Insurance Firm’s Lawsuit Alleges $3.2 Million Embezzlement At Hospital

Dec. 29--A spokesman for former three-term mayor of Albuquerque Martin Chavez confirmed Wednesday that Chavez's "significant other," Loretta Mares, is the same woman named as a defendant in a lawsuit claiming that several years ago, she and others embezzled $3.2 million from what is now Christus St. Vincent Regional Medical Center.

The suit filed by the hospital's insurance company Dec. 23 also names Richard A. Crabtree, St. Vincent's former chief operating officer, Mares' two brothers and five companies controlled by her and or her siblings.

The insurance company paid the claim by the hospital and is seeking to recover the money from the defendants.

"I have absolutely no knowledge of anything related to these allegations," Chavez wrote in an email statement Wednesday. "My relationship with Loretta began long after."

Chavez is currently running for the U.S. House of Representatives seat being vacated by Martin Heinrich.

Alex Valdez, Christus St. Vincent's chief executive officer, assured employees in an email Wednesday that the hospital "sought not only recoupment, but justice" after learning about the scheme in 2008.

Valdez said a packet of information about the alleged scheme was delivered to him anonymously in January 2008. Crabtree was fired two months later, following an internal investigation. He and Mares had a personal relationship that predated his hiring by St. Vincent in Sept. 2002, the complaint states.

The embezzlement didn't become public, however, until Dec. 26, when the Albuquerque Journal reported that the insurance company that reimbursed the hospital for the loss was suing Crabtree, Mares and several others for the $3.2 million, plus interest.

In his email to staff, Valdez wrote that some employees "have been cynical or skeptical that we would do anything or that we would just 'sweep this under the rug.' " He pointed to the filing of the lawsuit as proof that the hospital "did, in fact, fully pursue the matter."

But it was still unclear Wednesday how long Valdez knew about the allegations before he reported them to law enforcement.

Christus St. Vincent spokesman Arturo Delgado said Valdez personally reported the matter to the state Attorney General's Office in "early 2008."

But Attorney General Gary King's spokeswoman, Lynn Southard, wrote in an email Wednesday that the matter had been referred to King's office "several months ago."

According to the lawsuit filed in U.S. District Court by the Ohio-based Great American Insurance Co., Crabtree, Mares and others "engaged in a pervasive scheme" to misappropriate at least $3.2 million from the hospital via "sham transactions consisting of payments for claimed services that were either never provided or were billed in amounts grossly in excess of their limited value."

The lawsuit alleges Crabtree helped divert funds earmarked for information-system upgrades to companies owned by Mares and/or her brothers Steven R. Gallegos of San Antonio, Texas, and Michael Gallegos of Albuquerque.

The lawsuit states that Mares is also known as Bernadette Gallegos.

One or more of the three siblings are said to be officers in each of the five companies named in the suit. Crabtree, the complaint says, "excluded knowledgeable St. Vincent Hospital personnel from interacting with the other defendants in order to minimize the risk of discovery."

The suit claims Crabtree, Mares and the two Gallegos brothers even went so far as to orchestrate a meeting aimed at proving the legitimacy of one of the companies, which included flying in a part-time student from San Antonio "to pose, falsely, as an engineer" employed by Michael and Associates Programming and Engineering Corp.

"In doing the acts set forth above," the lawsuit states, "the individual defendants acted fraudulently, oppressively, maliciously and recklessly and in knowing and conscious disregard of and callous indifference to the rights of St. Vincent Hospital."

Santa Fe-based attorney Richard Hughes, who is representing Great American Insurance Co., said the company paid the hospital the $3.2 million that went missing under a standard "employee faithfulness" clause that insures clients against staff dishonesty.

Crabtree, who now lives in Castle Rock, Colo., did not return calls seeking comment Wednesday.

Attempts to reach Mares and Steven R. Gallegos were unsuccessful, although Chavez's campaign manager, Alan Packman, said he would pass a reporter's request for Mares' contact information on to Chavez.

Contact Phaedra Haywood at 986-3068 or [email protected].

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