville are accused in a multi-count, multi-million-dollar federal medical fraud case.
Judge Neal B. Biggers is presiding over the trial.
Prosecutors contend the men were part of a bribery/kickback scheme associated with Tri-Lakes Medical Center in Batesville, where Shoemaker was a top official. Garner’s nurse staffing company did business with Tri-Lakes.
The courtroom audience was full of family, friends and others interested in the case.
Co-defendant Dr. Robert Corkern of Batesville recently pleaded guilty to charges against him and testified early in the trial. Former Panola County administrator David Chandler, named an unindicted co-conspirator in the case, pleaded guilty to an embezzlement scheme late in 2011 and was the government’s lead and final witness.
Prosecutors are Clay Dabbs, Robert Mims and Charles Spiller. Defense attorneys likely to address the jury are Ronald Michael of Booneville for Garner and Steven Farese for Shoemaker.
(Please excuse the typos and glitches likely as I type as quickly as I can. Come back to this post, which I’ll update as I can during breaks in the courtroom action.)
• • •
11:37 – Judge says we’ll recess for lunch, then come back to wrap things up. Back at 1:15 p.m.
1:16 – Garner looks energetic, chatting with Jackson attorney Bill Kirksey. Shoemaker looks concerned at defense table.
1:23 – Judge returns. Attorneys at bench talking with Biggers. Bailiff urges overflow crowd to be quiet.
1:26 – Judge calls jury back.
Says closing arguments to follow.
(Several members of jury are taking notes on reporters’ pads.)
CLAY DABBS – (Statements for goverment). David Chandler, a liar, embezzler, a thief, extorts people for money, involve din numerous frauds. It seems like everything he was involved in was a fraud. Eveyrthing touched was bogus. He was Garner’s bookkeepr for 20 years. Bogus. And Lee Garner paid him $268K to do nothing but drop off invoices and pick up checks. You heard Chandler extorted, used position to strong-arm people for money. But Shoemaker said he loaned him $12K andnever asked him to pay him back.
In spring 2005, garner made an agreement with Chandler to pay him $5/hr for every nursing hour billed and collected at Batesville hospital. Undisputed, with agremement and payment, county-city owned hospital, And Chandler was administroator, CFO of county. He ran it. He also was chairman of hospital board. After agreement, Garner paid him $268K.
Now, $5/hr means the more hours that are billed, the more to Garner, the more money Chandler would make. Now, based on everything you know about Chandler, is there any doubt that he would go to hospital and try to get as many hours as he could to get Garner paid as much as he could? Any doubt, in 2006 that Chandler would be willing to pay a bribe to Shoemaker, $12K to keep this flow of money going? More Garner made, more Chandler got paid.
Garner and Shoemaker righ tin middle of bribnbery/kickback scheme with Chandler. That’s Cts 1-6 of indictment.
Ct 7 is false statment to FBI, that Shoemaker makde false statement. First, he denied got any money from Chandler. Second, when confronted, he said it was a loan. That’s not true. So, starts with false statment. That’s Cts 1-7.
Heard Chandler, was he telling the truth. Cts 8-12 against Shoemaker have little or nothing to do with Chandler. Could disregard him and ahve plenty of evidence to convict Shoemaker of 8-12. In 2006, Shoemaker begged USDA for larger line of credit for hospital where he was COO.Said it would close down without money. Said oney would only be used to pay expenses of hospital. SAme day he signed the loan, he had a $250K check issue to Kaizen (his non profit corp.) Just as good as a check to Shoemaker.
Ct. 12 also related to $250K, embezzlement. Board of hospital did not know about the $250K. Dr. Ball and Randolph, testified. They ssaid if knew, wouldn’t have approved it. Shoemaker did not have authority to take that money from hospital. He embezzled it.
Let’s look at some documents: Exhibit 2 – check from Garner to Dhcnalder, first $3K, May 23 2005. NO dispute this was part of $5/hr fee. Memo line – says accounting services. Remember what Chandler said, Garner told him to make sure invoices don’t match up exactly to $5/hr because we’re going to cover this up. Chandler was being paid by Garner as an accountant. $5/hr is separate from actual accounting services. Next check – July 05 pd $15K. Then $26K two months later. Next, $12K. see each one says accounting services of accounting fees. If this were above board, why would check say accounting services. Why wouldn’t it say nursing. This is way they agreed to conceal the agreement.
