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Macmillan Childrens Publishing Group

The Soprano State

New Jersey's Culture of Corruption

Bob Ingle and Sandy McClure

St. Martin's Press

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Chapter 1

In New Jersey's super-corrupt atmosphere, nothing is sacred or beyond conversion to a patronage pit. Seemingly everything Jersey politicians do is designed to help themselves or their friends. Little is done because it is the right thing to do. Sometimes it can be the right thing, but in that case, it's a coincidence.

The University of Medicine and Dentistry of New Jersey (UMDNJ) is a microcosm for corruption in the rest of the Garden State. Appropriately for an institution of higher learning, UMDNJ made a science out of corruption. It created a system that assigned numbers—1, 2, or 3—to job applicants based on their political connections. If a person with a 1 rating—highly connected to a political patron—showed up at the school's human resources department, personnel staff would search the campus to secure No. 1 a job, qualifications notwithstanding.

UMDNJ employs fifteen thousand at its five campuses across the state, has five thousand students, and spends $1.5 billion a year. It has been a patronage pit for decades, but not until a Newark Star-Ledger team led by reporter Josh Margolin tore away the layers of corruption was there a full disclosure of just how bad things were.1

Among those whose recommendations ranked a 1 were U.S. Sen. Robert Menendez and State Sen. and former Newark mayor Sharpe James. State Sen. Wayne Bryant must have had a huge 1 circled in red because he was chairman of the senate budget committee and could steer millions of dollars the school's way. He personally went on UMDNJ's payroll in March 2003 as a part-time consultant for $38,200. Shortly thereafter, Bryant lobbied to get UMDNJ's School of Osteopathic Medicine in his Camden County more money. On one occasion he inserted a $2.7 million budget line item for the school, sources told Margolin and colleague Ted Sherman.

In 2005, U.S. Attorney Chris Christie gave UMDNJ a choice: be prosecuted for federal Medicare fraud or accept Herbert J. Stern, a former federal prosecutor and federal judge, as monitor. Thus was ushered in another of those "firsts" in which Jersey can take no pride—the first medical school in the nation to go under federal supervision. That put the state's medical university right up there with mobbed-up labor unions. Stern's subsequent report cited "potentially illegal activities" including skewed profit reports and a Newark city councilman using his influence for political gain. (The school's main campus is in Newark, the state's largest city.)

R. Michael Gallagher, who later resigned as dean of the School of Osteopathic Medicine, was accused of doctoring financial statements to qualify himself for a bonus. Newark Councilman Donald Bradley was said to have used UMDNJ's Black History Month celebration as entertainment for political backers with costs escalating from a planned $5,000 to $22,000. Gannett State Bureau reporter Gregory J. Volpe explained:2

The report also says Gallagher charged the university thousands for expensive restaurants, upscale hotels and his drink of choice—18- to 21-year-old Glenlivet, which costs about $20 per glass.

He used petty cash, reimbursement requests and direct billing to the university to avoid the scrutiny of expense reports, the report says. He spent more than $180,000 in fancy restaurants and country clubs. He also used his UMDNJ car and driver for personal use.

Meanwhile, Bradley, a UMDNJ trustee and Newark council president, is under fire for negotiating a sublease of a UMDNJ space to a political donor vying for a contract with the city.

In 2003, according to the report, Bradley got a $1 per year sublease of office space for Dr. Chandrakant Patel—whose doctor's license [at one point] was suspended for operating an illegal laboratory—and his son, Dr. Saurabh C. Patel. The family and practice have donated $6,415 to Bradley, including $700 that was refunded because it exceeded contribution amounts.

Stern's report claimed the Patels owed UMDNJ about $75,000 in property taxes—and $3 in back rent because for three years they didn't even pay the $1 a year.

The Medicaid fraud probe at UMDNJ spawned at least a hundred investigations. One of them, the Bryant probe, revealed what U.S. Attorney Christie called one of the most brazen examples of public corruption he had ever prosecuted. In March 2007, he indicted Byrant and Gallagher.3

The twenty-count indictment charged the two with an illegal scheme in which Gallagher created the bogus $38,200-a-year job for Bryant in exchange for Bryant using his role as a state senator to get money for the university. "You have to wonder why this guy was in charge of giving out taxpayer money," Christie said of Bryant. "And you have to wonder why no one was watching the store." Christie also charged Gallagher with cooking the university books, showing a profit instead of a loss, to collect $50,000 in bonus money. If the books did not show a profit, he would not have qualified for the bonuses. Ironically, the bonuses were for the good performance of the university's Headache Center, where Gallagher diverted money, at a time when both Gallagher and Bryant were creating headaches for taxpayers.

As if Gallagher wasn't earning enough money with a base pay of $340,000, Bryant, who talked Gallagher up among high-ranking New Jersey officials, is accused of helping him appear to shine in the job, resulting in nearly $99,000 in incentive bonuses in 2003 and 2004.

