City of Hope’s Bitter Family Feud

Drive past the run-down delis and weary auto repair shops along Duarte Road, past the sign welcoming you to Duarte--”Home of the City of Hope.” Turn right and enter what seems like a cross between a hospital and a university campus, complete with a chapel, Japanese garden and motel-style dormitories where families of patients can stay close to their loved ones.

You’re in the City of Hope National Medical Center, the country’s third-largest cancer research and treatment facility, a medical titan founded by trade unionists in 1913 and guided by a compassionate approach to health care.

The sylvan San Gabriel Valley campus is the hub of cutting edge research and medical care, and lately, a bitter, costly battle of charges and countercharges that has spawned state and federal probes.

The FBI is investigating the City of Hope’s former president and two associates for allegedly conspiring to extort money from the charity by threatening to destroy its image and donor base. The former president, Dr. Sanford Shapero, contends that the City of Hope made up the extortion allegations because he was looking into financial misdeeds at the nonprofit center. Shapero’s allegations have prompted the state attorney general’s office to launch an investigation of the City of Hope.

The institution says Shapero’s allegations cannot be believed and are part of his effort to destroy its image. Officials there say the attempt has failed and that the center’s operations are stronger than ever.

But the accusations have thrust a cherished charity with an enviable public reputation into the uncomfortable position of aggressively pursuing legal action against its former leader, a 68-year-old rabbi who once spent several days in jail with the Rev. Martin Luther King Jr.

Some people long associated with the center are distressed by the legal wrangling, but City of Hope officials say they must act forcefully when the facility’s reputation--and millions of dollars in donations--are threatened.

“This is absolutely insane,” said Percy Solotoy, a board member for 35 years who resigned last year in protest after the City of Hope seized Shapero’s office. “It’s not the philosophy of City of Hope to treat people this way.”

That philosophy is rooted in the institution’s founding in 1913 by Jewish labor unions for tuberculosis patients who were shut out of other facilities because of anti-Semitism. As medical advances in the 1940s made tuberculosis less deadly, the City of Hope focused on cancer treatment and steadily grew in size and reputation.

In 1951, it enumerated “Thirteen Articles of Faith” to guide its work. Among them: “Wholehearted participation in the City of Hope movement will give people enriched spiritual nourishment,” and “It is our duty to bring into our service only such people as are motivated by a deep, humanitarian impulse.”

One unwritten rule has been that those who could not afford care would not be turned away. Current officials say that as the medical marketplace becomes more competitive, the City of Hope cannot offer as much free care as previously but that 28% of all money spent on medical care still goes to paying for those who cannot afford it. The center remains the largest private provider of free or subsidized medical care in the state, according to officials at the center.

Today, the City of Hope comprises three nonprofit organizations governed by a 56-member board made up largely of business leaders, including some prominent entertainment executives.

One-fourth of the institution’s roughly $250-million budget comes from donations, which range from million-dollar corporate gifts to proceeds of bake sales and knitting marathons by 300 grass-roots fund-raising chapters nationwide.

One of 57 cancer centers eligible for National Cancer Institute grants, the City of Hope also does pioneering research. The first synthetic insulin was manufactured there. In recent years, the Duarte facility’s researchers have developed new treatments for leukemia and breast cancer and conducted the first bone-marrow transplants to treat multiple sclerosis. In the past three years, officials said, outside grants for research have nearly doubled from $13 million to $25 million.

The City of Hope boasts more than 200 doctors and researchers who treat more than 1,000 patients in both its 212-bed hospital and various outpatient facilities.

Dr. Stephen Forman, the City of Hope’s chief physician, said the center draws a specific type of doctor to its salaried jobs. “This is Duarte, California. This isn’t San Francisco or the middle of Manhattan,” he said. “The people who come here are here by choice. The doctors here are not physicians making tremendous amounts of money. Their income is fixed.”

Shapero, whose doctorate is in Hebrew letters rather than medicine, said he chose the City of Hope because of its commitment to helping those in need. He was a chaplain in the U.S. Navy during the Korean War, marched with King in the 1960s and recently concluded a presidential appointment on the National Institutes of Health’s National Advisory Council on Aging.

He joined the City of Hope in 1976, working in its fund-raising office before being promoted to president in 1986. By the time he left, in January 1996, he was one of the highest-paid charity executives in the nation, drawing a $350,000 salary. Shapero said he earned his keep by more than quadrupling the City of Hope’s assets through energetic fund-raising.

