By Billy Davis and David Howell

A federal investigation involving former leadership at Tri-Lakes Medical Center has implicated a fourth and fifth person associated with the hospital’s past ownership.

Dr. Robert Corkern, who oversaw the hospital from 2005 to 2007, has been served with a five-count indictment by a federal grand jury in Oxford.

A newly updated federal indictment contained twelve pages describing the federal government’s case against Corkern: one count of conspiracy to defraud the U.S., one count of bribery involving federal programs, and three counts of loan and credit fraud.

Corkern pleaded not guilty to all counts and was released on a $40,000 bond in a hearing that lasted about four minutes.

He was represented at the hearing by Batesville attorney Parker Still and William Travis, a Southaven attorney.

Corkern is accused of diverting Tri-Lakes funds from a line of credit from GE Capital to Emergent Health, a company he owned.  

He is also accused of bribing David Chandler, the former county administrator, to transfer $400,000 from a county fund into a bank account for Physicians and Surgeons Hospital Group.

Chandler allegedly deposited a $25,000 check from Physicians and Surgeons for the bribe.  

The 29-page indictment obtained by The Panolian indicates that Corkern allegedly diverted $2.8 million from non-profit Physicians and Surgeons over two years to for-profit entities he controlled.

Physicians and Surgeons purchased Tri-Lakes for $27.3 million from the City of Batesville and Panola County in 2005. A local board of trustees was selected to oversee the hospital, though Corkern and Ray Shoemaker oversaw day-to-day operations.

Within the Batesville hospital, a second for-profit company known as Batesville Hospital Management, and also headed by Corkern, worked under contract with Physicians and Surgeons to manage Tri-Lakes.

When Tri-Lakes was in bankruptcy in 2007, a court-ordered audit of the hospital red-flagged those payments to Batesville Hospital Management and to three other Corkern-owned companies —Emergent Health, Health Care Engineers, and Batesville Specialty Hospital.
Heathcare Management Partners, which oversaw the bankruptcy, argued that the transfer of funds from Physicians and Surgeons to Corkern’s for-profit businesses amounted to “excess benefit transactions.” That is an IRS term used when a tax-exempt entity provides a monetary benefit to a disqualified recipient.  
A 2009 story in The Panolian indicated that Physician and Surgeon’s board of trustees had approved a contract with Batesville Hospital Management, and with other companies owned by Corkern, and the process was “vetted” by an attorney and an accountant.  

A new indictment  

Corkern was named in a Superseding Indictment that was unsealed this week at an arraignment hearing in federal court in Aberdeen.

The Superseding Indictment replaced an indictment from March that implicated Ray Shoemaker, the former Tri-Lakes CEO, and Batesville businessman Lee Garner.

An FBI investigation alleges Shoemaker, Garner and Chandler were involved in a kickback scheme that rewarded Chandler, and later Shoemaker, for using Garner’s nurse staffing service.

Garner and Shoemaker have pleaded not guilty and are awaiting trial while Chandler, who has not been indicted, is said to be cooperating with authorities.

Shoemaker, already facing federal charges for fraud and kickback, faces new charges in the Superseding Indictment. Authorities allege he conspired with Corkern and hospital consultant David Vance to request a $4 million line of credit, planning all along to divert the money for their own use.

The indictment alleges Shoemaker transferred $250,000 to his Kaizen consulting firm the same day Tri-Lakes received the line of credit.

Late consultant implicated

The indictment also implicates the late David Vance, who investigators say was paid approximately $600,000 as a consultant.

The indictment alleges he conspired with Corkern to seek the line of credit and later diverted the funds for Corkern’s use.

The indictment also alleges Vance prepared a secret document, “Sources and Uses Statement,” which stipulated Corkern would receive as much as $500,000 from the line of credit. Shoemaker would get $250,000.

Vance died last October in an automobile accident in Batesville and was not indicted by the federal grand jury.

Chandler has court date

Shoemaker and Garner were set to stand trial October 31 but that court date was recently pushed back to December 12 with the entry of an unnamed defendant — now known to be Corkern.

Chandler has not been charged with wrongdoing, though his name is sprinkled in both the old indictment against Shoemaker and Garner, and the new indictment that names Corkern.

Federal court documents show Chandler is set to appear at a federal court hearing in December to waive indictment and plead guilty to two counts.

It’s unclear what charges Chandler is set to plead guilty to. A call to the U.S. Attorney’s Office about the hearing was not returned.

The court date is December 14 — two days after Shoemaker and Garner’s federal trial is scheduled to start.