The U.S. attorney in the indictment classified Bryant's UMDNJ job as a bribe. The indictment said Gallagher created the job, described as improving university communications, when the university already had someone on staff with those identical duties. Gallagher held interviews for the post, but Christie said they were staged. When the interviews were held, Gallagher had already circulated administrative forms indicating Bryant had been selected, the indictment said. Bryant and Gallagher were awaiting trial at the time of this writing.

On the student front, revelations flowed from the federal monitor who said the associate dean for academic and student affairs at UMDNJ's Camden campus, Paul Mehne, pressured directors at the school to give passing grades to some medical students who failed standardized tests, the Courier-Post reported. These students were about to start specialty rotations and some are now practicing doctors. Mehne, who denied violating the university's grading policy, was placed on administrative leave. If that wasn't enough to worry New Jersey's patients, the Star-Ledger reported that Deborah Johnson resigned as an associate dean for clinical enterprise after the monitor said she signed medical charts and billing documents for patients she had not examined. Johnson, who told the monitor she believed she was permitted to sign for another doctor within the same practice, was still on the faculty.4

After Stern started digging, university president Petillo agreed to cooperate and, New Jersey style, was given a $600,000 severance package. In the wake of the probe, some individuals at the university were fired and others quit. One who was removed was Warren Wallace, a $166,234-a-year senior dean at UMDNJ's School of Osteopathic Medicine.5 Typical of so many in Jersey politics, $166,234 wasn't enough; in addition to his duties as dean, he was a Gloucester County official and chairman of the bistate Delaware River and Bay Authority, a regional Jersey-Pennsylvania agency that wields a lot of influence in South Jersey.

A monitor's report indicated Wallace engaged in activities that benefited friends, family, and, naturally, Wallace himself. It told how Wallace's daughter applied to get into the school where her father was a dean and was granted an interview even though she didn't have Medical College Aptitude Test scores, letters of recommendation, or the two required essays. Reportedly, she got the highest possible ranking.6

In 2006 Gov. Jon Corzine said Wallace should leave public life and noted he himself would do his part toward that end by not reappointing Wallace to the Bay Authority.7 Ironically, Gov. Jim McGreevey had appointed Wallace in the first place to help clean up the agency, which was rocked by a financial scandal not unlike the one that Wallace got caught up in at UMDNJ.8

Wallace was an ally of Bryant. After being tipped off that documents were being shredded, the FBI raided Wallace's office to halt shredding thought to be related to the Bryant case.9

The original UMDNJ Medicare billing fraud was estimated at $4.9 million, but investigators found evidence of another one totaling about $70 million. Looking at the whole picture, monitor Stern identified more than $243 million in waste, fraud, and abuse. The school was forced to put its planned $110 million cancer center on hold, and more than 150 employees were set to get pink slips.10

Then the scandal hit the heart unit big-time.

According to the federal monitor, the university, in violation of federal law, had offered high-paying faculty jobs to eighteen cardiologists in exchange for the doctors' referring patients to a failing cardiac surgery program that the state was threatening to shut down because of poor performance, the Star-Ledger reported.11

Senate President Dick Codey complained, "When a physician refers you to a certain hospital, the assumption is that that hospital is the best hospital for you in that condition. You never think ‘Is that physician doing it for his own financial health?'"

The monitor accused cardiologists with referring patients for nearly $36 million in illegal Medicare and Medicaid payments in exchange for the no-show university jobs that cost $5.7 million and paid each doctor more than $150,000 a year for doing nothing. In addition, the university tried to hide the scam from the monitor, failing to disclose a settlement to an employee who blew the whistle on the kickbacks.

The monitor charged that UMDNJ interim president Bruce Vladeck was part of the cover-up. Corzine in 2006 continued to back Vladeck—but told the Star-Ledger that if there were ongoing criminal activities, they should certainly cease and desist. Now there is a novel idea for New Jersey.12

Petillo and his temporary replacement, Vladeck, were then replaced by William Owen, former chancellor of the Health Science Center at the University of Tennessee, who would be the first African American to head UMDNJ. In breaking the news of Owen's selection, the Star-Ledger said Owen had undergone his own scandals in Tennessee, where he had to repay the university $4,500 for unauthorized decorating of his school-owned home.13 Those who selected Owen for the new post, paying $570,000 a year, plus $25,000 for travel and entertainment, said it was a miscommunication. At first blush, it sounded like Owen would fit in just fine in New Jersey.

With the goodies at UMDNJ getting plenty of publicity, South Jersey political boss George E. Norcross III said he wanted UMDNJ to put a new medical school in Camden. "Given the opportunities for patronage provided by UMDNJ in Newark, it's easy to understand why Norcross is salivating at the prospect of a new medical school," an Asbury Park Press editorial said. "The discussion should be a short one, beginning and ending with ‘No.'"14 As of this writing, Norcross's proposal has been shelved but not dismissed totally.

