Former state Sen. Larry Young, once one of Maryland's most powerful and promising politicians, was charged in a nine-count bribery and extortion indictment yesterday with using his office to shake down a pair of minority-owned health care companies for more than $72,000.
The indictment was handed up by an Anne Arundel grand jury after a yearlong investigation by State Prosecutor Stephen Montanarelli that included testimony from dozens of witnesses, including the last-minute appearance yesterday of the governor's chief of staff, Major F. Riddick Jr.
The charges against Young are the latest development in a scandal that resulted in his ouster from the Senate, the first such expulsion in more than two centuries in Maryland. The case prompted charges from Young and his supporters that he was being treated unfairly because of his race.
Prosecutors allege that Young received payment in 1995 and 1996 "for the purpose of influencing him in the performance of his official duties." Montanarelli declined to say what tasks Young allegedly performed in exchange for the payments. He said more would be revealed at trial.
The indictment accuses Young of extorting the money from officials of PrimeHealth Corp., a Lanham-based health care firm, and a closely affiliated radiology company, Diagnostic Health Imaging Systems. It also says that Young and a former aide received a series of payments from the two firms.
If convicted, Young could face a maximum 98-year prison term and $40,000 in fines.
Young denounced the indictment last evening during an interview on a local radio station and said prosecutors and The Sun, which first reported Young's business dealings, were out to ruin him.
Said Young: "Did I seek or accept bribes from them? Absolutely not. Did I willfully commit any crime? Absolutely not."
Young's lawyer said his client would fight the charges.
"An indictment is nothing more than an allegation as presented by the prosecutor with no opportunity for the defendant to respond in the grand jury," Gregg L. Bernstein said. "One is never happy when your client is indicted, but we welcome the opportunity to finally have a chance to respond in a court of law, where Senator Young will be able to present his side of these events. We expect the jury will acquit him of all of these counts."
An arrest warrant was issued yesterday for Young, but the former senator will be allowed to voluntarily surrender later this week and be released on his own recognizance.
The six-page indictment lists four counts of extortion, four counts of bribery and one count of tax fraud stemming from the alleged bribery and extortion scheme. It says Young and his aide, Zachary Powell, received $72,493 from PrimeHealth and DHIS. The grand jury also charged that Young illegally received two computers from the companies.
The grand jury alleged that Young, who chaired a key health care committee before he was expelled from the Senate in January, received $52,000 in seven installments, while Powell collected a total of $14,000 under two separate consulting agreements. The indictment says that Young falsely stated on his federal tax return that he had only $129,999 in gross earnings in 1995. The indictment charges Young also falsely listed his 1995 income on his Maryland tax return as $115,955.
Prior to returning the indictment yesterday at 2: 30 p.m., the grand jury heard several hours of testimony from key witnesses, including Riddick, the governor's top aide. Riddick was quietly ushered in and out of a back door of the Anne Arundel Center, where the grand jury was convened.
Asked about Riddick's appearance, Glendening spokesman Ray Feldman referred questions to Andrea Leahy-Fucheck, the governor's chief legal aide. She issued a brief comment stating that neither Riddick nor any other member of the Glendening administration "is or was a target of the investigation."
She said administration officials had voluntarily provided information requested by Montanarelli's office. She said that since the matter "is now in the hands of the court, it would be inappropriate to comment further."
Glendening also declined to discuss the indictment.
Montanarelli said Riddick was subpoenaed to testify as a "witness," but he declined to say what Riddick had witnessed or why he was brought before the panel. Young had been a close ally of Glendening and members of his administration before his expulsion. He enlisted the aid of some of them to help PrimeHealth operate as a health maintenance organization in Maryland.
The other witnesses called to testify yesterday were Christian Chinwuba, the founder of PrimeHealth; Wayne Clarke, PrimeHealth's lobbyist and vice president; and Powell, a former Young aide who also worked as a consultant to PrimeHealth.
Powell, Chinwuba and Clarke declined to comment as they left the grand jury room. Powell and Chinwuba had appeared before the same grand jury previously. All three have been granted immunity from prosecution in exchange for their testimony.
The indictment came one year and 11 days after The Sun reported that the West Baltimore Democrat was using his taxpayer-financed district office to benefit himself and a group of businesses he controlled.
The newspaper reported that companies owned or controlled by Young were being run out of his West Baltimore office. Some of those companies were doing business with firms that were seeking state contracts or had issues pending before Young's health care committee.
Young's companies included the LY Group, a private for-profit ,, consulting firm; and the National Black Health Study Group and the American Advocate, both nonprofit companies. The study group was still operating years after losing its corporate charter.
The LY Group and Young had several questionable consulting contracts.
One was with Coppin State College. Young billed the financially strapped school between $4,000 and $5,000 a month, but audits found that Young did little or no work for the $38,500 in fees he collected from the college.
The LY Group also had a $7,000-a-month consulting contract with Merit Behavioral Care Corp., a New Jersey company that was bidding on a contract to provide mental health services in Maryland.
