Bankrupt 139-bed Grenada Hills Community Hospital, Los Angeles, disclosed possible "improprieties" by former management in the use of proceeds from a $16.1 million tax-exempt bond issue. According to a notice from the bonds' trustee, U.S. Bank, the hospital submitted invoices for new construction expenses in order to draw funds from the 1997 bond issue after it had already been reimbursed for those expenses by the Federal Emergency Management Agency's seismic-hazard mitigation program. The hospital, which declared bankruptcy in November 2002, said bond proceeds are believed to have been spent for general operations and working capital, in possible violation of federal tax code. The hospital said it is trying to reach a settlement with the Internal Revenue service to preserve the bonds' tax-exempt status. -- by Mary Chris Jaklevic
Hospital: Bond proceeds may have been misused
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