Hospital Chief Took $663,355, Suit Says
The president and chief executive officer of Anaheim Memorial Hospital was suspended hours before a civil lawsuit was filed alleging that he and others embezzled more than $600,000 from the institution over the last two years, according to court records and a hospital spokesman.
Peter Gray, who was chief financial officer of the hospital before taking over as interim president earlier this year, allegedly diverted $663,355 in hospital funds to his own use through accounts in two Orange County banks, according to the lawsuit filed by one of the banks.
Orange County Superior Court Commissioner Ronald L. Bauer ordered both accounts frozen last Friday and prohibited Gray from transferring ownership in a home at 4075 Cassia Lane, Yorba Linda, which the suit alleged he purchased in part with funds illegally diverted from the hospital.
“He (Gray) was suspended by the board of directors last Friday,” said Nancy Wagner, administrative assistant to Gray and spokesperson for Anaheim Memorial. “That’s all I can tell you,” she added.
Wagner declined to say why Gray was suspended or whether the suspension was with or without pay and refused to comment on the allegations contained in the lawsuit. She declined to say whether the case had been referred to police.
“It’s going to take some time to unravel, and we don’t want to do anything that would soil our hospital’s reputation until we have all the facts,” Wagner said.
Gray, an employee of the hospital for eight years until his suspension Friday morning, could not be reached for comment, and neither could John Browning, counsel for Anaheim Memorial.
Directors in Control
Asked who has replaced Gray as president, Wagner said, “at this time, our board of directors is in direct authority.”
The lawsuit filed by El Camino Bank alleged that Gray opened a checking account there “on behalf of Anaheim Memorial Hospital” on April 13, 1984.
“At that time Gray was well know to the officers of El Camino Bank as the chief financial officer for Anaheim Memorial Hospital,” according to the lawsuit. “Gray represented that he had authority to open the account and that he was authorized to sign on the account,” the lawsuit alleged.
A total of $837,225.55 was deposited into the account--representing checks made out to the hospital--and $663,355.04 was withdrawn, according to the suit.
In a sworn statement filed with the case, Edward Lemoine, senior vice president and cashier of El Camino, said bank officials became suspicious when they noticed all withdrawals from the account were by check made payable to “Walter G. Haag, CPA” and deposited into an account at the List American Bank “in the name of Gray and Haag, CPAs.”
When Lemoine contacted the hospital, he was “advised that no account had ever been authorized at El Camino Bank by Anaheim Memorial Hospital and that the checks deposited in the El Camino Bank account had never been documented as having been received by Anaheim Memorial Hospital,” according to Lemoine’s sworn statement.
No Haag Licensed as CPA
No person with the name of Haag is licensed by the state of California as a certified public accountant, according to Robert L. Lavoie, lawyer for El Camino in the case.
When certain checks were received by the hospital, Gray and others deposited the proceeds in the El Camino Bank account, “concealing both the existence of the account and the receipt of the funds,” according to the lawsuit.
The lawsuit alleges fraud and conversion and says there is “evidence of an intent to embezzle and defraud” on the part of Gray. Others named defendants are Haag and List American Bank, formerly Orange City Bank.
However, Lavoie said Monday that List American is “innocent of any wrongdoing” in the case. “We asked for the court order because we were afraid the money (the balance in the account) would disappear,” he explained.
Anaheim Memorial is a not-for-profit institution and is not a part of any hospital chain, Wagner said.