Strange Ties in Bill Thompson's Brooklyn Backyard
Thursday, July 25, 2013
During that time, Kurron and Price have cut a trail of financial and medical mismanagement, run-ins with regulators and public controversies – not least repeated clashes with healthcare unions – up and down the Eastern Seaboard.
So Thompson’s paid ties to Kurron – during a period when he was planning a second run for the mayor’s office after his near-victory over Michael Bloomberg in 2009 – raise important questions about his attentiveness to detail, his judgment and his choice of associates.
Asked by WNYC on Thursday about his involvement with Price, Thompson said he had “nothing to do with Kurron, nothing to do with their business, nothing to do with their company, period.” He said that he served about six months on an advisory board for Price as he attempted to start up a private equity fund. As for the fate of Interfaith Medical Center, Thompson said he has been part of the fight to keep the hospital open. “I firmly believe that Interfaith needs to stay open, period,” he said. “It is important to that neighborhood.”
Price, right, would not directly answer questions about his arrangement with Thompson, but his explanation paralleled Thompson’s. “His work for Kurron Capital was to guide us on shifting to become a private equity firm. He wasn’t involved in the operations of the company on health care, consulting or restructuring,” Price said. A Kurron intimate explained that Price’s general counsel, Pam Bradshaw, worked directly with Thompson, who functioned “more as a consultant,” advising Kurron on the “pursuit of private equity opportunities.” All the Kurron companies had a single shareholder, Price, and shared an office on Third Avenue.
As comptroller, Thompson was Wall Street’s conduit to the city’s $130 billion in pension funds, which the comptroller serves as investment advisor, custodian and trustee. And his principal employer after he left office has been a public finance firm, Siebert Brandford & Shank, which paid him $680,000 last year. But he joined Kurron when it was a sinking ship.
Just how much Thompson has been paid by Kurron isn’t clear. The disclosure form he filed with the state as chair of the Battery Park City Authority says he was a paid member of the advisory board of Kurron Shares, a sister company to Kurron Capital, Interfaith’s management company, in 2010 and 2011. The state form doesn’t list his earnings, stating only that Kurron was a source of income over $1,000. Another disclosure form, which mayoral candidates filed with the city last week, contained no reference to Kurron, indicating Thompson’s advisory service ended in 2011.
The extent of the relationship would be more apparent if Thompson joined his fellow Democratic candidates for mayor by fulfilling a pledge to make public his tax returns. Early this year, he released his 2012 tax returns, but he has refused to release his 2010 and 2011 filings, which would list his Kurron earnings. He is the only Democratic candidate for mayor who’s only released a single year’s return, even while Scott Stringer is making repeated demands that fellow comptroller candidate Eliot Spitzer make five years’ returns public.
In 2012, Thompson appeared on NY1 and host Errol Louis, pointing out that all his opponents had already released their returns for years, asked why he was the only one who hadn’t. A smiling Thompson replied that he would “probably release all four years of them next year, in a campaign year,” rather than “deal with things one at a time.” Over a week of daily calls to Thompson's headquarters, press officer John Collins repeatedly promised them, at one point even describing how they could be viewed at the campaign office. In the end, the campaign never supplied them.
Ties to Kurron are hardly something the average office-seeker would brag about.
WNYC asked an intern new to New York to do a Google search of Kurron to see how quickly she hit negatives. It took a minute. In three minutes, she read an abstract that “criticized Kurron for reducing medical care” at Interfaith and “later earning a surplus of $8.6 million.”
Within 12 minutes, she reached the first Google result about Price’s anti-labor record – a story that led to a deluge going back to 1985, when he started in the healthcare management business with the Hospital Corporation of America, a national fixture in the field. His layoffs in Maryland of 650 workers at the Prince George’s Hospital Center, the county hospital, sparked the union animosity that rails him to this day. In 1989, he left HCA and won a personal contract to run the huge, publicly-owned and privately-managed Maryland facility, but was fired within months, collecting three years of full CEO pay. That’s when he created Kurron, incorporating it in Maryland in 1990.
He tried twice to return to Prince George’s—seeking to buy it in 2003 , and failing that seeking a big consulting contract then and again in 2007 and igniting controversy each time. When county officials withheld millions in subsidies in 2003 that were due the hospital unless they hired Price, the hospital management went to the state attorney general, who conducted a six-month probe of the politicians’ demands before concluding there was no crime. In 2007, when county officials repeated the same public demand for a Price contract in exchange for releasing committed millions of county aid, The Washington Post wondered why Price met such vocal opposition and answered its own question: “Why? Because he has several decades of history tangling with the hospital workers.” A top Maryland union leader, Quincey Gamble, branded him a “slash and burn” villain; the county executive said to favor Price is now in jail, convicted on unrelated corruption charges.
Price’s company and his son donated $9,900 to Thompson’s mayoral campaign in 2007, at the same moment that the Washington-Baltimore press corps covering his Prince George’s County machinations was reporting that Price had “left 1,200 pink slips in his wake,” “enraged union members,” and “hurt” patient care.