Look at Exhibit 17 – all the checks written to Chandler until June 2007 – paid $268K. Look at Dec. 05 – gets $46K just in that month. All doing, delivering invoices and picking up checks. Exhibit 96A – remember what Chandler said about agreement. Garner already had contract with hospital, Feb. 2005. No doubt the hospital was using contract nurses. But not Garner’s. Zero in March. Then agreement with Chandler and hours begin to shoot up. From March 2005 to a year – is largest provider of nursing services at the hospital. See how invoices shot up to over $100K a month.
Remember, Chandler said Garner complained that they weren’t using his nurses. But after agreed to pay Chandler, use went up.
Audio clip, Feb. 15, 2011 – Chandler and Garner. Talking about how Chandler did not bill for exactly $5/hr, he calle dthem acct services. Play it (hard to understand, so looking at transcript.) See what it says? Chandler started to tell him something, then GArner said, Don’t tell me too much. Says I just paid you for legal services. No doubt why he was payng him. On tape he talks about cover story for legal, accounting services.
Play clip #3 – Garner,Chandler talking about not corresponding with the hours. Garner says I said didn’t know who you paid.
Another clip with Agent Shannon WRight – Garner talks about payments. SAys can’t pay who’s running the hospital. Chandler was chairman of the board. He set meetings, agenda. Board was in charge of the hospital.
Next clip – why paid Chandler? Did he pay to get paid on time or to get business? Chandler had power and influence at the hospital. Garner, during interview, said he paid him to get business. Called it a finders’ fee. At end of clip, see what he says why he paid Chandler. (Clip – Garner says county was not running the hospital when DAvid charged me for procuring some business for me.) Procuring business? That’s consistent, a finders fee. Doesn’t say anything about collections. But checks for accounting services.
BAsed on what you know about Chandler, any doubt if he gets paid more money when GArner gets more, is there any doubt that he will got o hospital and do what he can to be sure Garner gets paid as much as he can.
Exhibit 96B – Chart …shows how much invoiced and how much was paid. Shows GArner regularly getting check every week. Chandler going and pikcing it up. Making sure hours were up and paid regularly. Next page … totals. As you can see, this is for 2006. Paid every penny of that invoice – $1.2 million. In 2007, hospital went into bankruptcy. All vendors ended up with hospital owing money, including Garner. In 2005-6 he was paid every penny he billed.
In December, Chandler paid $47K … Vickie Scruggs said it was her job to pay the bills. If it’s just matter of taking invoice in, anybody can do that. If that’s all it takes to get paid. Another person said only one person who came to CEO’s office to get paid. That was David Chandler, chair of hospital board, county admin. Straight to CEO to get paid. even after no longer chairman of board, Dr. Corkern said? Said I thought he was going to bring hospital down and I knew he could do it. This man … walking in to CEO, making suer hours are up and Garner getting paid.
Why, others aren’t doing that? They don’t have influence at the hospital. Chandler had influence in county. That’s why. Garner paid percentage of biz at hospital back to chairman of its board. Definition of a kickback.
Nov. 2005, something happened and changed it. Hospital sold .. county/city sold to nonprofit Physicians and Surgeons … Chandler was no longer on board. County no longer owned it. After sale, Shoemaker became CEO. His influence increased while Chandler’s decreasing. Dec. 2005, what happened? Shoemaker told Chandler, if you’re going to keep this up… money to Garner, I want $25K. Chandler said he told Garner and he said I don’t care who yuou pay, it’s coming out of your $5/hr.
That’s what Chandler did – started paying Shoemaker $2K/month. (Chart of payments – Exhibit 23 – Jan. 2006, check to Shoemaker $2K.) Shoemaker said it was a loan. Financial difficulties, supporting two households. Jan. 2006, had $12K in bank. Net pay was $10K. Salary $200K/year. Have you believe he needed a loan from Chandler that he never paid back.
Next check Feb.-March $2K, says Feb. If this is a loan, why does it say February? Let’s look at end of February, Shoemaker finances – says he’s having difficulty, broke – at end had $26K in checking account at REgions bank. $26K .. net pay was $9,670 for month. Have you believe this check was a loan. SAme month, salary raised to $250K/year.
Next check – April 2006, $2K from Chandler, says March, to Shoemaker. Shoemaker told agents needed money, financial difficulties. End of March, had $22K in checking account. Get paid every two weeks, some months you get more than two checks. March like that, net pay $15,978 one month takehome. Have you believe $2k check was a long.
Ap[ril 2006 – in addition to salary, got $250K check from the hospital. In addition to money at Regions. Says it was a loan. Next check – May 2006 – another $2k check from Chandler, says April. End of May – Shoemaker had $10K in checking account and $250K in Marks bank. Net pay $11,758 that month. Have you believe $2K was a loan.
Last check $4K, Chandler missed a month. End of July wrote $4K check to Shoemaker. $26,200 take-home pay June-July. Has $14K in checking. Still has $250K in Marks.
