Corkern trial

Published 12:00 am Tuesday, February 28, 2012

Doc claims was clueless about hospital finances

By Billy Davis

Dr. Robert Corkern admitted to a federal jury last Friday that he once wrote a personal check for $25,000 to David Chandler in exchange for $400,000 in Panola County funds that were transferred to Tri-Lakes Medical Center.

But he had good reason to do it, he said.

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“Chandler said he would take the hospital down,” Corkern said of the then-county administrator in Panola County. “And I believed he could do it.”

Corkern was the sole witness through the morning and a portion of the afternoon in the fifth day of the federal criminal trial now under way in Oxford.

Batesville businessman Lee Garner and Ray Shoemaker, the former CEO at Tri-Lakes Medical Center, are on trial in Oxford for an alleged kickback scheme at the hospital.

Shoemaker also faces an embezzlement charge for a Humphreys County hospital he oversaw after leaving Tri-Lakes.

Federal and state investigators uncovered a litany of illegal schemes Chandler had undertaken as administrator, and he pleaded guilty to mail fraud and embezzlement as part of a plea agreement.

Chandler’s courtroom testimony kicked off a parade of trial witnesses for federal prosecutors. The trial is expected to last through this week when defense attorneys put on their witnesses.

Like Chandler, Corkern stepped into the third floor courtroom as a witness for federal prosecutors after the doctor pleaded guilty in January to a single count of bribery — the payment to Chandler.

Under a plea agreement with Corkern, federal prosecutors dropped charges of conspiracy and fraud that were alleged in a superseding indictment that was unsealed last October.

Corkern’s indictment alleged the doctor embezzled approximately $2.8 million from Tri-Lakes, beginning in November 2005, until the hospital went bankrupt two years later.

But Corkern testified last week that he was uninformed about financial matters at the hospital, leaving that to Shoemaker and to the late David Vance.

Corkern testified he was unaware at the time that Shoemaker had deposited $250,000 from a GE Capital line of credit that was intended for the hospital.

Corkern testified that Shoemaker had handed over his non-profit business, Kaizen, to secure funding to purchase Tri-Lakes just days before a deadline hit to close the deal.  

When Shoemaker later asked for $250,000 in return for the non-profit, Corkern said he turned him down after seeking legal advice.

Transfer of the $250,000 from GE Capital to Tri-Lakes, then to Shoemaker’s own business, is one of the federal charges Shoemaker is disputing in front of the federal jury.

Federal investigators have alleged Corkern also benefited personally from the line of credit.

Corkern told jurors a transfer of approximately $291,000 from Tri-Lakes to himself was reimbursement for earnest money for the hospital’s purchase.

Corkern further explained that Panola County had demanded $500,000 in earnest money to purchase the then-public owned hospital. To meet that demand, Corkern said he personally borrowed $300,000 from First Security Bank to put towards the earnest money.

The federal indictment alleges Vance, acting on behalf of Shoemaker, deposited the $250,000 in an account at First Delta Credit Union in Marks on April 7, 2006.  

Vance also wired Corkern’s money, the $291,000, to a business account at Trustmark National Bank on April 10, 2006. The funds paid off the loan at First Security Bank the next day, the indictment alleges.

The U.S. Attorney’s Office indicted Corkern for the wire transfer but the charge was dropped as part of a plea agreement with federal authorities.  

Asked about a “sources and uses” document allegedly prepared by Vance — investigators allege the document spelled out the two money transfers — Corkern said he glanced at a handwritten document prepared by Vance as the two were passing in a hallway.

The conversation “lasted approximately 10 seconds,” Corkern said from the stand.

“When you were interviewed by the government, you said you didn’t think you’d seen the agreement before,” defense attorney Michael Heilman told Corkern.

“I still say that,” Corkern replied.

“Well, the second time you’ll recall you said you may have unknowingly signed the document,” Heilman said.

“It would be unknowingly,” Corkern replied.  “I had not seen that before.”

Testifying about the bribe money to Chandler, Corkern testified that Chandler had approached him four times about the county money, mentioning the available funds casually at first. Chandler later mentioned a bribe and threatened the success of the hospital, the doctor testified.

Heilman pointed out that Tri-Lakes was no longer in public hands when Chandler made the threats, which meant Chandler was no longer chairman of the hospital board.

“You were the guy,” Heilman told Corkern.

“I had a lot of influence,” Corkern replied. “But the board was in control.”

When Heilman asked Corkern about other federal charges that had been dropped, the doctor again said he paid Chandler and did so to protect the hospital from retribution.

“But I didn’t do any of that stuff,” referring to the other charges he had been facing.