Victor Botnick, a former senior executive of four-hospital Cathedral Healthcare System, based in Newark, N.J., has been charged with defrauding the system of more than $200,000 over three years after an investigation reportedly triggered by his accusations against Cathedral officials.
The probe began in April 1997 when FBI agents raided Cathedral's corporate offices, prompted by Botnick's accusations of illegal payments to doctors, sources said. Soon after, Botnick left his position as the system's senior vice president of managed care, which he held from May 1996 to May 1997 at an annual salary of $175,000.
Prosecutors have said the investigation led straight to Botnick, a one-time aide to former New York Mayor Ed Koch. According to Paul Nittoly, a lawyer who represents Cathedral, "We found evidence that Botnick had misused his office to steal hundreds of thousands (of dollars) from Cathedral and then turned around and made allegations against Cathedral and its officers."
Not-for-profit Cathedral is affiliated with the Catholic Archdiocese of Newark.
Botnick, 46, was arrested on March 22 and released on $100,000 bail. He will be arraigned April 2. His lawyer could not be reached for comment but previously has been quoted as saying prosecutors have a grudge against his client and promising a vigorous defense.
While employed at Cathedral, Botnick allegedly authorized payments for phantom services and then routed the money to out-of-state bank accounts, according to the U.S. attorney in Newark. Among the charges in the 17-count indictment, Botnick allegedly requisitioned a check for $50,000 in connection with the system's purchase of a physician practice. Prosecutors say the check was not necessary to complete the acquisition and that Botnick deposited it into a personal account using a forged signature.
Botnick allegedly pocketed at least $150,000 more by having Cathedral pay for services never rendered. He also is accused of knowingly interfering with a criminal investigation and filing false tax returns.