The prosecution rested its case in early afternoon Tuesday during the seventh day of the federal kickback/bribery conspiracy trial of former Tri-Lakes Medical Center administrator Ray Shoemaker and Batesville businessman Lee Garner.

Charges against Shoemaker and Garner stem from $268,000 in bribes the prosecution alleges Garner paid former county administrator and hospital board chairman David Chandler to influence the hospital’s use of Garner’s medical staffing firms and that Chandler in turn paid Shoemaker part of the proceeds.

Shoemaker is also accused of illegally taking $250,000 from the hospital for the use of a nonprofit entity, Kaizen CMR Inc., that he founded, so Dr. Robert Corkern could buy Tri-Lakes Medical Center from the county in 2005, with a loan from UPS Capital that carried a 90-percent guarantee from USDA Rural Development.

Before the jury’s return from the noon recess to again take their seats in front of a wall of the third floor courtroom that bears a life-size, full-length painting of president U. S. District Judge Neal Biggers in his judicial robes, defense attorneys charged that the government lawyers had not shared confidential informant contact reports that had been mentioned by F.B.I agents during the agents’ morning testimony for the prosecution.

Garner attorney William Kirksey asked that the documents be produced. He was joined in the request by Shoemaker attorney Steve Farese.

U. S. attorney Charlie Spillers and his associates answered that the documents in question were among some 400,000 pages in evidence given to defense attorneys prior to trial. District Judge Neal Biggers ordered the trial to continue while a U. S. attorney reviewed documents to confirm that all the items had been shared with the defense.

Kirksey then resumed his cross examination of FBI agent Shannon Wright, questioning her about the accuracy of her testimony describing a February, 2011 interview of Garner.

“All we’ve got to rely on is what you say he said?” Kirksey asked. Wright had testified earlier that she had not recorded her February, 2011 initial interview with Garner. Kirksey’s questions followed by redirect examination by Spillers kept Wright on the stand until 3 p.m., when the government rested its case.

Following a mid-afternoon recess, prosecutors told Judge Biggers that their search had yielded documents not previously shared with defense attorneys.

“So, you’re telling me they were never furnished?” the judge asked. He ordered the documents to be turned over to defense attorneys. He said that he would reserve judgment until later on any action that the omission might require.

With jurors still out during the mid-afternoon recess, defense attorneys for both defendants made motions asking the judge order directed verdicts of not guilty for their clients.
Defense attorney Steve Farese charged that Wright had made a false statement about Shoemaker during her testimony. Attorney Robert Addison said that the government had failed to present convincing evidence against Garner.

“The evidence, even in the light most favorable to the government is so scant that the jury can only speculate on the defendant’s guilt,” Addison said.

U. S. attorney Spillers argued that Garner had told former Panola County Administrator David Chandler, who testified for the prosecution, to write “accounting services” on checks alleged to be kickback payments. “That shows what his intent was,” Spillers said.

Judge Biggers denied the motions for directed verdicts of not guilty.

“At this stage, the court is required to accept everything the government puts on as true,” the judge said.

When the jurors returned to the courtroom, Shelbyville, Tennessee banker James L. Pope was first to take the witness stand. Pope said that he was contacted by David Vance in 2005 for help in arranging financing for the purchase of Tri-Lakes by Dr. Robert Corkern.

Pope testified that gaining the use of an existing 501 (3)c non-profit corporation was the only way USDA-guaranteed financing could be arranged in the short schedule allowed for the transaction. Pope said that during a meeting in June, 2005, between Vance, Corkern, Shoemaker and himself, Corkern offered Shoemaker $250,000 for the non-profit.

Under cross examination, a government attorney showed several financial documents from the period, but none showed the $250,000 expenditure for the non-profit.

Payment to Shoemaker for the non-profit was the focus of quesioning for both witnesses who followed Pope. Connecticut financier Patrick Kenney testified that UPS Bank was aware that the non-profit was being purchased and had no objections. Former Tri-Lakes Chief Financial Officer John Gregory of Germantown said that the $250,000 payment to Kaizem was made at the direction of Vance and Shoemaker.

“What authority did Dr. Corkern have?” Addison asked Gregory.

“His company was the management company that managed the hospital,” Gregory replied.

“Did the board of directors have any role in approving payments?” the attorney asked.

“They did not,” Gregory answered.

(Editor’s note: Tri-Lakes Medical Center was purchased through the U. S. Bankruptcy Court in September, 2010 by a local physicians’ syndicate which still holds an ownership share of the hospital.)

About 5:15 p.m. Judge Biggers recessed the trial until 9 a.m. Wednesday and ordered Gregory, over his objections, to return to continue his testimony.

“But I’ve got a stress test,” Gregory told the judge.

“You’re under subpoena,” the judge responded.