2 former Blues officials acquitted in fraud case

November 02, 1994|By John Fairhall | John Fairhall,Sun Staff Writer

A federal jury acquitted yesterday two former Blue Cross and Blue Shield of Maryland executives charged with diverting more than $1 million to three companies in which they held financial interests.

Former Chief Financial Officer Edward T. Zimmerman and an aide, Claude H. Holemon, both of whom left Blue Cross in 1989, were found not guilty on all counts.

The men were indicted in March and charged with mail fraud, wire fraud and aiding and abetting.

"They're very gratified -- they're vindicated," said defense attorney Joshua R. Treem.

Mr. Zimmerman now works in Washington, while Mr. Holemon lives in Arizona.

Mr. Zimmerman and Mr. Holemon left Blue Cross after top executives took them to task for their dealings with a Pennsylvania computer firm in which they once had 60 percent ownership and with two companies they set up to lend money to health care providers.

Blue Cross initially didn't report the activity to criminal authorities, prosecutors told the jury at the beginning of the trial two weeks ago in U.S. District Court in Baltimore. But the FBI began investigating after U.S. Senate hearings in 1992 exposed financial irregularities at the Owings Mills-based health insurance company.

Mr. Holemon's attorney, Paula M. Junghans, said Blue Cross did not report the activity because the dispute was not about a crime, but a simple disagreement over business strategy.

She said the dispute was distorted by other executives' dislike of Mr. Zimmerman.

The biggest amounts the prosecution said were diverted involved the two executives' efforts to set up a company called Medical Payment Services of Maryland Inc. Medical Payment was designed to lend money to health care providers.

Judge Marvin J. Garbis presided over the trial. The jury began deliberating Monday.

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