Pay you clip – Garner, Chandler talking about payments to Shoemaker. (Garner asks if paid him with a check? Yes. You didn’t pay one of his companies?) Let’s play that again, listen to Garner ask if Chandler paid with check? (Chandler tells him Shoemaker is throwing everybody under the bus.)
Next clip – Chandler questioned by Spillers. Clip – (this is clip where Garner says he didn’t need to know who Chandler paid.) Shoemaker interviewed Dec. 2009, denied he received any money from Chandler. After interview, Chandler said he and Ray talked and agreed to call the money a loan, a $10K loan. WRight interviews Chandler, Feb. 2010, Chandler lied about everything. What else did he say? That payments to Shoemaker was a $10K loan.
Wright goes back to Shoemaker with checks. Shows them. Lays out $10K in checks and he says it was a loan. Admitted he talked to Chandler since last interview, he stuck to his story. Loan. Two false statements, count 7. Both have to be false for Shoemaker to guilty of that count.
Briefly, talk about instructions for Cts 1-7. Cts 1, 4 are conspiracies. Conspiracy is an agreement to commit a crime, to cooperate. EAch one doesn’t have to know every detail. Shoemaker doesn’ thave to know everything that Garner is doing. Garner doesn’t have to know what Shoemaker is doing. WE must prove one overt act. Numerous overt acts charged in indictment. Each payment is an overt act, one is enough to be guilty of conspiracy.
#666 is federal programs bribery – no dispute hospital and county receiver more than $10K a year from federal govt. If you pay bribe to an agent of hospital or county, with intent to influence, that’s a bribe. Shoemaker, in same way, received a bribe, as agent of hospital. Conspiracy is the whole scheme.
Ct. 2 – Garner payments to Chandler, as chair of board. Ct. 3 – Shoemaker receiving payments form Chandler. Cts 4-6 – similar. One msut be related to a service to be reimbursed by Medicaid. Payment from Garner to chandler are bribes/kickbacks under that. Payments to Shoemaker from Chandler are bribes/kickbacks under that statute.
Important exception – if it’s bonafide salary, it’s not a violation. Example, Chandler working as bookkeeper for Garner. Nothing to do with position as a county admin. Difference, though, with getting paid as hospital chairman for nursing hours. He’s attached to hospital. Exception…. $5/hr do not qualify.
Next part of this case: $250K to Shoemaker. When hospital sold in 2005, Shoemaker thought he should get $250K out of deal. When didn’t get it and hospital couldn’t pay him, he and David Vance and Corkern decided they needed a larger line of credit to pay themselves $250K each … but had to get OK from USDA. Taxpayers in hook for 97% of loan. So USDA must OK increased debt. March 2006, USDA denied first request – said no, can’t have a larger line of credit. Vance/Shoemaker aren’t going to get paid.
Exhibit 59 – email from VAnce ot Shoemaker… call me asoon as you get it. March 7, after USDA denied loan. Few hours later, email from Vance to USDA-MS and attached letter from Shoemaker. (Shows letter) Shoemaker says being forded to move financing … doesn’t say they want money so they can divide it up. Can keep their money coming. (Next page – ) Shoemaker asks USDA for help, puts hospital in further jeopardy.
Exhibit 70 – Letter references letter from Shoemaker. He never said it wasn’t his letter. He told agent he sent it to USDA. To Agent Wright, he said? (Shows email) Says Betty Oliver doesn’t know and attach my first correspondence to her … it’s the letter that says if don’t get money, hospital will close… please help us. Later, he signed certification with GE … says oney is used to fund company expenditures. Certifies money will go to hospital and not anybody else.
On day he signed the loan, writes a $250K check to Kaizen. Also signs payment letter without a schedule, doesn’t include payment to Shoemaker. (Shows schedule, what’s to be paid on April 2006. No mention of $250K to Shoemaker.)
Next exhibit – Source and Uses STatement… USDA, other never saw it. They said if they had seen it, would have influence their decision to make this loan. $250K to Corkern and $250 to Kaizen. USDA’s Oliver said she relied on fact that info to GE was true. These are false.
Exhibit 100 – email. Money also embezzled from hospital. Dec. 8. 2005. From David Vance’s computer. Says $250K to Ray should be presented to hsopital board. Invoice? Bookkeeper says never got it. Finally, he didn’t give this money to a church – $50K to a church and paid rest of it way he wanted to. Paid off an Infinity, rest in REgions bank account. Can see what else he did with the money. Personal household. Didn’t give it to a church.
