Stephen Sachs tapped for hospital probe in Prince George’s

December 15, 2011

Dimensions Healthcare System hired a former Maryland attorney general and federal prosecutor Thursday to examine allegations that at least one top company executive may have traded promises of lucrative contracts for former Prince George’s county executive Jack B. Johnson in exchange for his job.

Stephen H. Sachs will also investigate others in the hospital system who may have dealt with Johnson. That probe will include looking into those involved with the hiring of a physician who hospital officials said was unqualified for her job but who Johnson insisted should be hired. She has since left the hospital.

Johnson (D), who last week was sentenced to seven years in federal prison in a bribery scheme, had been overheard by federal agents in dozens of intercepted calls and videotaped meetings working out deals for himself that would begin after his term ended last December. He was arrested Nov. 12, 2010, before his term ended.

According to prosecutors, Johnson had several discussions with developers, a financial services company and someone identified in court documents only as a “hospital official” in which he was overheard negotiating consulting contracts with Dimensions worth up to $30,000 a month.

The financial services corporation was recently identified by county officials as Xavier Capital Management, where Johnson had sent $44 million in county funds for investment. Last week, Prince George’s County Executive Rushern L. Baker III (D) severed the contract with Xavier.

Dimensions’ board met in a closed session Thursday to authorize the contract with Sachs, 77, who is of counsel at the Washington firm WilmerHale. The terms of the contract were not disclosed, but the company said former Maryland assistant U.S. attorney Michael Leotta would work with Sachs. Leotta prosecuted former state senator Thomas Bromwell (D-Baltimore County) on corruption charges.

“We promised a thoughtful, careful, dignified, and professional inquiry. Steve Sachs is the right person to do this,” said a statement from Dimensions board Chairman C. Philip Nichols Jr., a Prince George’s Circuit Court judge.

The sentencings last week of Johnson, 62, and his wife, Leslie Johnson, 60, a former County Council member (D-Mitchellville), who received a one-year term for destroying evidence in same scheme, brought an end to the high-profile criminal prosecutions of the political couple.

But the full impact of the federal investigation is unfolding, and prosecutors have said it is far from over. The allegations about hospital officials are particularly worrisome for Prince George’s officials, where Baker has worked on a plan with the state to build a $600 million hospital for the county.

The University of Maryland Medical System is expected to eventually operate the new hospital, but Dimensions officials have played a role in the negotiations.

As county executive, prosecutors have said, Jack Johnson engaged in a broad corruption scheme that dated to his first days in office, in 2002.

During wiretapped conversations, Johnson bragged about deals that included $60,000 a month for consulting work for five people, as well as a contract with a developer for $15,000. And “then there’s the deal I worked with somebody at the hospital,” Johnson said.

A 75-page sentencing memorandum from U.S. Attorney Rod J. Rosenstein and his team of prosecutors described several conversations between Johnson and an unnamed “hospital official” in spring and summer 2010. Johnson, the prosecutors said, “was arranging it so the hospital official would run the county’s hospital system and provide [Johnson] with a consulting job, once he left office.”

That consulting job was to pay Johnson up to $15,000 a month; Johnson also later worked out an agreement to do legal work for the hospital at the same pay rate, prosecutors said. Around the same time, Steve Smith, an attorney for the hospital, saw his workload cut back, according to several people with knowledge of the circumstances.

In spring 2010, there was a change of leadership at Dimensions.

Ken Glover, who had been chairman of a panel assigned to find a buyer to take over the beleaguered county hospital system, took over as president of Dimensions. He replaced G.T. Dunlop Ecker, whose retirement, several people with knowledge of the circumstances said, was engineered by Michael Herman. Herman, a former Johnson aide who was a member of the Dimensions board, has not responded to repeated requests for comment.

Glover has acknowledged in interviews with The Washington Post that he is the hospital official in the August 2010 conversations with Johnson that were described in the prosecution memorandum.

He said any potential deals “never matured” and would have required approval by Dimensions’ board. Glover, who is on paid leave pending the outcome of Sachs’s examination, said he did not recall any prior conversations.

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