Court documents indicate that Shapero’s problems with the institution began in late 1994 when three women accused him of sexual misconduct. Two of them made similar allegations against his top deputy, Andrew Leeka.

The women were eventually paid settlements, officials at the center said. An initial investigation found that Shapero and Leeka erred in judgment but did not harass anyone, City of Hope documents say.

According to court documents, as the center conducted a second investigation of the misconduct allegations, Shapero and Leeka were told their jobs could not be guaranteed. They then ordered copies of thousands of documents, ostensibly for earthquake preparedness, and rented storage space in Arcadia. Shapero said there was nothing untoward in these acts.

In early 1996, both Shapero and Leeka left the City of Hope, Shapero with a settlement package worth about $1 million. While negotiating for an upgrade in his package, Shapero allegedly threatened to destroy the City of Hope’s reputation and donor base, according to an FBI search warrant affidavit--an allegation he strongly denies.

City of Hope officials said they did not take their concerns to federal authorities until Nov. 18, 1996, after they learned that “60 Minutes” was looking into a possible story on the institution. When they found a calling card bill showing a telephone call to “60 Minutes” from Shapero’s home, they feared he was planting an unfavorable story. Shapero’s girlfriend said she was merely returning a phone call from the CBS news program.

The call from Shapero’s home was discovered by the City of Hope on Nov. 18, the same day it received a demand for $1.9 million from attorney Hugo Gerstl to settle the claims of six current and former employees, officials and court documents say. Gerstl had already filed one of those actions--a lawsuit--on behalf of a former employee and had once represented Shapero and Leeka during the misconduct allegations.

After those Nov. 18 events raised fears of extortion, the FBI wired the City of Hope’s attorneys to tape-record settlement conferences with Gerstl, according to court documents and participants. In the conferences, Gerstl said that his case had “blackmail value” and that he knew the City of Hope had paid “hush money” before, court documents say.

“That is language I’ve heard judges use, I’ve heard lawyers use,” Gerstl said in an interview. “That’s certainly not blackmail in the criminal sense.”

In a search warrant affidavit filed Jan. 30, the FBI alleges that Shapero, Leeka and Gerstl engaged in the extortion conspiracy against the center. Once assured that “60 Minutes” was not going to do a story on the City of Hope, the institution opened another front, accusing Shapero and Leeka of violating the terms of their settlement packages and taking them to arbitration.

On April 7, 1997, City of Hope officials seized a Monrovia office they had leased to Shapero as part of his settlement package. After discovering boxes of City of Hope documents inside, the center posted an armed guard outside the office, court documents said.

Two arbitration judges ruled recently that Shapero and Leeka violated the terms of their settlement agreements. One judge found that the men tried to discredit the City of Hope and seemed motivated by a desire for “vengeance.”

Shapero was ordered to pay more than $1 million to cover the City of Hope’s legal fees and other expenses the center incurred. Shapero says he may have to declare bankruptcy.

Leeka, now president of Good Samaritan Hospital in Los Angeles, owes $250,000 in damages and could be penalized an additional $500,000 if he discusses his tenure at the City of Hope. Through his attorney he declined to comment.

Shapero was also enjoined from talking about the center but in an interview said he would speak out to defend his reputation.

“The most important thing in the world is what you stand for,” said Shapero, who said he still believes in the City of Hope. “Reputation is a thing you get once in your life for doing good things, and when it gets tarred and besmirched, it’s over.”

City of Hope officials agree. Only it is their institution’s reputation that is on the line, they say.

“These ex-employees were attempting to destroy our reputation,” said City of Hope attorney Glenn Krinsky. “A core function of our mission is defending our reputation.”

Some former employees and others once connected to the City of Hope praise Shapero’s integrity.

“That man gave his life for the place,” said Kathy Marcario, a former City of Hope vice president who left soon after Shapero. “This is personal now. It’s not just business.”

“It’s sort of like any ethnic family,” said Dr. John Golenski, a bioethics expert who was a consultant at the institution during Shapero’s tenure. “It gets pretty savage around the table.”

But Ben Horowitz, a board member and former chief executive of the City of Hope, said the situation has been properly handled. “It’s a betrayal. An individual who’s been given the opportunity to implement the ideology and the research and the medicine of City of Hope has gone astray.”

Correspondent Richard Winton contributed to this story.