A Justice Department spokesman declined to comment, and a spokesman for U.S. Attorney Joshua S. Levy of Massachusetts did not respond to an interview request. CBS News first reported the investigation on Thursday, citing sources.
Steward’s international operations have already come under considerable scrutiny, particularly in Malta, where the company first attempted to expand its brand abroad. In June, The Globe reported that Steward executives Ralph de la Torre, founder and CEO, and Armin Ernst, head of international operations, were suspected of being involved in a bribery scheme linked to a controversial deal to buy part of a Maltese hospital. Maltese authorities allege that as the deal collapsed, the pair were part of a criminal conspiracy to funnel millions of dollars from the government into “consultancy fees” rather than improving the acquired medical facilities.
According to documents filed in a Maltese court, the U.S. federal government was involved in part of a Maltese investigation into a failed public-private partnership. In the fall of 2022, Maltese investigators handed over electronic devices belonging to former Maltese Prime Minister Joseph Muscat to special agents from the Department of Homeland Security’s Criminal Investigation Division, seeking their assistance in unlocking the devices.
Malta’s investigation culminated in a 1,200-page report in June recommending that Ernst and de la Tori be prosecuted on charges of money laundering, criminal organisation and corruption of public officials, including Muscat.
It is unclear whether Ernst, who lives in Brookline, or de la Torre, who moved to Dallas with Steward’s headquarters in 2018, will face charges in Malta. Maltese law does not allow defendants to be prosecuted in absentia, but the United States has an extradition treaty with the island nation.
For extradition to occur, Maltese authorities would need to present sufficient evidence to the Department of Justice to issue a warrant. The report also recommended that Maltese investigators “notify relevant U.S. authorities, particularly with a view to the U.S. Foreign Corrupt Practices Act (FCPA).”
In the United States, Steward has been under scrutiny from federal lawmakers for long-running financial problems, including cuts to services, shortages of critical supplies and unpaid invoices to many vendors. Founded in Massachusetts in 2010, Steward filed for bankruptcy in May and bids to buy its eight Massachusetts hospitals under a court-supervised auction process close on Monday.
“FCPA investigations can take years to resolve, citing the complex process of proving overseas bribery allegations. Federal prosecutors also tend to look broadly at a company’s activities once an investigation is launched, and FCPA investigations may ultimately involve activity in multiple countries.”
“Once the Department of Justice and the SEC understand what happened in Malta, they’ll be asking, ‘Where else?'” says Mike Koehler, a former FCPA lawyer who teaches and writes extensively about corruption law. “The average length is four years, with five to seven years not uncommon.”
Separately, a businessman who sold a Maltese hospital to Steward last year filed a whistle-blower lawsuit with the U.S. Securities and Exchange Commission, which can investigate companies and impose civil penalties under the Foreign Conduct Act, alleging that the company’s activities in Malta violated U.S. graft laws.
David Schumacher, a lawyer and former federal prosecutor who has investigated health care fraud, said it was “extraordinary” that federal investigators “conducted so many separate investigations against a single entity in such a short period of time.”
“In my view, this is just the latest in a series of horrific events in the stewards case,” Schumacher said in an interview.
He said the investigation would not have any further impact on Steward’s plans to sell the hospital. “This is an independent process and it should be done at arm’s length,” he said.
Steward, who is based in Dallas, had been under surveillance by federal agents for months. In December, federal officials Steward’s St. Elizabeth Medical Center in Brighton submitted false claims to Medicare. Steward said Thursday that Medicare’s federal lawsuit is “administratively closed.”
At a bankruptcy hearing in June, Steward’s lawyers also confirmed that the federal government was reviewing Optum’s proposed acquisition of physician group Stewardship Health Inc. for antitrust violations. Optum has since withdrawn from the deal.
And in 2022, Steward He agreed to pay $4.7 million.This comes after the Department of Justice launched a new investigation into possible violations of federal law.
Amid financial difficulties, Steward Health Care executives approved spending millions of dollars on a private intelligence firm tasked with surveilling the company’s critics and exposing corruption, according to a recent Globe Spotlight investigation.
The operation included videotaping the financial analyst’s home and tracking his and his daughter’s routes to school, according to emails, encrypted messages and financial records compiled by global journalism outlet The World. Organized Crime and Corruption Reporting Project “At another time, salacious details were extracted from the cellphones of Steward executives and shared with the Globe Spotlight team. During the same period, records show, Steward failed to pay vendors who frequently provided vital supplies and staff to the hospital.”
Federal lawmakers who have already been vocal about Steward’s financial woes have also slammed the company over allegations of fraud overseas.
“Steward, led by Dr. Ralph de la Torre, is just the latest example of how corporate greed is putting our health care system at risk,” Sen. Ed Markey said in an emailed statement Thursday. “Whether in Massachusetts or Malta, Dr. de la Torre used his credentials as a physician and CEO to pitch Steward as the savior of health care, but he and his corporate backers in private equity and real estate hollowed out our health care system to line their own pockets.”
The investigation adds further complications for the company, which has struggled to raise capital domestically and find new operators.
The company recently extended the deadline for submitting bids for a Massachusetts hospital by three weeks to mid-July, and Optum, a potential buyer of the company’s physician group, also recently withdrew from the deal.
The exodus of patients from Steward Hospital has also strained other emergency departments in eastern Massachusetts, leading the state to require health insurers to cover care at urgent care centers through the end of September, even if the facilities are out of their insurance network.
Jessica Bartlett can be reached at [email protected]. Follow us Jess BartlettElizabeth Koh can be reached at [email protected]. Follow her ElizabethContact Hanna Krueger at [email protected]. Follow her translation:.
