Reports of misuse of funds emerge in attempt to save a Brooklyn hospital

Brooklyn Pol Calls for Criminal Investigation

January 13, 2015 Brooklyn Daily Eagle

Kenneth Thompson. Eagle file Youtube screenshot

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It is being reported that while trying to push a Brooklyn hospital through a bankruptcy filing, lawyers and accountants took advantage of the fact, charging upward of $16 million in fees in expenses.

During the bankruptcy proceeding, a federal monitor red-flagged more than $700,000 in bills as questionable, as first reported in the New York Daily News. The monitor singled out bills he felt couldn’t be explained, charges for over-priced meals and — most alarmingly — dozens of billable hours charged for the time spent tallying up the bills.

Records also show that two accountants charged the struggling hospital nearly $30,000 just to travel from their Edison, N.J., office to visit Interfaith or to attend court hearings in Downtown Brooklyn.

“Generally, it is not unusual for a bankruptcy trustee to file objections to professionals’ fees,” said Michelle Fleishman, associate general counsel for the Interfaith accounting firm Cohn Reznick. “In this case, the trustee’s objections were resolved after Cohn Reznick agreed to discount its fees.”

In response to the federal bankruptcy trustee’s objections, the Daily News notes, Interfaith’s law firm Willkie Farr agreed to cut its fees by $125,000 and Cohn Reznick by $150,000. The Brooklyn federal bankruptcy judge overseeing proceedings, Carla Craig, then approved all fees requested.

“We were pleased that Judge Craig found the U.S. trustee’s objections to be meritless. Among other things, the U.S. trustee’s objections ignored the fact that Willkie provided a voluntary fee reduction to IMC as an accommodation and that Willkie’s efforts played a significant role in IMC’s successful reorganization,” a Willkie spokesperson commented.

“The energy and hard work of a lot of people went into saving Interfaith from closure last year,” Councilmember Robert E. Cornegy Jr. (D-Brooklyn) said in a released statement Monday afternoon. “Unfortunately, a few individuals ceased upon this as an opportunity to line their pockets and took advantage not only of the institution, but of the taxpayers, as well.”

Councilmember Cornegy Jr., whose district includes Bedford-Stuyvesant where Interfaith is located, called on Brooklyn District Attorney Ken Thompson to initiate a criminal investigation into the allegations of misused funds.

“Interfaith is an important institution in Central Brooklyn. It is a vital health care provider in a community that faces serious health care access issues. If it had closed, it would have been a devastating blow to the health of Bedford-Stuyvesant and the surrounding communities,” the council member said.

“It is important going forward that the hospital operate in an appropriate and transparent way with strong involvement and oversight from the community.”

-Information from Councilmember Robert E. Cornegy Jr. and the New York Daily News