Tantalizing clues plus a plea on SRHS: Down to the last two pieces of the puzzle.

Back in mid December I ran a post on the Singing River disaster which addressed what was fueling the rumor mill regarding sweetheart deals certain insiders allegedly made with the Health System. In response to that post I interviewed a former insider. I’m not ready to disclose many specifics publicly but I will disclose I have shared this with two reporters in the main stream media because the story is there for the taking.

What I will do is leave a road map for the informed observer because the Allowance for Doubtful Accounts does not get off by $88M on its own. In doing so I’m going to disclose both some of what I know and lack in hopes the community here can help me nab an interview with someone that has the answers.

First we circle back to that snippet from yesterday’s post, A Cornerstone of the Singing River Financial Disaster: Management perpetrates an accounting fraud and Karen Nelsen’s story “Ex-Singing River Health System exec says he sounded alarm about pension plan and accounting issues”:

Shoemaker, who left the Singing River system in 2012, told county supervisors that he now holds a leadership position at another healthcare system in the area and has no axe to grind with Singing River. But he said that he also sounded the alarm about the system’s way of understating contract adjustments, stringing along debt that overstated its income, which lead in part to the $88 million shortfall in income the system announced in March.

Next stop, Analysis: Rumors of sweetheart insider contracts swirling around Singing River Hospital (Updated), specifically the part dealing with Jackson County Outsource Group, LLC and Patient Benefit Group, LLC. Then we should visit with this comment by Pravda, a mystery man that tantalized with this:

The more interesting (and ripe for corruption) connection is that SRHS bills to a separate entity. Is there a flow chart showing all SRHS orgs and entities and how they relate?

My spidey senses told me we were getting closer and then this from Pravda citing the public record:

There is no need to speculate. Setting the laundry issue aside, at least two entities controlled by Gentry Williams (son of SRHS Board attorney Roy Williams) were operating in SRHS facilities. Jackson County Outsource Group, LLC had a contract with SRHS. This likely would have required board approval. Additionally one of the below Gulfstates entities solicited patients for financing procedures at SRHS. One of the Gulfstates entities engaged in collection activities as well.
05/25/2011 – Gulfstates Credit and Finance, LLC formed by Gentry Williams
08/29/2011 – Mississippi Laundry Services – Gentry Williams for “assistance with laundry services and management”
06/12/2012 – ALL IN THE SAME FILING SUBMITTED TO SOS
1. Mississippi Laundry Holding, LLC – Gentry Williams for “management of laundry services”
2. Gulfstates Advance and Finance, LLC – Gentry Williams for “management of laundry financial services”
3. Gulfstates Assurance Company, LLC – Gentry Williams for “management of financial services”
09/10/2012 – Jackson County Outsource Group, LLC – Jon Reynolds, also controlled by Gentry Williams – for “financial management”
02/10/2012 – Patient Benefit Group, LLC – Gentry Williams
09/03/2014 – Patient Resource Solutions, LLC – Gentry Williams, also controlled by Jon Reynolds
While these issues are separate from those of the pension, they point to the pattern of behavior by the handpicked trustees.

This comment left a day earlier sent chills up my spine:

What is Charter Bank’s relationship to all of this? Charter lists Roy Williams as a founding member and on the Board of Directors. Also listed on the “Advisory Board” are Chris Anderson and John Lockard. Gentry Williams business partner Jon Reynolds is also at Charter.

Now we must think like a CPA. How do you get bad accounts off the receivable list without recognizing nonpaying accounts as bad debts? There is one person outside the system that may know the answer. Per Karen Nelson’s story as quoted above:

But he said that he also sounded the alarm about the system’s way of understating contract adjustments, stringing along debt that overstated its income, which lead in part to the $88 million shortfall in income the system announced in March.

No financial institution wanting to remain in business would finance unsecured debt to pay for health care expenses. There would have to be some sort of security or the bank examiners would not allow it. And then you remember what happened at Lehman Brothers:

Anatomy of an Accounting Scandal ~ Accounting School Guide

Infamous scandals

Lehman Brothers

Big players: CEO Richard S Fuld, Jr. & Lehman executives

Several civil suits were filed against them; there have not been any prosecutions. Fuld has been keeping a very low profile ever since.

What happened: Lehman Brothers hid over $50b in loans by classifying them as sales Auditor, Ernst & Young, manipulated the books by using accounting trick “Repo 105” Repo 105 was a report that was “materially misleading” it temporarily moved $50b of assets at the end of each quarter. This made them appear to be far less dependent on borrowed money than they actually were

What sank Lehman Brothers was when the scheme unraveled those loans they “sold” had claw back provisions. In laymen’s terms, the risk associated with the Lehman Brother loans was never fully conveyed to the counter party. That fact was never recognized in Lehman’s financials which is what made them materially misleading.

So what the SRHS retirees and the taxpaying public in Jackson County needs to know is the color behind “understating contract adjustments” and “stringing along debt that overstated its income” because this should unravel the mystery.

Stay tuned.

2 thoughts on “Tantalizing clues plus a plea on SRHS: Down to the last two pieces of the puzzle.”

  1. French75,
    The FBI has been called in and they have been asking questions and interviewing people. I for one am very concerned

    Having been one of the many interviewed I got the distinct feeling this one particular investigator didnt want to find the truth

    there may not had been any theft or embelllzement of pension monies, but there has in fact been much wrong doing in SEHSs accounting methods as a whole, contract sourcing methods that are highly questionable and not to mention all of the llc’s and their relationships with hospital trusted and county board of supervisors

    While many demand a new set of supervisors and yes we need ALL of the current ones voted OUT we need ALL NEW Srhs bs of trustees as well.

    Current Srhs administration has yet to produce the required conflicts of interest statements of their BOT and Sr. Leadership. By the way mr holland if you are reading this, they are required YEARLY. NOT just a one time deal. Understand ?

    When we see these we will have a much clearer picture of the web of mendacity

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