September 3, 2007
LAPD investigating alleged embezzlement at cardiac nonprofit
$700-900K in 'questionable expenditures'
A Save A Heart Foundation board member raised concerns about financial irregularities in May 2006, after the foundation's longtime administrative assistant began an extended sick leave. Cedars officials were notified, and the hospital's internal auditing department began an investigation, identifying between $700,000 and $900,000 worth of questionable expenditures by the administrative assistant, according to hospital spokesman Rich Elbaum.
This past March, Cedars officials met with the board of Save A Heart and, Elbaum said, "recommended that they obtain separate counsel, notified them of their obligation to report as a nonprofit organization missing funds to the state attorney general and urged them to report it to the police as well."
But the foundation did not contact the Los Angeles Police Department until Aug. 30, the same day The Journal called asking about the alleged bilking. The press secretary for California Attorney General Jerry Brown said Save A Heart has not filed documents and disclosures that are required of all nonprofits since 2005. The foundation was recently sent a notice of delinquency.
"I can't comment on that," Save A Heart interim administrator Chris Becker said when reached by phone at the foundation's West Third Street office on Friday morning.
Becker referred all questions to attorney Paul Frimmer, who declined to comment. Save A Heart President Dr. Yzhar Charuzi did not return calls for comment, nor did a handful of board members, many cardiologists and internists at Cedars.
Elbaum, who would not elaborate on the findings of Cedars' investigation because the contents had been turned over to Save A Heart, also declined to identify the employee at the center of the storm. But tax forms indicate the foundation's finances were handled by a Lori Houser, whom sources said was the longtime administrative assistant who went on sick leave last spring.
When a reporter knocked on Houser's apartment door last Thursday evening and asked to speak with her about the embezzlement allegations, she answered through the peephole: "I can't speak with you about this." She then walked to her window and closed the curtains.
The Save A Heart Foundation was founded in 1980 by Charuzi, an Israeli-born doctor at Cedars who wanted to open scientific research to practicing physicians, not just lab scientists. Soon after, the foundation's mission expanded to providing research fellowships for young doctors. Initially they came mostly from the United States, Japan and Macau to research echocardiography, but by 1987 the primary source of fellows was Israel.
"We decided that by concentrating on Israeli physicians, we could contribute to Israel becoming a major regional cardiology center with a unique relationship with Cedars-Sinai," Charuzi says in a history on the foundation's Web site.
Past alumni have gone on to oversee the creation of Israel's first nuclear cardiology unit and develop the country's heart-transplantation program. Currently, the program supports three fellows, all from Israel.
Dr. Arik Wolak, a second-year fellow studying cardiac imaging under Dr. Daniel Berman, chief of cardiac imaging and nuclear cardiology at the S. Mark Taper Foundation Imaging Center at Cedars and a professor at UCLA School of Medicine, plans to join two Save A Heart alumni at Soroka University Medical Center in Beersheba and start a cardiac imaging service when he completes his fellowship.
"My service here will provide the opportunity to give the people of the Negev access to immediate, available, high-tech cardiac diagnostic service," Wolak says in his biography.
The foundation, which had assets of $335,414 at the end of 2004 -- the most recent year for which a tax return could be obtained -- focuses its fundraising on an annual dinner that typically brings in more than $400,000. In 2004, gross receipts for the year were $459,699, with expenses of $244,468.
The employee in question was hired in the mid-'80s to help raise money, Elbaum said. Unlike all other staff fundraisers for the hospital's independent support groups, who are supervised by Cedars community relations managers, the Save A Heart employee worked without oversight as a member of the hospital's cardiology department. This person received paychecks from Cedars, which was reimbursed annually by the foundation. Elbaum would not say whether that employee remains on the payroll.
Save A Heart was asked to leave the Cedars name off fundraising literature until the matter is resolved. It's unclear if donors were officially informed.
Max Webb, 90, has consistently been among the foundation's biggest financial supporters. He said Tuesday he had informally heard about the situation, but didn't want to know much more. No institution, he said, is immune from theft. Still he will continue to fund the foundation.
"Some people take with one spoon and some with a few spoons and some take the whole pot," he said. "It is a shame. But what can you do? It happens."