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An investigation of financial problems at University Medical Center evolves into a criminal probe.
Police and the district attorney joined the Clark County commission in a growing probe of financial problems at the only county run hospital. Boxes of documents were removed from UMC offices. And the commission learned UMC's debt is about $34 million, almost twice what was predicted.
The county also removed Chief Executive Officer Lacy Thomas and named Kathy Silver as acting chief executive officer for University Medical Center of Southern Nevada.
The police investigation began in November of 2006 when District Attorney David Roger looked at University Medical Center's financial audit and concluded something was really fishy.
Eventually, a handful of county officials were informed about it, but it still remained a secret even after subpoenas were served late last week.
The county hospital was abuzz Tuesday morning when Metro detectives arrived with a search warrant for the executive offices. The I-Team got a tip from the hospital and was there with a camera rolling when police hauled out the first big load of seized documents.
The affidavit from Metro lays out the case and law enforcement suspicions. The district attorney and Metro believe that UMC's financial problems might not be entirely accidental. Hundreds of thousands of dollars worth of contracts were allegedly awarded by UMC Chief Executive Officer Lacy Thomas to at least seven companies, which did little or nothing for the money.
According to the search warrant document, Thomas has personal ties to all of the companies. Some were owned by former fraternity brothers, others by friends. For example, Superior onsulting, also known as ACS, is a Chicago area firm that was paid more than $1 million to help UMC collect its debts even though it collected less than the hospital had the year before it was hired.
Superior allegedly paid for Thomas to spend a week in the Virgin Islands. He awarded the contract upon his return. Former UMC managers told Metro that Thomas personally awarded these contracts, bypassing normal procedures, and sometimes not even telling his own staff.
A firm known as Frasier Systems Group is headed by a former fraternity brother of Thomas who has his office in the Chicago home where he lives with his mother. He doesn't even have a license to do business anywhere in Nevada and never submitted a final work product, although he was paid in excess of $600,000, according to a police source.
Perhaps most telling are statements from eyewitnesses who say Lacy Thomas personally ordered the hospital staff to make sure the Chicago companies were always paid first. UMC was bleeding money and was millions of dollars behind in its payments to top vendors, even its drug supplier. But according to affidavits, Thomas repeatedly moved his Chicago friends to the front of the payment line.
The I-Team has also obtained witness statements alleging that Lacy Thomas instructed his staffers to hide or obscure financial reports to the county so that it would be tougher for anyone over there to figure out what was going on.
Again, there are no charges, no arrests. It's still an investigation at this point, but from what the I-Team has been told, investigators expect to take this case all the way.