A hospital struggling through bankruptcy for more than a year learned last week of one possible catalyst for its financial demise.
The director of collections at Logan (W.Va.) General Hospital and a real estate company he co-owned with the hospital's former president are accused of stealing and laundering $347,000 of hospital funds, according to a federal grand jury indictment made last week in Parkersburg, W.Va.
The grand jury for the U.S. District Court in Parkersburg indicted Donald Gene Cabell, 55, and the company, American Development Corp., which he co-owned with the hospital's former top administrator, C. David Morrison, on 10 counts of embezzlement and money laundering. If convicted, Cabell faces a maximum sentence of 105 years and a maximum $4 million fine. The real estate company could face a $5 million penalty.
Morrison was not named in the indictment.
When reached by telephone, Cabell said he is innocent of the charges but that his lawyer had instructed him not to comment further. Morrison's lawyer did not return telephone calls.
In the wake of the indictment, the hospital is preparing a civil lawsuit against Cabell, a hospital employee for 24 years, and Morrison, who resigned last December, said George Partain, general counsel for 132-bed not-for-profit Logan General. Cabell is on leave from his job at the hospital.
The indictment alleges Cabell and a co-conspirator took money from the hospital's corporate enterprises to pay debts incurred by Cabell and American Development.
In one instance, according to the indictment, Cabell and the individual had the hospital write a check to pay off some of the real estate company's debt. In return the two promised to give an existing motel to the hospital. After paying off the debt and writing off loans with hospital money as part of the motel sale, the defendants instead sold the motel to someone else, the indictment alleges.
The hospital has a Dec. 22 deadline for filing a restructuring plan in bankruptcy court. It's negotiating with Genesis Healthcare, based in nearby Huntington, W.Va., to become part of its three-hospital system (June 7, p. 18).