It was clear the poorly run UMDNJ was costing taxpayers an arm and a leg. The behavior of its dental students could also cost taxpayers some teeth. About twenty dental students were implicated in a cheating scheme in which they were given credit for course work not done. Some weren't allowed to graduate with their classmates in May '06; others did community service work, and some had to repeat the requirements. It is not known how long the scam involving false credits for learning how to do root canals, crowns, and extractions had been going on at the dental school.15

Not only did UMDNJ students want to skip practicing pulling teeth, they also wanted to skip studying for exams. The Star-Ledger reported that dental students set up an elaborate cheating scheme instructing students to memorize a specific question on a dental exam so the information could be e-mailed under a false name and then put on a CD and posted on a Web site for those who had yet to take the test: "Investigators also found detailed instructions calling for each member of the class to contribute questions for upcoming exams," the Star-Ledger reported. "The directions were very specific, according to the dean, including the creation of the e-mail accounts." Everyone was supposed to take part. Dean Cecile Feldman said peer pressure played a role.16

As if scandal wasn't enough, the bizarre came into play at the school. UMDNJ med student Ahmed Rashed must have been impressed with nude dancer Linda Kay from a club called Hott 22, because he gave her a hand.17 Literally. It was named Freddy and allegedly was stolen from a cadaver at the medical school in 2002. Both Rashed and Kay were indicted, he for stealing the hand, she for accepting stolen property.

Rashed, a 2005 grad, moved to California and then to Texas before accepting a plea deal that kept him out of prison but could have banned him from practicing medicine in New Jersey, though only for five years.18

Superior Court Judge Frederick DeVesa fined Rashed $5,000 but didn't slap him with probation that would have kept him from his medical career. Kay was allowed to enter a pretrial probationary program.19

The hand was discovered when police went to Kay's home to answer a report about a man trying to commit suicide with a hammer. Freddy had roommates, six human skulls, but authorities determined the skulls were obtained legally from an outfit called Skulls Unlimited. According to the Home News Tribune, officers found the hand "preserved in a foot-tall mason jar of formaldehyde on a basement table." The rest of the cadaver was cremated after being used in UMDNJ classes.20 Once again: We aren't making any of this up.

And what was the reaction to the various UMDNJ scandals from the school and the state's political establishment?

UMDNJ wanted to run a $2.5 million advertising campaign to polish the school's image even as more waste and corruption was uncovered almost daily. Stu Rabner, Governor Corzine's chief counsel, later his attorney general and chief justice of the state supreme court, and previously an assistant to U. S. Attorney Christie, pointed out what should have been crystal clear: It was inappropriate to run an ad campaign while the school was eliminating jobs and had a $25.5 million deficit at its hospital.21

In another only-in-New Jersey development, questions started about whether the more than $9 million billed to the state for the monitor's investigation was excessive. The bill exceeded the original amount of Medicare fraud that started the flood of investigations. "Maybe we need someone to monitor the monitor or at least his expenditures," State Sen. Loretta Weinberg, a Democrat, told the New York Times.22

U.S. Attorney Christie defended the monitor's expenses as "the greatest return on government dollars anyone's ever seen in the state of New Jersey . . . Taxpayer money was pouring out of that place like an open fire hydrant. We put a stop to that and put in the type of structure they're going to need for long-term reform."23

But the corrupt New Jersey system slammed those looking for reform.

Michael Nappe, a billing manager at UMDNJ, said the university moved his office to a lunchroom, demoted him, and wouldn't give him raises after he blew the whistle on a scheme to cover up more than $25 million in padded bills, the Star-Ledger reported. In a lawsuit filed in state court, Nappe said he objected to an accounting system aimed at hiding the high cost of telecommunications contracts not competitively bid, as the law requires. Fake invoices billed university departments for services they never received to hide the inflated bills, including $301,660 to remove two computer viruses from a computer and seventy-seven cents a minute for long-distance calling.24

Nappe wasn't alone. Carol Caprarola, a former government affairs coordinator at UMDNJ, said she was laid off after she complained the university was making illegal campaign contributions to Essex County lawmakers, Newark council members, and senate Democrats. Rohit Arora, former chief of the Division of Cardiology, said he was forced from the university after he objected to the scheme to trade cardiology referrals for no-show teaching jobs. UMDNJ paid Arora $2.2 million to settle his lawsuit, the Star-Ledger reported.25

Kathryn Gibbons, a former senior financial official, sued after she said she was fired in retaliation. Gibbons and former university vice president Adam Henick were the first to tell federal investigators about the overbilling and fraud, the Star-Ledger reported. As the whistle-blower lawsuits piled up, Moody's Investors Service downgraded the university's bond rating.

Even with its financial woes, UMDNJ made headlines again in June 2007 when it was revealed that the state university spent more than $450,000 on legal fees related to the firing of its former dean, the indicted Gallagher. UMDNJ trustee chairman Robert Del Tufo, a former state attorney general under Gov. Florio, defended the bill because it included the cost of an investigator.26


Copyright © 2008 by Bob Ingle and Sandy McClure. All rights reserved.