Company officers testify on Young Grand jury seeking inside look at alleged PrimeHealth payoffs

October 27, 1998|By Walter F. Roche Jr. and Scott Higham | Walter F. Roche Jr. and Scott Higham,SUN STAFF

Signaling what could be a major breakthrough in the investigation of former state Sen. Larry Young, three officers of the health care company at the center of the bribery case testified yesterday for the first time before an Anne Arundel grand jury.

The extensive testimony is expected to give prosecutors an inside look at the purported bribery scheme while providing grand jurors with firsthand accounts from the men who were in positions to know about the alleged payoffs.

In successive appearances that consumed the entire day, the majority stockholder, the president and the chief financial officer of the PrimeHealth Corp. of Lanham testified before the grand jury. All three were accompanied by lawyers and declined to comment when asked if they had been granted immunity from prosecution in return for their testimony.

State prosecutor Stephen Montanarelli, who has been leading the investigation of the expelled West Baltimore legislator, also declined to discuss the case, as did Gregg L. Bernstein, Young's defense attorney.

Several sources familiar with the 10-month probe said the three witnesses -- stockholder Christian Chinwuba, President Edward A. Thomas and Chief Financial Officer Albert St. Hillaire -- had been granted immunity in exchange for their testimony under provisions of the state bribery statute.

The statute says witnesses with information about bribery cases should be granted immunity when they are subpoenaed to testify before grand juries.

With today's testimony, the sources said, the grand jury is likely to be asked soon to return indictments against Young and possibly others.

Investigators in Montanarelli's office have alleged in court documents that PrimeHealth officials paid Young more than $90,000 in exchange for his help in securing a state license to operate the health maintenance organization and a contract to serve Medicaid patients in Maryland.

As chairman of a key health panel until he was expelled from the General Assembly on ethics charges Jan. 16, Young was in FTC powerful position to help companies navigate their way through the state's health care bureaucracy. Prosecutors contend that Prime-Health officials made a series of payments to Young and wrote checks that were made out to cash that carried the notation "SLY" on the memo lines.

Investigators theorize that the notations refer to "Senator Larry Young." When the grand jury subpoenaed the checks and other financial records from PrimeHealth this year, the investigators said, someone tried to obliterate the "SLY" references from the memo lines and from the corporation's check registers.

Records from Young's office show that he played an active role in helping PrimeHealth. Appointment calendars and a visitors log show that he and PrimeHealth officials met on at least three occasions with top state officials, including a key aide to Gov. Parris N. Glendening, to lobby on the firm's behalf. Thomas, St. Hillaire and a PrimeHealth lobbyist, Wayne Clarke, were among those who met with Young, according to the records.

Clarke did not testify before the grand jury yesterday.

Chinwuba, a radiologist from Prince George's County, was the first witness yesterday. He remained inside the jury room at the Arundel Center for about three hours, emerging at 1: 20 p.m. Chinwuba, who was accompanied by attorneys Leonard L. McCants and Nathaniel H. Speights, declined to comment when asked about his testimony and whether he had been granted immunity.

The testimony by Chinwuba, PrimeHealth's founder and 81-percent stockholder, was followed by that of Thomas, the company's president. The former Pennsylvania state insurance official remained in the grand jury room for about an hour. He declined to discuss his testimony or confirm that he had been granted immunity.

Asked if he would be happy when the probe is over, Thomas said: "No question about it."

The final witness of the day was St. Hillaire, who testified for about an hour and declined to say what he told the panel.

Yesterday's testimony marked at least the fourth time this year that PrimeHealth officials have appeared before state and federal grand juries investigating Young and his relationship to health care companies that he oversaw as chairman of the Senate's health subcommittee.

Young has been the subject of a series of articles in The Sun that detailed how he used his public position to benefit corporations he controlled. The newspaper reported that Young collected $300 an hour in consulting fees from health care firms that had or were seeking state contracts. PrimeHealth paid more than $30,000 to two corporations that Young ran out of his district office.

The legislative ethics committee investigation concluded that Young had misused his public office. The state Senate voted to expel Young, the first expulsion in Maryland in more than two centuries.

PrimeHealth, which provides health care for about 12,800 Medicaid recipients, was placed in receivership early this month under a consent agreement filed in Baltimore Circuit Court. The agreement stemmed from a lawsuit filed by Maryland Insurance Commissioner Steven B. Larsen, who concluded that PrimeHealth was insolvent.

Larsen said in the lawsuit that insurance regulators found that PrimeHealth had issued $625,000 in checks made out to cash. Larsen has appointed a financial consultant, James Gordon, to run the firm, which has retained its state contract and continues to serve Medicaid patients in Maryland.

Pub Date: 10/27/98

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