The union hostility continues to this day. Just a few months ago, New York’s hospital workers union, Local 1199, joined the New York State Nursing Association in briefs filed in the Interfaith bankruptcy case objecting to Kurron’s latest contract there and charging that Price was a shadow manager consuming grand fees without even visiting hospitals where he was listed as CEO. At the time, Thompson was aggressively seeking 1199’s mayoral endorsement, which he ultimately did not get. But he has received the backing of many city unions, including the United Federation of Teachers.
But the shadow over Kurron hardly ends there. The New York State Department of Health cancelled Kurron’s contract with Interfaith, pictured left, in April, after sending four blistering letters to the company, including charges that bonuses paid to Kurron executives were “contrary to law” and contending that “the reasonableness” of Kurron’s overall fees could not be determined. At the time of Interfaith’s bankruptcy filing, its liabilities exceeded its assets by $200 million after nearly 20 years of Kurron management. The demise wasn’t just financial; a court-appointed patient care ombudsman found the hospital’s emergency department “more chaotic and disorganized” than others he’d observed, noting that “there did not appear to be a coherent process of triage and patient management.”
This week, the health department rejected a reorganization plan proposed by Interfaith’s current managers – a team of former Kurron executives stripped first of Price and then of a long-time Kurron executive, Luis Hernandez, who quit the day of the June protest, a departure that one protest organizer, Robert Cornegy, credited to “pressure from the community.” The state now has asked Interfaith to submit a plan for its closure – part of a dramatic consolidation of healthcare services in Brooklyn that has nearby Long Island Community Hospital almost emptied.
While the collapse of Interfaith culminated after Thompson left Kurron’s advisory board, but the road to bankruptcy – marked by gaping operational deficits – was being paved through his tenure. Also on his watch, in November 2010, Episcopal Health Services terminated the company’s two-decade-old contact to manage St. John’s Hospital in Far Rockaway, disturbed by Price’s efforts to close the obstetrics unit in a low-income neighborhood in a cost-cutting maneuver and also supported by state officials. Soon after, in February 2011, Kurron’s biggest contracts – $14.6 million in politically-wired deals in tiny Bermuda – were abruptly terminated by the government 18 months before they expired amid a flurry of public condemnations.
Price’s champion there, Premier Ewart Brown, awash in corruption allegations, had just stepped down, and the new leader of Brown’s PLP party decided to kill one of the most expansive deals arranged by her own party, an extraordinary event in Bermuda’s hyper-partisan politics.
Of course, none of this was Thompson’s business at Kurron. But the problems made his experience particularly relevant to Price, who explained that he was “shifting direction” to private equity because his other businesses were drying up. Kurron’s battles over Interfaith peaked as Thompson apparently was exiting the firm.
Indeed, the medical center’s bankruptcy papers read like an expose of Price and Kurron, as well as an autopsy of a gutted hospital. IMC filed on December 2, 2012 – three days after awarding a new $3.25 million contract to Kurron, some $250,000 of which was paid the day before the contract was signed. The contract, which had to be approved by the bankruptcy judge, called for Kurron to continue managing the hospital and become its “restructuring adviser” during the bankruptcy process, with Price as Chief Restructuring Officer and CEO. The rationale was that Kurron knew interfaith so well it was the only consultant that could salvage it, and the judge eventually approved the deal.
The U.S. Trustee that oversees bankruptcies, - joining 1199, the nurses union and the hospital’s creditors – filed objections to the Kurron deal. The independent trustee found that Kurron “could be an impediment to reorganization,” questioning its ability “to fulfill its fiduciary duty.” Price’s 35-years in the health care business, featuring restructuring experience, was one of the reasons Kurron won the court battle. He promised the judge in court and in writing that he would be a 40-hour-a-week CEO and restructuring chief.
But the briefs from the unions told another tale. The hospital workers union accused Price of a “shockingly cavalier attitude,” arguing that he had not been “present physically” though the first months of the bankruptcy period. The nurses cited the observations of their own members, who said Price hadn’t been there “a single day” and had no office or secretary at Interfaith, refusing to respond to requests for even a conversation. The hospital’s patient ombudsman said Price wouldn’t meet with him, and only talked to him once for five minutes.
Price responded in court to these allegations by listing a handful of phone inquiries he made about Interfaith, mostly to bankruptcy lawyers and consultants. Kurron also accused the objecting creditors of “prioritizing union interest.” In March, the judge singled out Price personally and dropped him from the contract, approving a new restructuring chief with no ties to Kurron to guide the bankruptcy.
Price’s remote management had been an issue for decades – at least since 1999, when Newsday reported that his claim he “spent very little time away from Interfaith” was “flatly contradicted by multiple sources.” Anthony Kovner, an NYU heath care professor, told Newsday then he’d never heard of a hospital story “stranger than this” – a hospital run by a missing person. Another key objection to Price was that he sat on the Interfaith board that awarded and administered Kurron’s contract for 10 years. The Newsday story was prompted by Price’s war with Interfaith workers; in it, Brian Lane, an 1199 leader, called Price “a hatchet man.”
