CLEVELAND (CN) – A county hospital wants to cancel $50 million renovation contract that it claims a builder won by paying $678,000 in bribes.
MetroHealth Medical Center sued East-West Construction Co. in Cuyahoga County Court. The Cleveland hospital says the bribery was uncovered after the FBI raided the homes and offices of “several Cuyahoga County officials suspected of accepting bribes and engaging in other illegal conduct.”
After the July 28, 2008 raids, “The FBI investigation expanded in scope, and several criminal informations and guilty please have been obtained,” including that of a former MetroHealth former vice president, John Carroll, the hospital says.
MetroHealth says Carroll admitted accepting “things of value” from East-West Vice President Nilesh Patel, including a trip to India, a Royal Caribbean Cruise, furniture, appliances and a computer, in exchange for $50 million in contracts.
Carroll was sentenced to 9 years in prison and ordered to pay $728,000 in restitution; Patel was sentenced to 3½ years and ordered to pay $628,000 in restitution, according to the complaint.
During the trial of Carroll’s subordinate Tomas Greco, Patel testified that he “spread out increases, purchase orders, and estimates to cover the cost of gratuities,” according to the complaint. Greco was convicted and sentenced to 9 years and 4 months in prison.
“None of the employees who signed the contracts on behalf of MetroHealth was aware at the time that they signed the contracts that Carroll had solicited and accepted bribes or violated the competitive bidding laws,” MetroHealth says.
The hospital says that East-West improperly demanded arbitration, and had the brass to demand $1.43 million, though it admitted that “subcontractors who supplied labor and materials to MetroHealth construction projects were not paid by East-West, even though MetroHealth paid East-West in excess of $15 million under the contract.”
MetroHealth says it will not participate in arbitration, which is pending, because the contracts were procured through bribery and are void.
MetroHealth seeks declaratory judgment, an injunction and punitive damages for unjust enrichment, fraud, negligence, tort and conspiracy. It is represented by Matthew Mendoza with Calfee Halter.