June 03, 2011

http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202495967727&Former_CHOP_GC_Charged_With_Fraud_Money_Laundering

Former Children's Hospital of Philadelphia General Counsel Roosevelt Hairston, Jr. was charged Thursday with one count each of mail fraud, money laundering and filing a false tax return.

According to the information filed by the U.S. Attorney's Office for the Eastern District of Pennsylvania, Hairston used his senior positions at CHOP to embezzle $1.7 million from the hospital between 1999 and 2011. The information alleges Hairston created eight "shell companies," including Educational Strategies and The Children's Research Alliance, for the purposes of stealing the money through false invoices he created for those companies.

When questioned about some of the invoices by CHOP personnel, Hairston stole the identity of a friend and created an e-mail address in his friend's name to send e-mails to CHOP verifying the invoices, according to the information.

In a press release issued Thursday, the U.S. Attorney's Office said Hairston used the $1.7 million to live a "lavish lifestyle, purchasing luxury items, like real estate, a luxury yacht with a captain to maintain the yacht, high-end automobiles and many other luxury items."

Eric W. Sitarchuk of Morgan Lewis & Bockius represented CHOP and declined to comment on the filing of the information. Hairston's attorney, Howard Bruce Klein, wasn’t immediately available for comment. Hairston was terminated from CHOP in February, with the hospital saying only that he was let go due to "financial irregularities." He had become the GC in April 2010, previously serving as senior vice president for community and government relations and deputy general counsel for the organization.

According to the information, between December 1999 and December 2003, Hairston was responsible for coordinating the defense of medical malpractice claims against CHOP. He allegedly created fraudulent invoices, claiming that expert medical witnesses had supplied services to CHOP when those witnesses either didn’t exist or didn’t provide those services, prosecutors outlined in the information.

Between June 2007 and Feb. 14, Hairston took advantage of his position as head of community and government relations by allegedly falsely claiming that various companies had provided consulting services, prepared economic impact studies or provided other services to CHOP, the information said.

"Defendant Roosevelt Hairston Jr. went to great lengths to conceal his fraud and launder the proceeds of the scheme by creating numerous shell companies, opening bank accounts in the shell companies' names, establishing phony offices for the shell companies and creating fraudulent e-mail addresses for some of the shell companies," prosecutors said in the information.

In order to prolong the scheme, according to the information, Hairston allegedly lied to his co-workers, including his personal assistant, stole the identity of a long-time friend and created false documents.

In relation to the coordination of the medical malpractice defense between 1999 and 2003, Hairston allegedly created 33 fraudulent invoices related to expert witnesses, collecting $225,000 from CHOP. The embezzlement scheme, according to the information, was suspended when Hairston was no longer able to approve invoices for expert witnesses on his own and needed approval from another CHOP official.

The alleged fraud was restarted in June 2007 when Hairston began submitting false invoices for work related to the community and government affairs function of CHOP. According to the information, Hairston submitted nearly 100 "bogus invoices" from June 2007 through Feb. 14, 2011, for services totaling more than $1.5 million.