Garner paid percentage of his biz to the chairman of hospital. Kickback. Chandler paid money to Shoemaker and told Garner about it. Fasle statements to USDA.
Now we’re asking you for a verdict ot guilty on all counts. 2:17
MICHAEL HEILMAN (FOR SHOEMAKER) – Want to begin differently. Not to talk about Chandler. About competent professional experienced businessmen who came to you yesterday – Jim Pope and Pat Cannon. Part of govt problem is they didn’t start ivnestigation from beginning. They started later. These gentlement told you.
At beginning was an issue of Corkern, who testified that he wanted to buy that hospital, for himself profit. Couldn’t get financing. He had to go another route. David Vance wa shis trusted representative. He brought Jim Pope with him. Pope put deals together for many years. Pope met with them all andthen went to Connecticut and talked to UPS, a big lender. What used to buy hospital.
Cannon said biggest thing had to happen, is must be a 501(c)3. Must have it. Pope comes back to Batesville and says got to be nonprofit. Shoemaker says he has one but isn’t being used. Corkern, says I’ll pay $250K for that. Pope says sounds like a reasonable deal. In a $27M deal, Pope says $250K is cheap.
He said, no questions but that this is normal business practice and from time to time, the most valuable asset is 501(c)3 because without it, can’t even start. Cannon was told that. He is primary lender, says OK, let’s go forward. Both of these men tell us that $250K at closure out of working capital, not a line item. Not out of closing. It’s not on sources and uses sheet. Doesn’t hae to be. Coming from working capital.
What they miss (govt) in every single charge is that hospital owed the money. It was an obligation of the hospital… to pay Shoemaker $250K.
Focus on a couple of things about loan. Part of Exhibit 69 – see sources and uses of funds sheet. This is one USDA asked, what blew up as ot working capital. What happened – $27M loan from UPS, it’s spent with line of credit from Stillwater $1.2M. $25M goes to seller… the county, bunch of fees and expenses. Pretty much wipes it out.
A lot of credit issues, but line of credit is weakened at closing. It’s suppose to be $1.2M but actually only is $1.8 million. Deduction in there. $738,000 left. A problem of about $468K. Immediately hist the books and becomes a problem.
Next step is this: Everything moves forward. But first thing that happens… Exhibit 70 – letter by UPS. Oliver relied on UPS. Reported to her in letter, that hospital still has financial problems without Stillwater money. What happened is this $1.7M in line of credit has been cut by another $1M. Also, lawyers who closed the deal took too much money. Things are tight. What choice does manager have? Must ahve an operating line of credit.
Line of credit takes your accounts receivable. When hospital bills money, it gets paid then it goes to line of credit lender. If lender won’t let it loose, hospital can’t use it. Won’t work. Stillwater was holding their money. GE did. In answer to problems they had, the GE loan worked exactly like it was suppose to work. REcall when it came, everything started working.
Issues relating to representations made by Ray Shoemaker: They say letter by him is a misrepresentation. Email to Betty Oliver. This is the letter she got, it was a draft, not a final letter. Shoemaker tells her he’s surprised that line of credit hadn’t been approved. First thing he says, Adams & Reese charged too much, $650K fees. Says hospital needs funds to operate, merely replacing Stillwater money with GE. We;ve lost $1M and must act now or future of hospital in jeopardy. That’s all true.
What did Ms. Oliver say? She said it was in big trouble if didn’t get any money. The whole $47M would ahve gone into default without a line of credit. That’s why hospital asked for it, to make it operate properly.
Next – this document – Shoemaker certifies money will go to hospital expenditures. It doesn’t say they aren’t going to pay an affiliate of the borrower. They didn’t want Dr. Corkern to use this money for his other clinics, only pay hospital expenses.
Loan agreement, Exhibit 83 – important. Look at section.. proceeds can be used to refinance debt, other corporate purposes. That’s what they used the money for.
No question, the hospital had an obligation to Ray Shoemaker. No question they could pay it. Ray didn’t get paid at closing. He waited. He acted as a reasonable, professional CEO should act. Wait until we get the funds. Got it, hospital paid the debt it was due. As we go foward, recall testimony of USA and others, after line of credit, this hospital thrived. Did fantastic, Exceeded expections. Did very well.
Payment to $250K to Ray. Before he got there, hospital was in trouble. He left and pursued his own interests in Dec. 2006. Wasn’t until August they started running out of working capital. Shoemaker wasn’t even there.
One final issue: Don’t forget when it came to payment o Ray Shoemeker to Kaizen, that was Ray. Not a single penny of money from GE was received by Ray.
2:36 – judg – LET’S TAKE A BRIEF RECESS.
15 MINUTES.
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