Lane said: “That’s the style of Corbett Price. Everywhere he goes, he cuts to the bone.”
Polished, bejeweled and engaging, Price - a registered Republican who serves as a trustee of his alma mater, Ohio State University – works mostly out a Harlem townhouse on West 148th Street he’s owned for years. He bought a $4.9 million condo in 2008 at 15 Central Park West, where Lloyd Blankfein of Goldman Sachs, Denzel Washington and Sting also had apartments and chauffeurs have a waiting room. Kurron sometimes used it for business purposes, but Price sold it in 2011, around the same time that Kurron closed its headquarters office at 885 Third Avenue, where Thompson and Price usually met at awkward two-member “board meetings.” The 800 number on Kurron’s neglected website is dead.
Perhaps Price’s most ambitious undertaking – and most ignominious fall during Thompson’s formal association with Kurron – was his detour to Bermuda.
Price won two of the small country’s biggest consulting contracts in 2007, shortly before “a friend” of his, as the island’s Royal Gazette newspaper described the new premier Ewart Brown, took office in 2006. Charges of cronyism had risen when Kurron beat out the much larger and more prestigious Johns Hopkins University for a plum assignment at the center of the nation’s healthcare system.
Officials in Bermuda attributed Price’s bonanza to the premier’s ex-New Yorker wife, Wanda Henton-Brown, a onetime New York investment banker whom Price had known for years; in the ’90s, they summered in nearby houses on Martha’s Vineyard. That’s also when Price steered a huge bond offering from Interfaith to the fledgling investment firm Henton-Brown had just founded herself. More recently, Price has given to Henton-Brown’s Bermuda foundation. Messages left for Henton-Brown in Bermuda were not returned.
Price was supposed to do three things in Bermuda: develop a national health plan, come up with a conceptual/financial model for a new hospital and propose a new insurance program for seniors called Futurecare. His health plan was never adopted, Futurecare has been turned upside down since he left and is running a $13 million annual deficit, and the new and financially troubled King Edward VII Memorial Hospital just shut down its continuing care unit for seniors this month as “not fit.”
An opposition party leader, Louise Jackson, called Price’s fees “absolutely obscene” on the floor of Parliament. Price’s 34-year old son Devin, a kick-boxing promoter, oversaw the Bermuda work for Kurron, sometimes conducting meetings about it at 15 Central Park West. Once Brown resigned in 2011, awash in scandal, his successor, though she was also a leader of Brown’s PLP party, cancelled Kurron’s contract – 18 months before it expired.
The worst of Kurron’s problems – in Bermuda, and at Interfaith and St. John’s – came home to roost during Thompson’s association with Kurron and Price. The issue for Thompson is not whether he aided or advised Price on labor relations, Bermuda or the management of the Brooklyn hospitals. The question is why he identified himself with a company with so much baggage.
Someone looking for patterns would point to past blots on Thompson’s record. Before he became comptroller, he worked in a small underwriting firm selling municipal bonds without the required license for years, and broke half a dozen securities rules. His firm signed him up for a six-hour licensing exam six times, forfeiting a $200 fee when he failed to show up each time. Finally passing the test in December 1995, he failed to meet continuing education requirements, forcing securities authorities to list him as “deficient and inactive” and temporarily suspend his license for two more years. Yet his 2001 campaign for comptroller emphasized his private sector expertise including the claim he’d sold billions in bonds, without mentioning he did it illegally. It was also revealed in that campaign that he’d filed his taxes late four of five years and had to repay by installment.
In 2008, while serving as comptroller, Thompson got a highly favorable mortgage and credit line from the union-owned Amalgamated Bank, which did billions of dollars of business with his office – an episode highlighted in commercials run by Mayor Bloomberg’s 2009 reelection campaign, in which he edged out Thompson. The $1.4 million loan to acquire Thompson’s Harlem home was artificially split in half by the bank to avoid federal ceilings and secure a lower interest rate. Amalgamated’s management of city retirement funds administered by Thompson’s office grew from $174 million when became comptroller to $3.6 billion, taking its greatest leap at the same time Thompson got the favorable mortgage and earning the bank $51 million in fees.
Thompson and state officials also deposited $50 million in city cash in Amalgamated, making it the biggest recipient of a special public deposit program; the number two bank in that program, North Fork, also gave Thompson a personal line of credit and loans. He also used the comptroller’s office to push high state and city officials to fund his wife-to-be’s new African-American art museum on Fifth Avenue, which was slated to open in 2009 but remains uncompleted.
All this is history. The substantive issue, in the midst of a tight mayoral primary, is why Thompson decided to enter and maintain a compensated business relationship with a man with Price’s history. Besides repeating over and over yesterday that he had “nothing to do with Kurron,” that’s not a question Thompson has answered.
Ben Shanahan and Tamara Smillie, a research assistant at the Nation Institute, contributed reporting.