SF Hospital Scam Lawsuit Targets Chavez Housemate [Albuquerque Journal, N.M.]

Dec. 30--The housemate of 1st Congressional District candidate Marty Chavez is named in a federal lawsuit alleging she and others participated in a "pervasive scheme" to bilk more than $3 million from Christus St. Vincent Regional Medical Center in Santa Fe.

Meanwhile, there were conflicting accounts Thursday as to how long the office of state Attorney General Gary King has been investigating the allegations of embezzlement and fraud.

King's office said several months, but hospital officials said they presented information to the AG in 2008.

Chavez, a Democrat and former three-term Albuquerque mayor, said through a campaign spokesman Thursday that the fraud allegations predate his relationship with Loretta Mares.

"Their relationship didn't start until the spring of 2009," said Alan Packman, who said the two have been living together in Albuquerque since July. "Marty knows absolutely nothing about this."

He said Chavez first learned about the allegations in a Journal story this week.

Chavez and Mares were to host an "End of Quarter Holiday Fun (d) raiser" at their North Valley home tonight, but the party's venue has since been moved.

"Obviously, this is a rough week for Loretta, so the location has changed," Packman said Thursday.

Chavez, who is seeking the Democratic nomination for the Albuquerque-based 1st District seat, left the Mayor's Office in 2009 after losing a re-election bid to Republican Richard Berry.

The hospital contends it lost millions through phony billings from 2002 to 2007. The loss came to light in a lawsuit filed last week by the hospital's insurance company, which is seeking to recoup the money.

Mares, also known as Bernadette Gallegos, is named as a defendant, along with two of her brothers, five of their companies, and Richard A. Crabtree, the former senior vice president and chief operations officer for the hospital.

The complaint filed in U.S. District Court alleges the defendants and their companies billed and collected at least $3.2 million from the hospital for sham transactions.

It also alleges:

The billings related to information technology hardware or software or for services that either weren't provided or that were billed in amounts grossly in excess of their limited value.

The scheme to defraud the hospital began soon after Crabtree was hired by the hospital in 2002.

Crabtree at the time had "an existing relationship with defendant Mares predating his employment by St. Vincent Hospital" and that "personal relationship" continued during his employment at the hospital.

The alleged false billings date from October 2002 to December 2007.

Asked about the lawsuit earlier this week, Mares told the Journal ," It doesn't make any sense at all."

She didn't return a message seeking comment Thursday.

Crabtree, who is believed to have moved to Colorado, couldn't be reached for comment Thursday.

AG discrepancy

Attorney general spokeswoman Lynn Southard said Thursday that the matter was referred to the office "several months ago."

But through a hospital spokesman, Christus St. Vincent CEO Alex Valdez said he personally referred the matter to King's office in early 2008.

Asked to explain the discrepancy in dates, hospital spokesman Arturo Delgado said in an email, "It is not appropriate for us to go into any detail about the hospital's cooperation with the AG's office.

"We can say that since we contacted the AG's office in 2008, their personnel have clearly been very active, having made numerous requests for information including many thousands of pages of documents.

He added: "Through our counsel we have fully cooperated and have been pleased with the AG's diligence. We will not address this matter further as we do not want to in any way interfere with the AG's efforts."

Asked to explain the discrepancy, Southard said her office's policy is not to comment about ongoing investigations.

Packman had no immediate information on where Mares works or any details about her business.

The lawsuit contends she has or had an ownership interest two firms that did business with the hospital under Crabtree, Net Link LLC and World HCS LLC. She also allegedly has or had an ownership in other companies that did business with the hospital, which include Com-Link, Information Document Management and Sanitec.

Great American Insurance Company, based in Ohio, filed the lawsuit to recover the $3.1 million it paid the hospital under an insurance claim for losses incurred.

It was unclear when the reimbursement was made. Richard Hughes, a Santa Fe lawyer who filed the lawsuit, referred a reporter to the insurance company, which couldn't be reached Thursday.

Discovery of losses

The losses weren't discovered by the hospital until early 2008, according to an email Valdez sent hospital staff and board members this week.

According to the email:

A manila envelope was delivered to Valdez's office late one morning toward the end of January 2008. After he opened it and read the cover memo, he turned the envelope and its contents over to an assistant and asked her to keep it confidential.

He then asked hospital counsel Larry Maldegen to investigate the allegations under the direction and oversight of the hospital board of directors and its audit committee.

Crabtree was placed on leave several weeks into the investigation and was ultimately terminated for cause.

"I was, and still am, shocked and angry at the Breach of Trust," Valdez wrote. "I will never forget."

He added that some "have been cynical or skeptical that we would do anything or that we would just 'sweep this under the rug.'

"As a result of the filing of the Complaint, you now know that we did, in fact, fully pursue this matter and have sought not only recoupment, but justice."

The email said the matter had been turned over to the "authorities. At their request, I will not comment on who they are or if and when they may pursue an action."

Journal North Editor Mark Oswald contributed to this report.

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