In the midst of the bidding, the company flew Glendening to a Manhattan fund-raiser on a corporate jet. After the trip became public, Glendening said he had no idea Merit was bidding. The governor declined to accept the $60,000 that was raised at the event, and he reimbursed the company for the cost of the plane trip.
Merit lost the contract, but it later bought the company that won the work, becoming the mental health care provider for Medicaid patients in Maryland.
Young's other companies also worked with corporations doing business in the state.
PrimeHealth, the HMO cited in the indictment, helped sponsor a religious event Young organized at Oriole Park at Camden Yards in 1997 through the American Advocate. The firm also helped fund a Las Vegas health care conference November 1997 that Young organized through his National Black Health Study Group.
The newspaper also reported that Young was using tax dollars )) to help support the activities of his corporations. He based the companies in his taxpayer-supported office, used tax dollars to pay corporate phone charges and had public employees working for his private companies.
One employee served as his personal chauffeur -- even though )) he was on two public payrolls.
After The Sun's articles appeared, the legislature's ethics committee launched a probe and issued a highly critical report, prompting Young's expulsion from the Senate on Jan. 16.
Even before the ethics panel began its investigation of Young, Montanarelli's office had opened a criminal probe into the senator's business dealings. A grand jury convened in Anne Arundel County began subpoenaing records and witnesses, focusing on Young's ties to PrimeHealth and its officers.
PrimeHealth was created from the financial ruins of Diagnostic Health Imaging Systems. Young once worked as a paid DHIS consultant.
DHIS officers transferred most of the assets of their company to a new firm, PrimeHealth, and left behind a bundle of debt and a trail of lawsuits. DHIS hired Bruce Marcus -- Glendening's personal attorney -- to fight some of those lawsuits.
With a shaky foundation but big aspirations, PrimeHealth opened its doors in Washington but soon ran into trouble. The company lost its license to operate in the district and sought a license in Maryland, a larger and potentially more lucrative market.
The company enlisted Young's help.
The senator's lobbying effort paid off. With his assistance, the new company received a state rule change, a federal waiver and a contract -- all while under investigation for its business practices in Washington, according to records and interviews.
A top health official, in a memo to the governor's office, described her agency's assistance to PrimeHealth as far exceeding help provided to other firms. She said no other company in the state "was provided this opportunity." Administration officials refused to make the memo public and only acknowledged its existence after it was quoted by The Sun.
After investigating Young and his ties to PrimeHealth, Montanarelli's agents raided its corporate offices in Lanham and Washington on April 3, seizing computers and boxes of documents. In a sworn affidavit filed to justify the raid, the agents said they believed PrimeHealth's officers had been bribing Young and others to secure an HMO license and a contract to serve welfare patients in Maryland.
The affidavit also noted that $91,175 worth of PrimeHealth checks were made out to "cash" and some carried the initials "sly" on memo lines. Montanarelli's investigators said they believed the initials stood for "Senator Larry Young," and they said someone had tried to erase or obliterate the notations on financial records Prime-Health provided to the grand jury.
PrimeHealth also is being examined by the Maryland Insurance Administration, which launched its own probe to determine whether the company failed to disclose required details about its finances.
During the insurance administration's financial review of the corporation, regulators discovered that PrimeHealth's officers had written $675,236 in checks made out to cash.
Concluding that the firm was "insolvent," Insurance Commissioner Steven B. Larsen asked a Baltimore judge to place the firm in receivership in August. Larsen said PrimeHealth and its executives filed "inaccurate, inconsistent and incomplete information" that raised "serious concerns that PrimeHealth is controlled directly or indirectly by untrustworthy management."
The company eventually agreed to a state takeover and is being run by a receiver appointed by Larsen.
The U.S. attorney's office and the FBI also launched a probe of Young shortly after the newspaper articles appeared. A grand jury in Baltimore has subpoenaed records from Young, PrimeHealth, Coppin State College, the state Department of Health and Mental Hygiene and the governor's office, among others.
That investigation is ongoing. No charges have been filed.
In late October, U.S. Attorney Lynne A. Battaglia asked state prosecutors to consolidate the two criminal probes in a federal grand jury. At the time, Montanarelli declined to publicly say whether he would accept the offer.
By indicting Young yesterday, Montanarelli has apparently declined Battaglia's proposal.
Legislative experience: state delegate, 1975-1987; first African-American to chair a General Assembly committee, 1983; chairman, health panel of the National Black Caucus of State Legislators; state senator, 1987-1998; chairman, Senate Finance Health Subcommittee; chairman, Executive Nominations Committee; chairman, Maryland Legislative Black Caucus; expelled, Jan. 16, 1998.
Professional experience: president, LY Group; founder, National Black Health Study Group; founder, the American Advocate; president, Center for Urban Environmental Studies; columnist, the Afro-American; talk show host, WOLB radio.
Personal: born in Baltimore; single; self-described urban environmentalist.
Pub Date: 12/15/98